Form 8-K
8-K — HEALTHY CHOICE WELLNESS CORP.
Accession: 0001493152-26-043135
Filed: 2026-09-17
Period: 2026-09-17
CIK: 0001948864
SIC: 5411 (RETAIL-GROCERY STORES)
Item: Entry into a Material Definitive Agreement
Item: Completion of Acquisition or Disposition of Assets
Item: Results of Operations and Financial Condition
Item: Unregistered Sales of Equity Securities
Item: Material Modifications to Rights of Security Holders
Item: Changes in Registrant's Certifying Accountant
Item: Changes in Control of Registrant
Item: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers
Item: Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
Item: Financial Statements and Exhibits
Documents
8-K — form8-k.htm (Primary)
EX-3.1 (ex3-1.htm)
EX-10.1 (ex10-1.htm)
EX-10.2 (ex10-2.htm)
EX-10.3 (ex10-3.htm)
EX-10.4 (ex10-4.htm)
EX-10.5 (ex10-5.htm)
EX-16.1 (ex16-1.htm)
EX-21.1 (ex21-1.htm)
EX-23.1 (ex23-1.htm)
EX-23.2 (ex23-2.htm)
EX-99.1 (ex99-1.htm)
EX-99.2 (ex99-2.htm)
EX-99.3 (ex99-3.htm)
EX-99.4 (ex99-4.htm)
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): September 17, 2026
HEALTHY CHOICE WELLNESS CORP.
(Exact
name of registrant as specified in its charter)
Delaware
001-42274
88-4128927
(State
or Other Jurisdiction
(Commission
(I.R.S.
Employer
of
Incorporation)
File
Number)
Identification
No.)
3800
North 28th Way, Unit# 1
Hollywood,
Florida, 33020
(Address
of Principal Executive Office) (Zip Code)
(305)
600-5004
(Registrant’s
telephone number, including area code)
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
☐
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class
Trading
Symbol(s)
Name
of each exchange on which registered
Class
A common stock
HOST
NYSE
American
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Explanatory
Note
On
September 17, 2026 (the “Closing Date”), Host Digital Inc., a Delaware corporation (formerly known as Healthy Choice
Wellness Corp.) (the “Parent”), completed the previously announced Merger (as defined below) pursuant to the Agreement and
Plan of Merger (the “Merger Agreement”), dated May 27, 2026, by and among Parent, Healthy Choice Wellness II Corp., a Delaware
corporation and wholly owned subsidiary of Parent (“Merger Sub”), and Host Digital Infrastructure LLC, a Delaware limited
liability company (“Host DI”). On the Closing Date, pursuant to the Merger Agreement and on the terms and conditions set
forth therein, Merger Sub merged with and into Host DI, with Host DI surviving the Merger as a wholly owned subsidiary of the Parent
(the “Merger”). In connection with the Merger, all of the Common Units and Preferred Units of Host DI (collectively, the
“Host DI Units”), in each case as defined in that certain Amended and Restated Limited Liability Company Agreement of Host
DI, dated effective as of February 13, 2026, outstanding immediately prior to the effective time of the Merger (the “Effective
Time”), were converted into the right to receive shares of Class A common stock, par value $0.001 per share, of the Parent (“Parent
Common Stock”), or pre-funded warrants (“Pre-Funded Warrants”) to purchase Parent Common Stock at an exercise price
of $0.001 per share, in lieu of such shares.
All
defined terms used in this Current Report on Form 8-K that are not otherwise defined herein have the meanings ascribed to such terms
in the Merger Agreement.
Item
1.01 Entry
into a Material Definitive Agreement.
Merger
Closing
Registration
Rights Agreement
In
connection with the consummation of the Merger (the “Closing”), Parent entered into registration rights agreements, each
dated September 17, 2026 (the “Registration Rights Agreements”), each by and among the Parent and certain stockholders
of Parent party thereto (collectively, the “Holders”), pursuant to which, among other things, Parent has agreed to register
for resale certain shares of Parent Common Stock held by such Holders from time to time, including shares of Parent Common Stock issued
as consideration in the Merger.
Pursuant
to the Registration Rights Agreements, Parent is obligated to prepare and file a shelf registration statement covering the resale of
covered shares of Parent Common Stock within 30 calendar days following the Closing Date, subject to certain exceptions, pursuant to
Rule 415 of the Securities Act of 1933, as amended (“Securities Act”). Parent also agreed to use commercially reasonable
efforts to keep such registration statement continuously effective under the Securities Act until the date on which all relevant registrable
securities have been sold under each Registration Rights Agreement. Parent has also agreed under the Registration Rights Agreements to
pay certain expenses of the Holders incident to any registration demand and indemnify the applicable securityholders against certain
liabilities.
The
foregoing description of the Registration Rights Agreements does not purport to be complete and are qualified in their entirety by the
full text of such agreements, copies of which are filed hereto as Exhibit 10.1 and Exhibit 10.2 and are incorporated herein by reference.
Indemnification
Agreements
In
connection with the Closing, Parent entered into indemnification agreements with each director and executive officer of Parent as of
the Closing that provide for indemnification of certain expenses (including attorneys’ fees), judgments, penalties, fines and amounts
paid in settlement actually and reasonably incurred in any action or proceeding arising by reason of the indemnitee’s service as
a director or officer, as applicable, to the maximum extent permitted by applicable law.
The
foregoing description of the indemnification agreements is qualified in its entirety by the full text of the form of indemnification
agreement, which is filed hereto as Exhibit 10.3 and incorporated herein by reference.
Preferential
Rights Agreement
In
connection with the Closing, Parent entered into a Preferential Rights Agreement, dated September 17, 2026 (the “Preferential
Rights Agreement”), with Host Infrastructure Holdings LLC, a Delaware limited liability company formed and controlled by
the founders of Host DI (the “Sponsor”). Under the Preferential Rights Agreement, Parent has (i) a right of first offer with
respect to any project site acquisition subsidiary of the Sponsor (each, a “Project Subsidiary”) that the Sponsor markets
or determines to contribute, sell, or otherwise dispose of, exercisable within 30 days of the applicable offer notice, and (ii) a right
of first refusal with respect to any unsolicited bona fide third-party offer for a Project Subsidiary that the Sponsor desires to accept,
exercisable within five days of the applicable notice. Any project site acquisition company formed or acquired by the Sponsor after the
effective date is automatically included as a Project Subsidiary. The Sponsor is not obligated to develop, retain, market, or contribute
any Project Subsidiary to Parent, and if Parent does not exercise its rights, the Sponsor may consummate the applicable transaction with
a third party. The Preferential Rights Agreement expires on the second anniversary of its effective date.
Because
the Sponsor is controlled by, among others, our chief executive officer, Harmol Samra, and Hans Thomas, an owner of a substantial number
of the outstanding shares of Parent Common Stock, the Preferential Rights Agreement constitutes a related-person transaction for purposes
of Item 404 of Regulation S-K. The foregoing description of the Preferential Rights Agreement does not purport to be complete and is
qualified in its entirety by the full text of such agreement, a copy of which is filed as Exhibit 10.4 hereto and incorporated herein
by reference.
Item
2.01 Completion
of Acquisition or Disposition of Assets.
Pursuant
to the Merger Agreement and on the terms and conditions set forth therein, Merger Sub merged with and into Host DI, with Host DI surviving
the Merger as a wholly owned subsidiary of the Parent. In connection with the Merger, all of the Host DI Units outstanding immediately
prior to the Effective Time, were converted into the right to receive shares of Parent Common Stock or Pre-Funded Warrants.
At
the Effective Time, Parent issued 25,085,454 shares of Parent Stock (the “Stock Merger Consideration”) and Pre-Funded
Warrants to purchase an aggregate of 19,888,093 shares of Parent Common Stock (the “PFW Merger Consideration,” and
together with the Stock Merger Consideration, the “Merger Consideration”), to the previous holders of the Host DI Units.
Immediately following the Effective Time, the legacy Host DI members owned approximately 96.4% of Parent’s issued and outstanding
Common Stock. A copy of the form of Pre-Funded Warrant is filed as Exhibit 10.5 hereto and incorporated herein by reference.
The
Merger Consideration was issued pursuant to a private placement exempt from registration under the Securities Act pursuant to Section
4(a)(2) of the Securities Act and Regulation D promulgated thereunder. We intend to register the Stock Merger Consideration and the shares
of Common Stock underlying the Pre-Funded Warrants on a registration statement on Form S-3, covering the resale and issuance, as applicable,
of such Parent Common Stock. For more information, reference the “Registration Rights Agreement” section in
Item 1.01 to this Current Report on Form 8-K.
Effective
September 18, 2026, the Parent Common Stock will begin trading on the NYSE American under the new ticker symbol “HOST”,
represented by the existing CUSIP number 42227T303.
The
foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by the full text of such
agreement, a copy of which is filed hereto as Exhibit 2.1 and is incorporated herein by reference.
Item
2.02 Results
of Operations and Financial Condition.
Management’s
Discussion and Analysis of Financial Condition and Results of Operation of Host DI is filed as Exhibit 99.1 hereto and incorporated
herein by reference.
Item
3.02 Unregistered
Sales of Equity Securities.
The
information set forth in Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item
3.03 Material
Modification to Rights of Security Holders.
The
information set forth in Items 1.01, 2.01, 5.01 and 5.03 of this Current Report on Form 8-K is incorporated herein by reference.
Item
4.01 Changes
in Registrant’s Certifying Accountant.
Dismissal
of UHY LLP
On
September 17, 2026, the Board dismissed UHY LLP (“UHY”) as the Company’s independent registered public accounting
firm, effective as of that date. The decision to change independent registered public accounting firms was approved by the Board of Directors
of the Parent on September 17, 2026.
UHY
LLP previously served as the independent registered public accounting firm of Parent since 2024. UHY’s report on the Parent’s
financial statements for the fiscal year ended December 31, 2025 did not contain an adverse opinion or a disclaimer of opinion and was
not qualified or modified as to uncertainty, audit scope or accounting principles, except that such report included an explanatory paragraph
expressing substantial doubt about the Company’s ability to continue as a going concern.
During
the fiscal year ended December 31, 2025 and the subsequent interim period through September 17, 2026, there were no disagreements
(within the meaning of Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Parent and UHY on any matter of
accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to UHY’s
satisfaction, would have caused UHY to make reference to the subject matter of the disagreement in connection with its report.
Parent
has provided UHY with a copy of the disclosures made by the Company in this Item 4.01 and has requested that UHY furnish Parent with
a letter addressed to the Securities and Exchange Commission (the “SEC”) stating whether UHY agrees with the statements made
by Parent herein and, if not, stating the respects in which it does not agree. A copy of UHY’s letter is attached hereto
as Exhibit 16.1 and incorporated herein by reference.
Engagement
of Carr, Riggs & Ingram, L.L.C.
For
accounting purposes, the Merger is treated as a reverse acquisition, with Host DI as the accounting acquirer. Accordingly, the historical
financial statements of Host DI, which have been audited by Carr, Riggs & Ingram, L.L.C. (“CRI”), will become the historical
financial statements of the Company. In a reverse acquisition, a change in accountants is deemed to have occurred unless the same independent
registered public accounting firm audited the pre-transaction financial statements of both the legal acquirer and the accounting acquirer.
Effective
September 17, 2026, Parent engaged CRI as the Company’s independent registered public accounting firm for the fiscal year
ending December 31, 2026. The engagement of CRI was approved by the Board of Directors on September 17, 2026.
During
Parent’s two most recent fiscal years and the subsequent interim period through September 17, 2026, neither Parent nor
anyone acting on its behalf consulted CRI regarding (i) the application of accounting principles to a specified transaction, either completed
or proposed, or the type of audit opinion that might be rendered on Parent’s financial statements, and no written report or oral
advice was provided to Parent that CRI concluded was an important factor considered by Parent in reaching a decision as to any accounting,
auditing or financial reporting issue, or (ii) any matter that was the subject of a disagreement (as defined in Item 304(a)(1)(iv) of
Regulation S-K and the related instructions) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).
Item
5.01 Changes
in Control of Registrant.
The
information set forth in Items 2.01 and 5.02 of this Current Report on Form 8-K is incorporated by reference into this Item 5.01.
Item
5.02 Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.
Resignation
of Directors
In
accordance with the Merger Agreement, upon consummation of the Merger, Gary Bodzin, Behnam Myers and Michael Lerman resigned from the
Board and committees of the Board on which they respectively served. Such resignations were not the result of any disagreements with
Parent relating to its operations, policies or practices.
Appointment
of Directors
Effective
upon the Closing, the Board was reconstituted as follows: Robert Byrne, Omar Hussein, Guhan Kandasamy and Shawn Matthews, with Mr. Matthews
serving as Chairperson. Mr. Hussein and Mr. Matthews were appointed as Class I directors, with their terms expiring at Parent’s
2028 annual meeting, Mr. Byrne was appointed as the Class II director, with his term expiring at Parent’s 2026 annual
meeting, and Mr. Kandasamy as appointed as the Class III director, with his term expiring at Parent’s 2027 annual meeting.
Under
the listing rules of the NYSE American (the “NYSE Listing Rules”), a majority of the members of the Board must be “independent
directors.” Under the NYSE Listing Rules, an “independent director” is a person other than an executive officer or
employee of Parent, and no director qualifies as independent unless the Board affirmatively determines that the director does not have
a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The
Board has determined that each of Robert Byrne, Omar Hussein and Guhan Kandasamy qualify as “independent” under the NYSE
Listing Rules.
Each
of the newly appointed directors’ biographical information is set forth below.
Robert
Byrne. Mr. Byrne has nearly three decades of experience as an entrepreneur, trader, writer and capital markets adviser to public
and private companies. Since November 2025, he has served as a member of the board of directors of Sky Quarry, Inc. Since September 2024,
he has served as a principal and strategic advisor through Alpha Nine Ventures LTD and, since 2021, has held similar issuer-side advisory
roles as president of TB Byrne & Associates, focusing on acquisitions, corporate finance and restructuring (including debt workouts
and debt–equity swaps), recapitalizations and exit strategies, primarily utilizing traditional initial public offerings and alternative
public offerings. In this capacity, he advises boards and management teams of micro- and small-cap companies on complex capital structures
and balance-sheet repair, including secured and unsecured debt, convertible securities, warrants, merchant cash advances and other quasi-debt
instruments, and on strategic financings such as private investment in public equity, registered directs and Regulation A/Regulation
Crowdfunding offerings, as well as digital-asset treasury and real-world-asset tokenization strategies intended to complement traditional
capital-raising and listing pathways. From 1997 to 2018, Mr. Byrne was a full-time equities and futures trader, specializing in basket
trading, auction-market theory and short-term index and commodity futures. Since 2008, he has written on markets and trading strategy
as a contributing columnist for TheStreet.com and has also been involved in research, publishing and analytical roles, including as president
of Asymmetric Publishing and as an equity analyst at Monument & Cathedral Holdings LLC. Parent believes that Mr. Byrne is qualified
to serve on the Board due to his extensive experience in capital markets, corporate finance, restructuring and strategic advisory services,
which provide valuable financial and transactional experience to the Board.
Omar
Hussein. Mr. Hussein is the Co-Founder and Chief Strategic Officer of ConvergeFi, a VC-backed AI company transforming real estate
lending, which he launched in 2024. Since November 2025, he has served as a member of the board of directors of Sky Quarry, Inc. Prior
to ConvergeFi, from 2022-2023, Mr. Hussein was the CFO of two successive companies with announced IPOs - Sparks Energy, a $475 million
power services company, and PrimeBlock, a $1.25 billion data center company with over 100MW of deployed capacity. From 2015-2022, Mr.
Hussein was a TMT investment banker at Citigroup and from 2014-2015 he was an M&A banker at BMO Capital Markets. From 2003-2014,
Mr. Hussein held various roles at startups including Strategic Growth Bank, a tech-enabled bank backed by leading Growth Equity funds.
From 2001-2003, Mr. Hussein was an investor at Insight Venture Partners. From 1999-2001, Mr. Hussein was an investment banker at Morgan
Stanley. Mr. Hussein holds an MBA from Stanford University Graduate School of Business, and a B.A. from New York University. Parent believes
that Mr. Hussein is qualified to serve on the Board due to his extensive experience in investment banking, corporate finance and strategic
leadership, which provide valuable financial and operational insight to the Board.
Guhan
Kandasamy. From April 2018 to December 2023, Mr. Kandasamy served as the chief credit and data officer of 10X Capital Partners, LLC.
In 2015, Mr. Kandasamy co-founded TheNumber, a One Zero Capital company, which provides credit market analytics and intelligence to leading
credit hedge funds, Bulge Bracket Banks and Retail Banks. At TheNumber, he first served as the founding product manager, and as chief
executive officer from January 2016 to March 2018. From October 2010 to January 2015, Mr. Kandasamy served as global head of product
and data analytics at Opera Solutions, LLC (now ElectrifAi), where he co-founded the company’s financial services vertical while
helping the founders raise its first private capital from Silver Lake Partners, KKR & Co. Inc. and Wipro Limited (NYSE: WIT). Mr.
Kandasamy has also previously served as Vice President of US Structured Finance for the global credit ratings agency DBRS, Inc. and as
analyst for the private secondary market firm SecondMarket, Inc., which was later acquired by Nasdaq. Prior to that, as its first product
employee, he served as the founding product manager at CoreLogic, Inc. (NYSE: CLGX) from January 2004 to June 2007, and there he led
development of CoreLogic’s product suite including Loansafe, the credit risk product used by a large portion of the mortgage market,
as well as CoreLogic’s initial Automated Value Models (“AVMs”) and AVM cascade models for real estate assets, which
remain the industry standard. During his tenure, he provided key evaluation and assistance to CoreLogic through several major corporate
acquisitions, including First American Corporation. CoreLogic now produces over $1.7 billion in annual revenue and has an enterprise
value of $5.3 billion. Mr. Kandasamy began his career in 2003 at the Federal National Mortgage Association as a credit risk policy analyst,
where he developed the agency’s still-operational and patented Consumer Credit Risk Assessment Model (FMCA), along with several
capital allocation, collateral risk and property valuation models. Mr. Kandasamy received an MBA with a concentration in Finance from
Oxford University in 2010 and received a dual B.A. from Johns Hopkins University in 2003. Parent believes that Mr. Kandasamy is qualified
to serve on the Board due to his extensive experience in credit and data analytics, financial services and structured finance, which
provide valuable strategic, financial and operational expertise to the Board.
Shawn
Matthews. Mr. Matthews is currently the Founder and Chief Investment Officer of Hondius Capital Management, a global alternative
asset manager. In this role, he has oversight of and responsibility for all firm investments. Mr. Matthews has been actively investing
in global markets for over 30 years, with the majority of his career focused on trading across asset classes. Prior to founding Hondius
Capital Management, Mr. Matthews served as Chief Executive Officer of Cantor Fitzgerald & Co. (“Cantor Fitzgerald”) from
2009 through April 2018. Before becoming Chief Executive Officer at Cantor Fitzgerald, he held a number of senior investment leadership
roles there, including Head of Capital Markets and Head of Mortgage Trading. Earlier in his career, Mr. Matthews worked as a fixed income
derivatives trader, traded privatization certificates in Eastern Europe, and later founded both an equity-focused hedge fund, Alchemist
Capital Management, and a fixed income broker-dealer, West Side Capital. Mr. Matthews holds a Bachelor of Science in Finance from Fairfield
University and an MBA from Hofstra University. Parent believes that Mr. Matthews is qualified to serve on the Board due to his extensive
leadership experience in global investing, alternative asset management and financial services, which provide valuable leadership and
financial expertise to the Board.
Board
Committees
As
of the Closing, the Board reconstituted its existing committees as follows:
Audit
Committee
Omar
Hussein, Robert Byrne, and Guhan Kandasamy were appointed to the Audit Committee of the Board, each of whom were determined by the Board
to satisfy the requirements for audit committee membership under the NYSE Listing Rules and Rule 10A-3 under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). Mr. Hussein was appointed chair of the Audit Committee.
Compensation
Committee
Omar
Hussein, Robert Byrne and Guhan Kandasamy were appointed to the Compensation Committee of the Board. Mr. Byrne was appointed chair of
the Compensation Committee.
Nominating
and Corporate Governance Committee
Omar
Hussein, Robert Byrne and Guhan Kandasamy were appointed to the Nominating and Corporate Governance Committee of the Board. Mr. Kandasamy
was appointed chair of the Nominating and Corporate Governance Committee.
Departure
of Executive Officers
In
accordance with the Merger Agreement, effective as of the Closing, Jeffrey Holman resigned as Chief Executive Officer, Chairman and director
of Parent, and Christopher Santi resigned as President and Chief Operating Officer of Parent.
Appointment
of Executive Officers
Effective
upon the Closing, the Board appointed Harmol Samra as Chief Executive Officer of Parent. John Ollet remained in his role as Chief Financial
Officer of Parent. Mr. Samra’s biographical information is set forth below.
Harmol
Samra. Mr. Samra has served as Chief Executive Officer of Host DI since June 2025. Mr. Samra has over a decade of experience in digital
infrastructure and real estate private equity, with a focus on underwriting, structuring and executing large-scale real asset and development-oriented
investments across multiple markets. Prior to joining Host DI, Mr. Samra held investment roles at ICONIQ Capital, Starwood Capital Group
and PGIM Real Estate, where he evaluated and executed complex infrastructure and real estate transactions involving significant capital
coordination and development planning. While at ICONIQ Capital, Mr. Samra was a member of the team that built IPI Partners, one of the
world’s largest digital infrastructure investment platforms, which was subsequently sold to Blue Owl Capital. Mr. Samra holds a
Bachelor of Science in Business Administration from the Haas School of Business at the University of California, Berkeley. The Board
believes that Mr. Samra’s extensive experience in digital infrastructure investment and development, together with his expertise
in structuring large-scale real asset transactions, qualifies him to serve as Chief Executive Officer and provides valuable leadership
to Parent.
There
are no family relationships among any of our executive officers or directors. Other than as set forth in this Current Report on Form
8-K, none of the newly appointed directors are party to any transaction with the Company that would require disclosure under Item 404(a)
of Regulation S-K or any arrangement or understanding with any other person pursuant to which he was selected as a director.
Executive
Officer Employment Arrangements
Executive
Employment Agreement – Harmol Samra
In
connection with the Closing, Parent entered into an executive employment agreement (the “CEO Employment Agreement”) with
Harmol Samra, effective as of September 17, 2026, pursuant to which Mr. Samra will serve as Chief Executive Officer of Parent. Pursuant
to the CEO Employment Agreement, Mr. Samra is entitled to receive an annual base salary of $200,000, subject to adjustments from time
to time by the Board in its reasonable discretion, and is eligible to earn an annual incentive bonus pursuant to Parent’s annual
incentive bonus program to be established for executive-level employees. Mr. Samra is also eligible to participate in any equity incentive
plan of Parent. If Mr. Samra’s employment is terminated by Parent without “Cause” (as defined in the CEO Employment
Agreement), he will be entitled, subject to his execution of a release of claims and continued compliance with applicable restrictive
covenants, to continued payment of his then-current base salary for 12 months, any annual incentive bonus earned for the prior year
and a pro-rated annual incentive bonus for the year of termination.
Item
5.03 Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On
September 17, 2026, Parent filed a Certificate of Amendment (the “Certificate of Amendment”) to Parent’s Second
Amended and Restated Certificate of Incorporation (as amended), with the Secretary of State of the State of Delaware. The purpose of
the Certificate of Amendment was to change Parent’s name from “Healthy Choice Wellness Corp.” to “Host Digital
Inc.”.
Effective
as of the Closing, the Board approved pursuant to Parent’s Bylaws a change in the Parent’s fiscal year end from January 31
to December 31 of each year.
The
foregoing description of the Certificate of Amendment is qualified by reference to the Certificate of Amendment, a copy of which is filed
hereto as Exhibit 3.1 and is incorporated herein by reference.
Item
9.01 Financial
Statements and Exhibits.
(a)
Financial statements of businesses or funds acquired
In
accordance with Item 9.01(a), the audited consolidated financial statements of Host DI as of January 31, 2026 and for the period
from July 8, 2025 (inception) through January 31, 2026, and the accompanying notes, and the unaudited condensed financial statements
of Host DI for the three and six months ended July 31, 2026, and the accompanying notes, are attached to this Current Report on Form
8-K as Exhibit 99.3.
(b)
Pro forma financial information
In
accordance with Item 9.01(b), the unaudited condensed consolidated combined financial information for the year ended December
31, 2025, and as of, and for, the six months ended June 30, 2026, and the accompanying notes, are attached to this Current Report on
Form 8-K as Exhibit 99.3.
(c)
Exhibits
Exhibit
No.
Description
2.1
Agreement and Plan of Merger, dated May 27, 2026, by and among Healthy Choice Wellness Corp., Healthy Choice Wellness II Corp., and Host Digital Infrastructure LLC (incorporated by reference from Exhibit 2.1 to Parent’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 29, 2026)
3.1
Certificate of Amendment to Second Amended and Restated Certificate of Incorporation of Healthy Choices Wellness Corp.
10.1*#
Registration
Rights Agreement, dated September 17, 2026, between the Company and the Stockholders party thereto
10.2*
Registration
Rights Agreement, dated September 17, 2026, between the Company and the Holders party thereto
10.3
Form of Indemnification Agreement
10.4#
Preferential
Rights Agreement, dated as of September 17, 2026, between Host Infrastructure Holdings LLC and Parent
10.5#
Form of Pre-Funded Warrant
16.1
Letter from UHY LLP to the Securities and Exchange Commission regarding change in certifying accountant
21.1
Subsidiaries of Parent
23.1
Consent of UHY LLP
23.2
Consent of Carr, Riggs & Ingram, L.L.C.
99.1
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Host Digital Infrastructure LLC
99.2
Business of Host Digital Inc., Risk Factors and Related Party Transactions
99.3
Financial Statements of Businesses Acquired and Pro Forma Financial Information
99.4
Policy for the Recovery of Erroneously Awarded Incentive Compensation
104
Cover Page Interactive Data File (embedded within the Inline XBRL document).
*
Certain
exhibits, schedules and annexes to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees
to furnish supplementally a copy of any omitted exhibits, schedules or annexes to the SEC upon its request.
#
Certain portions of this exhibit
(indicated by “[***]”) have been redacted pursuant to Regulation S-K, Item 601(a)(6).
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
HOST
DIGITAL INC.
Date:
September
17, 2026
By:
/s/
John Ollet
John
Ollet
Chief
Financial Officer
EX-3.1
EX-3.1
Filename: ex3-1.htm · Sequence: 2
Exhibit
3.1
CERTIFICATE
OF AMENDMENT TO
SECOND
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
HEALTHY
CHOICE WELLNESS CORP.
This
Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Healthy Choice Wellness Corp. (the “Corporation”),
a corporation organized and existing under the laws of the State of Delaware, does hereby certify as follows:
1. The
name of the Corporation is Healthy Choice Wellness Corp.
2. Article
I of the Second Amended and Restated Certificate of Incorporation is hereby amended and restated
in its entirety as follows:
“The
name of the corporation is “Host Digital Inc. (the “Corporation”).”
3. The
foregoing amendment was duly adopted in accordance with the provisions of Section 242 of
the General Corporation Law of the State of Delaware.
4. The
foregoing amendment shall be effective as of 11:59 p.m., Eastern Time, on September 17,
2026.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation
to be executed by John Ollet its Chief Financial Officer, this 17th day of September, 2026.
HEALTHY
CHOICE WELLNESS CORP.
By:
/s/
John Ollet
Name:
John
Ollet
Title:
Chief
Financial Officer
EX-10.1
EX-10.1
Filename: ex10-1.htm · Sequence: 3
Exhibit
10.1
REGISTRATION
RIGHTS AGREEMENT
dated
as of September 17, 2026
among
Healthy
Choice Wellness Corp.
AND
the
Stockholders party hereto
TABLE
OF CONTENTS
Page
Article I DEFINITIONS
1
Section
1.1
Definitions
1
Section
1.2
Interpretation
5
Article II DEMAND
AND SHELF REGISTRATION RIGHTS
7
Section
2.1
Right
to Demand Registration
7
Section
2.2
Shelf
Registration
8
Section
2.3
Shelf
Takedowns.
9
Section
2.4
Cutback;
Selection of Underwriters
10
Section
2.5
Registration
Limits
11
Section
2.6
Suspension
or Deferral
11
Article III
PIGGYBACK REGISTRATION
12
Section
3.1
Right
to Piggyback
12
Section
3.2
Notice
13
Section
3.3
Cutback
13
Section
3.4
Underwriting
Agreement
14
Section
3.5
Selection
of Underwriters
14
Section
3.6
Company
Control
14
Article IV REGISTRATION
PROCEDURES
15
Section
4.1
Withdrawal
Rights
15
Section
4.2
Holdback
Agreements
15
Section
4.3
Registration
Procedures
16
Section
4.4
Registration
Expenses
21
Section
4.5
Request
for Information; Certain Rights
22
Section
4.6
Exchange
Act Compliance
23
Section
4.7
Participating
Stockholder
24
Article V INDEMNIFICATION
24
Section
5.1
By
the Corporation
24
Section
5.2
By
the Selling Stockholders
24
Section
5.3
Notice
25
Section
5.4
Defense
of Actions
25
Section
5.5
Indemnification
Priority
26
i
Section
5.6
Survival
26
Section
5.7
Contribution
26
Article VI MISCELLANEOUS
27
Section
6.1
Notices
27
Section
6.2
Severability
27
Section
6.3
Counterparts
27
Section
6.4
Entire
Agreement; No Third Party Beneficiaries
27
Section
6.5
Further
Assurances
27
Section
6.6
Expenses
27
Section
6.7
Governing
Law; Equitable Remedies
28
Section
6.8
Consent
To Jurisdiction
28
Section
6.9
Amendments;
Waivers
29
Section
6.10
Assignment
29
Section
6.11
Recapitalizations,
Exchanges Affecting the Registrable Securities
29
ii
REGISTRATION
RIGHTS AGREEMENT (this “Agreement”), dated as of September 17, 2026 (the “Effective Date”),
among (i) Healthy Choice Wellness Corp., a Delaware corporation (the “Corporation”), and (ii) each of the holders
of Company Units (as defined in the Merger Agreement) who are signatories hereto or who become party hereto pursuant to Section 6.10
(each such holder, a “Stockholder” and, collectively, the “Stockholders”).
WHEREAS,
this Agreement is made pursuant to the Agreement and Plan of Merger, dated as of May 27, 2026, by and among the Corporation, Healthy
Choice Wellness II Corp., a Delaware corporation and wholly owned subsidiary of the Corporation (“Merger Sub”), and
Host Digital Infrastructure LLC, a Delaware limited liability company (the “Company”) (as amended, restated, supplemented
or otherwise modified from time to time, the “Merger Agreement”);
WHEREAS,
pursuant to the Merger Agreement, at the effective time of the merger contemplated thereby (the “Merger”), each Company
Unit outstanding immediately prior to the effective time of the Merger will be converted into the right to receive shares of Common Stock
and/or Pre-Funded Warrants (as defined herein) (collectively, the “Merger Consideration”);
WHEREAS,
as a condition to the obligations of the Company under the Merger Agreement, the Corporation entering into this Agreement for the purpose
of granting certain registration and other rights to the Stockholders with respect to the Registrable Securities (as defined below).
NOW,
THEREFORE, in consideration of the mutual covenants and undertakings contained herein and for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
Article
I
DEFINITIONS
Section
1.1 Definitions. As used in this Agreement, the following terms have the following meanings:
“Affiliate”
of any Person means any other Person that, directly or indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such first Person. As used in this definition, the term “control,” including the correlative
terms “controlling,” “controlled by” and “under common control with,” means the possession, directly
or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or any
partnership or other ownership interest, by contract or otherwise) of a Person.
“Agreement”
has the meaning set forth in the preamble to this Agreement.
1
“Block
Trade” means an Underwritten Offering not involving any “road show” or other substantial marketing efforts by the
underwriters over a period of at least 48 hours, which is commonly known as a “block trade.”
“Business
Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York,
New York are authorized or obligated by law or executive order to close.
“Closing
Offering” means the underwritten public offering of Common Stock of the Corporation contemplated to be commenced on the date of
the closing of the Merger.
“Common
Stock” means the Class A common stock, par value $0.001 per share, of the Corporation and any equity securities issued or issuable
in exchange for or with respect to such Common Stock (i) by way of a dividend, split or combination of shares or (ii) in connection
with a reclassification, recapitalization, merger, consolidation, exchange or other reorganization.
“Corporation”
has the meaning set forth in preamble to this Agreement.
“Corporation
Indemnitee” has the meaning set forth in Section 5.5.
“Corporation
Takedown Notice” has the meaning set forth in Section 2.3(a).
“Demand”
has the meaning set forth in Section 2.1(a).
“Demand
Registration” has the meaning set forth in Section 2.1(a).
“Deferral
Period” has the meaning set forth in Section 2.6.
“Disclosure
Package” means, with respect to any offering of securities, (i) the preliminary prospectus, (ii) each Free Writing
Prospectus and (iii) all other information conveyed to purchasers of securities at the time of sale of such securities (including
a contract of sale) as determined in accordance with Rule 159 promulgated under the Securities Act.
“Effective
Date” has the meaning set forth in the preamble to this Agreement.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, supplemented or restated from time to time and any successor to
such statute, and the rules and regulations promulgated thereunder. A reference to an “Exchange Act Rule” means such rule
or regulation of the SEC under the Exchange Act, as in effect from time to time or as replaced by a successor rule thereto.
“Filing
Deadline” has the meaning set forth in Section 2.2.
“FINRA”
has the meaning set forth in Section 4.3.
“Form
S-3” has the meaning set forth in Section 2.2.
“Free
Writing Prospectus” has the meaning set forth in Section 4.3(a)(iii).
2
“Governmental
Entity” means any federal, state, county, city, local or foreign governmental, administrative or regulatory authority, commission,
committee, agency or body (including any court, tribunal or arbitral body), or any self-regulatory authority or stock exchange.
“Investor
Stockholders” means Graham Macro Strategic Ltd. and Graham Credit Opportunities Ltd.
“Losses”
has the meaning set forth in Section 5.1.
“Marketed
Underwritten Offering” means an Underwritten Offering that involves substantial marketing effort by the underwriters or the
Corporation over a period of at least forty-eight (48) hours.
“National
Securities Exchange” means an exchange registered with the SEC under Section 6(a) of the Exchange Act or any successor to such
provision.
“Other
Proposed Sellers” has the meaning set forth in Section 3.3.
“Person”
shall be construed broadly and includes any individual, corporation, firm, partnership, limited liability company, joint venture, estate,
business, association, trust, Governmental Entity or other entity.
“Piggyback
Notice” has the meaning set forth in Section 3.2.
“Piggyback
Registration” has the meaning set forth in Section 3.1.
“Piggyback
Seller” has the meaning set forth in Section 3.2.
“Pre-Funded
Warrants” means warrants to purchase shares of Common Stock at an exercise price of $0.001, issued to the Stockholders as Merger
Consideration pursuant to the Merger Agreement, which Pre-Funded Warrants shall be exercisable immediately and shall expire when exercised
in full.
“Pre-Funded
Warrant Shares” means the shares of Common Stock issued or issuable upon exercise of the Pre-Funded Warrants.
“Proceeding”
has the meaning set forth in Section 6.8.
“Records”
has the meaning set forth in Section 4.3(a)(viii).
“Rule
144”, “Rule 145”, “Rule 158”, “Rule 159A”, “Rule 405”,
“Rule 415”, and “Rule 424”, mean, in each case, such rule promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by
the SEC having substantially the same purpose and effect as such Rule.
3
“Registrable
Amount” means a number of Registrable Securities representing at least $10.0 million of aggregate anticipated gross proceeds
(such value shall be determined based on the value of such Registrable Securities on the date immediately preceding the date upon which
the Demand, as applicable, has been received by the Corporation); provided that in the case of any Marketed Underwritten Offering the
aggregate anticipated gross proceeds are at least $20.0 million.
“Registrable
Securities” means (i) the Shares and (ii) any securities issued or then issuable upon any stock split, dividend or other distribution,
recapitalization or similar event with respect to the foregoing. As to any particular Registrable Securities, such securities shall cease
to be Registrable Securities when (A) such securities have been sold or otherwise transferred by the holder thereof pursuant to
an effective registration statement, (B) such securities are sold in accordance with Rule 144 (or any successor provision) promulgated
under the Securities Act, or (C) such securities may be sold pursuant to Rule 144 (or any successor provision) promulgated under the
Securities Act without compliance with the manner of sale, volume and other limitations under such rule.
“Registration
Expenses” has the meaning set forth in Section 4.4.
“Requested
Information” has the meaning set forth in Section 4.5(a).
“Requesting
Stockholder” has the meaning set forth in Section 2.1(a).
“SEC”
means the United States Securities and Exchange Commission or any similar agency then having jurisdiction to enforce the Securities Act.
“Securities
Act” means the Securities Act of 1933, as amended, supplemented or restated from time to time and any successor to such statute,
and the rules and regulations promulgated thereunder. A reference to a “Securities Act Rule” means such rule or regulation
of the SEC under the Securities Act, as in effect from time to time or as replaced by a successor rule thereto.
“Selected
Courts” has the meaning set forth in Section 6.8.
“Selling
Stockholders” means the Persons named as selling stockholders in any registration statement under Article II hereof
and who is the Beneficial Owner of Registrable Securities being offered thereunder.
“Shares”
means the shares of Common Stock issued or issuable to the Stockholders as Merger Consideration pursuant to the Merger Agreement (including,
for the avoidance of doubt, the Pre-Funded Warrant Shares).
“Shelf
Notice” has the meaning set forth in Section 2.2(a).
“Shelf
Registration Statement” has the meaning set forth in Section 2.2(a).
“Shelf
Takedown” has the meaning set forth in Section 2.3(a).
4
“Stockholder”
has the meaning set forth in the preamble to this Agreement.
“Subsidiary”
or “Subsidiaries” means, with respect to any Person, as of any date of determination, any other Person as to which
such Person owns, directly or indirectly, or otherwise controls, more than 50% of the voting shares or other similar interests or the
sole general partner interest or managing member or similar interest of such Person. For purposes of this definition, the term “controlled”
means the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership
of securities, by contract or otherwise.
“Suspension
Period” has the meaning set forth in Section 2.6.
“Takedown
Notice” has the meaning set forth in Section 2.3(a).
“Transfer”
means any direct or indirect sale, transfer, assignment, offer, pledge, charge, mortgage, exchange, conversion, hypothecation, grant
of participation interest in, grant of a security interest or other direct or indirect disposition or encumbrance of legal title to or
any beneficial interest (in each case, whether with or without consideration, whether voluntarily or involuntarily or by operation of
law). Terms such as “Transferrable”, “Transferred” and “Transferee” shall each
have a correlative meaning with the term “Transfer”.
“Underwritten
Offering” means a sale of securities of the Corporation to an underwriter or underwriters for reoffering to the public.
“Well-Known
Seasoned Issuer” means a “well-known seasoned issuer” as defined in Rule 405 promulgated under the Securities Act
and which is also eligible to register a primary offering of its securities relying on General Instruction I.B.1 of Form S-3 or Form
F-3 under the Securities Act.
Section
1.2 Interpretation. In this Agreement, unless the context otherwise requires, words importing the singular include the
plural and vice versa;
(b)
pronouns of either gender or neuter shall include, as appropriate, the other pronoun forms;
(c)
a reference to a clause, party, annex, exhibit or schedule is a reference to a clause of, and a party, annex, exhibit and schedule to
this Agreement, and a reference to this Agreement includes any annex, exhibit and schedule hereto;
(d)
a reference to a statute, regulations, proclamation, ordinance or by-law includes all statutes, regulations, proclamations, ordinances
or by-laws amending, consolidating or replacing it, whether passed by the same or another Governmental Entity with legal power to do
so, and a reference to a statute includes all regulations, proclamations, ordinances and by-laws issued under the statute;
(e)
a reference to a document includes all amendments or supplements to, or replacements or novations of that document;
5
(f)
a reference to any party to a document includes that party’s successors, permitted transferees and permitted assigns;
(g)
a reference to any person includes that person’s successors, permitted transferees and permitted assigns;
(h)
the use of the term “including” means “including, without limitation”;
(i)
the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement
as a whole, including the annexes, schedules and exhibits, as the same may from time to time be amended, modified, supplemented or restated,
and not to any particular section, subsection, paragraph, subparagraph or clause contained in this Agreement;
(j)
the title of and the section and paragraph headings used in this Agreement are for convenience of reference only and shall not govern
or affect the interpretation of any of the terms or provisions in this Agreement;
(k)
where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed
to modify, limit or restrict in any manner the construction of the general statement to which it relates;
(l)
the language used in this Agreement has been chosen by the parties to express their mutual intent, and no rule of strict construction
shall be applied against any party; and
(m)
unless expressly provided otherwise, the measure of a period of one (1) month or year for purposes of this Agreement shall be that date
of the following month or year corresponding to the starting date, provided that if no corresponding date exists, the measure shall be
that date of the following month or year corresponding to the next day following the starting date (for example, one (1) month following
February 18 is March 18, and one (1) month following March 31 is May 1 (or in the case of January 29, 30 or 31, the following month shall
be March 1)).
6
Article
II
DEMAND AND SHELF REGISTRATION RIGHTS
Section
2.1 Right to Demand Registration.
(a)
At any time following the Filing Deadline, one or more Investor Stockholders and Hans Thomas, Harmol Samra and Alex Monje (each, a “Requesting
Stockholder”) shall be entitled to make a written request of the Corporation (a “Demand”) for registration
under the Securities Act of an amount of Registrable Securities that, in the aggregate taking into account all of the Requesting Stockholders,
equals or is greater than the Registrable Amount (based on the number of Registrable Securities outstanding on the date such Demand is
made) (a “Demand Registration”) and thereupon the Corporation will, subject to the terms of this Agreement, use its
commercially reasonable efforts to effect the registration, in each case as promptly as practicable under the Securities Act of:
(i)
the Registrable Securities which the Corporation has been so requested to register by the Requesting Stockholder(s) for disposition in
accordance with the intended method of disposition stated in such Demand;
(ii)
all other Registrable Securities which the Corporation has been requested to register pursuant to Section 2.1(b); and
(iii)
all equity securities of the Corporation which the Corporation may elect to register in connection with any offering of Registrable Securities
pursuant to this Section 2.1, but subject to Section 2.4(b);
all
to the extent necessary to permit the disposition (in accordance with the intended methods thereof) of the Registrable Securities and
the additional Common Stock, if any, to be so registered.
(b)
Each Demand shall specify: (i) the aggregate number of Registrable Securities requested to be registered in such Demand Registration,
(ii) the intended method of disposition in connection with such Demand Registration, to the extent then known and (iii) the
identity of the Requesting Stockholder (or Requesting Stockholders). Within one (1) Business Day after receipt of a Demand, the Corporation
shall give written notice of such Demand to all other Stockholders. Subject to Section 2.4(b), the Corporation shall
include in the Demand Registration covered by such Demand all Registrable Securities with respect to which the Corporation has received
a written request for inclusion therein within five (5) Business Days after the Corporation’s notice required by this Section
2.1(b) has been given. Such written request shall comply with the requirements of a Demand as set forth in this Section 2.1(b).
The Requesting Stockholder(s) and any Stockholder requesting inclusion in any Demand Registration pursuant to this Section 2.1(b)
may change the number of their Registrable Securities proposed to be offered pursuant to such Demand Registration at any time prior to
the pricing of such offering (in the case of an Underwritten Offering) or effectiveness of the registration statement (in the case of
any other offering) so long as such change would not materially adversely affect the timing or success of the offering and such revised
number of Registrable Securities in the aggregate, taking into account the Requesting Stockholder(s) and any Stockholder requesting inclusion
in the Demand Registration pursuant to this Section 2.1(b), continues to equal or exceed the Registrable Amount.
(c)
Demand Registrations shall be on (i) Form S-1 or any similar long-form registration statement, (ii) Form S-3 or any similar
short form registration statement, if such short form registration statement is then available to the Corporation, or (iii) Form S-3ASR
if the Corporation is, at the time a Demand is made, a Well-Known Seasoned Issuer, in each case, reasonably acceptable to the Requesting
Stockholders holding a majority of the Registrable Securities included in the applicable Demand Registration.
7
(d)
The Corporation shall not be obligated to effect any Demand Registration (A) within six (6) months of the effective date of a registration
statement with respect to a “firm commitment” Marketed Underwritten Offering in which all Stockholders were given “piggyback”
rights pursuant to Section 3.1 (subject to Section 3.2) and at least 50% of the number of Registrable Securities requested
by such Piggyback Sellers to be included in such Piggyback Registration were included, (B) within ninety (90) days of the effective date
of a registration statement with respect to any other Demand Registration or (C) as provided in Section 2.6.
Section
2.2 Shelf Registration.
(a)
The Corporation shall prepare and file a registration statement on Form S-3 (or, if the Corporation is ineligible to use a Form S-3,
a registration statement on Form S-1) within thirty (30) calendar days following the Closing Date (as defined in the Merger Agreement)
(the “Filing Deadline”), and use its commercially reasonable efforts to cause to be declared effective by the SEC
as soon as reasonably practicable after such filing, such registration statement providing for an offering to be made on a continuous
basis pursuant to Rule 415 under the Securities Act relating to the offer and sale, from time to time, all Registrable Securities held
by the Stockholders on the Closing Date (the “Shelf Registration Statement”), which shall be an automatic shelf registration
statement (as defined in Rule 405 under the Securities Act) if at the time the Corporation is a Well-Known Seasoned Issuer. At the time
the Shelf Registration Statement is declared effective, each Stockholder shall be named as a selling securityholder in the Shelf Registration
Statement and the related prospectus in such a manner as to permit such Stockholder to deliver such prospectus to purchasers of Registrable
Securities in accordance with applicable Law and the plan and method of distribution set forth in a Takedown Notice, which shall be set
forth in the prospectus included in such Form S-3. For the avoidance of doubt, no request for the filing of a Shelf Registration Statement
pursuant to this Section 2.2(a) shall count as a Demand Registration for purposes of Section 2.1(a).
If the Shelf Registration Statement ceases to be available for any reason, any Stockholder may require the Corporation to file a new
Shelf Registration Statement by delivering written notice to the Corporation (“Shelf Notice”) requiring the Corporation
to prepare and file a new Shelf Registration Statement as soon as practicable (but no later than thirty (30) days after the date the
Shelf Notice is delivered) and to use its commercially reasonable efforts to cause such Shelf Registration Statement to be declared effective
by the SEC as soon as reasonably practicable after such filing, which shall be an automatic shelf registration statement (as defined
in Rule 405 under the Securities Act) if at the time the Corporation is a Well-Known Seasoned Issuer.
(b)
If the Corporation shall become a Well-Known Seasoned Issuer, (x) the Corporation shall give
written notice to all of the Stockholders as promptly as practicable but in no event later than ten (10) Business Days thereafter
and such notice shall describe, in reasonable detail, the basis on which the Corporation has become a Well-Known Seasoned Issuer, and
(y) the Corporation shall, upon written request by the Stockholder, as promptly as practicable, but in no event later than twenty
(20) Business Days after receiving such request, use its commercially reasonable efforts to register, under an automatic shelf registration
statement, the sale of all of the Registrable Securities in accordance with the terms of this Agreement. The Corporation agrees that
if any Stockholder beneficially owns any Registrable Securities three years after the filing of the most recent automatic shelf registration
statement in compliance with this Section 2.2(b), the Corporation shall, if permitted under applicable rules of the
SEC, file and cause to remain effective a new automatic shelf registration statement that registers the sale of any Registrable Securities
that remain outstanding at such time. The Corporation shall give written notice of filing such Registration Statement to all of the Stockholders
as promptly as practicable thereafter. At any time after the filing of an automatic shelf registration statement by the Corporation,
if the Corporation is no longer a Well-Known Seasoned Issuer, within ten (10) Business Days after such date of determination, the
Corporation shall (A) give written notice thereof to all of the Stockholders and (B) to the extent the Corporation continues
to qualify for the use of Form S-3 promulgated under the Securities Act or any successor form thereto, the Corporation shall
file, if necessary, a Short-Form Registration Statement (or a post-effective amendment converting the Automatic Shelf Registration Statement
to a Short-Form Registration Statement) covering all of the Registrable Securities, and the Corporation shall use its commercially reasonable
efforts to have such Short-Form Registration Statement declared effective as promptly as practicable after the date the automatic shelf
registration statement is no longer useable by the Stockholders to sell their Registrable Securities.
8
(c)
Subject to Section 2.6, the Corporation will use its commercially reasonable efforts to keep a Shelf Registration Statement current
and continuously in effect with respect to resales of all Registrable Securities following the required filing thereof, and shall file
such supplements or amendments to such Shelf Registration Statement as may be necessary or appropriate in order to keep such Shelf Registration
Statement continuously effective and useable for the resale of Registrable Securities under the Securities Act, in each case until the
date on which all Registrable Securities covered by the Shelf Registration Statement have been sold thereunder in accordance with the
plan and method of distribution disclosed in the prospectus included in the Shelf Registration Statement, or otherwise.
Section
2.3 Shelf Takedowns.
(a)
Hans Thomas, Harmol Samra and Alex Monje or any Investor Stockholder included on a Shelf Registration Statement shall have the right
to require that the Corporation cooperate in a shelf takedown of that Stockholder’s Registrable Securities (“Shelf Takedown”)
at any time, including an Underwritten Offering, by delivering a written request thereof to the Corporation specifying the number of
shares of Registrable Securities such Stockholder wishes to include in the Shelf Takedown (each, a “Takedown Notice”).
The Corporation shall (i) within two (2) Business Days of the receipt of a Takedown Notice for an Underwritten Offering, give written
notice of such Takedown Notice to Hans Thomas, Harmol Samra and Alex Monje and all Investor Stockholders included on such Shelf Registration
Statement (“Corporation Takedown Notice”), and (ii) take all actions reasonably requested by such Stockholder, including
the filing of a supplement or amendment to the Shelf Registration Statement or related prospectus and any actions described in Article
IV or as may otherwise be necessary in order to enable such Registrable Securities to be distributed pursuant to such Shelf Takedown,
in accordance with the intended method of distribution set forth in the Takedown Notice, as soon as reasonably practicable. If the Shelf
Takedown is an Underwritten Offering, the Corporation shall use its commercially reasonable efforts to include in such Underwritten Offering
all Registrable Securities that the applicable Stockholders request to be included within three (3) Business Days following their receipt
of the Corporation Takedown Notice (or, in the case of a Block Trade, twenty-four (24) hours). An applicable Stockholder may change the
number of Registrable Securities proposed to be offered in any such Underwritten Offering at any time prior to the pricing of such offering
so long as such change would not materially adversely affect the timing or success of such Underwritten Offering and such revised number
of Registrable Securities in the aggregate, taking into account all of the Stockholders electing to participate, continues to equal or
exceed the Registrable Amount.
9
(b)
In no event shall the Corporation be required to effect, pursuant to this Section 2.3, during any 90-day period, more than (A)
two Block Trades or (B) more than one (1) Underwritten Offering that is not a Block Trade pursuant to a Takedown Notice.
Section
2.4 Cutback; Selection of Underwriters.
(a)
The Corporation shall not include any securities other than Registrable Securities in a Demand Registration, Shelf Registration or Shelf
Takedown, except for (i) Common Stock the Corporation intends to sell for its own account or (ii) subject to Section 4.5(b), with
the written consent of Stockholders participating in such Demand Registration, Shelf Registration or Shelf Takedown, as applicable, that
hold a majority of the Registrable Securities included in such Demand Registration, Shelf Registration or Shelf Takedown. If, in connection
with a Demand Registration, Shelf Registration or Shelf Takedown, the lead bookrunning underwriters (or, if such Demand Registration,
Shelf Registration or Shelf Takedown is not an Underwritten Offering, a nationally recognized independent investment bank selected by
the Corporation and reasonably acceptable to Stockholders holding a majority of the Registrable Securities requested to be included in
such Demand Registration, Shelf Registration or Shelf Takedown, as applicable, and whose reasonable fees and expenses shall be borne
solely by the Corporation) advise the Corporation, in writing, that, in their reasonable opinion, the inclusion of all of the securities,
including securities of the Corporation that are not Registrable Securities, sought to be registered in connection with such Demand Registration,
Shelf Registration or Shelf Takedown, as applicable, would adversely affect the marketability of the Registrable Securities sought to
be sold pursuant thereto, then the Corporation shall include in such Demand Registration, Shelf Registration or Shelf Takedown only such
securities as the Corporation is reasonably advised by such underwriters or investment bank can be sold without such adverse effect as
follows and in the following order of priority: (i) first, up to the number of Registrable Securities requested to be included
by the Requesting Stockholder or Stockholder who delivers the Shelf Notice or Takedown Notice, as applicable, together with all other
Stockholders participating in response to the Corporation Takedown Notice or in response to a Demand Registration, pro rata among
such Persons based upon the number of Registrable Securities requested to be included by them, (ii) second, securities the
Corporation proposes to sell; and (iii) third, all other equity securities of the Corporation duly requested to be included,
pro rata on the basis of the amount of such other securities requested to be included by them or such other method determined
by the Corporation.
(b)
Any time that a Demand Registration, Shelf Registration or Shelf Takedown involves an Underwritten Offering, (i) Stockholders holding
a majority of the Registrable Securities requested to be included in the Demand Registration, Shelf Registration or Shelf Takedown, as
applicable, shall select the investment banker or investment bankers and managers that will serve as lead and co-managing underwriters
with respect to the offering of such Registrable Securities, each of which shall be a nationally recognized investment banking firm reasonably
acceptable to the Corporation (such acceptance not to be unreasonably withheld, conditioned or delayed) and (ii) the Corporation and,
if reasonably requested by the underwriters, the applicable Stockholders, shall enter into an underwriting agreement that is reasonably
acceptable to the Stockholders holding a majority of the Registrable Securities requested to be included in the Demand Registration and
the Corporation, with such agreement containing representations, warranties, indemnities and agreements customarily included (but not
inconsistent with the covenants and agreements of the Corporation contained herein) by an issuer of common stock in underwriting agreements
with respect to offerings of common stock for the account of, or on behalf of, such issuers.
10
(c)
In connection with any Underwritten Offering under this Article II, the Corporation shall not be required to include the Registrable
Securities of a Stockholder in the Underwritten Offering unless such Stockholder accepts the terms of the underwriting as agreed upon
between the Corporation and the underwriters of such Underwritten Offering, in accordance with the terms hereof.
Section
2.5 Registration Limits. The Investor Stockholders and Hans Thomas, Harmol Samra and Alex Monje shall each be entitled to an unlimited
number of Demand Registrations and Shelf Takedowns.
Section
2.6 Suspension or Deferral. Notwithstanding anything to the contrary contained in this Agreement, the Corporation shall be entitled
(i) to suspend the use of the prospectus included in any effective registration statement (a “Suspension Period”)
or (ii) to defer the filing or effectiveness of any registration statement, prospectus or prospectus supplement otherwise required to
be filed pursuant to this Agreement (a “Deferral Period”), for a reasonable period of time not to exceed sixty (60)
days in succession or ninety (90) days in the aggregate for all Suspension Periods and Deferral Periods combined in any rolling twelve
(12) month period (provided, that during the 2026 calendar year or the 2027 calendar year, the aggregate duration of all Suspension
Periods and Deferral Periods shall not exceed 14 calendar days during such calendar year without the prior written consent of the Investor
Stockholders, such consent not to be unreasonably withheld, conditioned or delayed, and provided further that the rights under
this Section 2.6 shall not be available during the three (3) months after the Closing Date), if the board of directors of the
Corporation (the “Board”) shall determine in its reasonable and good faith judgment that a Suspension Period or Deferral
Period is necessary because (a) the registration statement or prospectus cannot be filed, declared effective or used for the sale of
Registrable Securities because of the unavailability of audited or other required financial statements, provided that the Corporation
shall use its commercially reasonable efforts to obtain such financial statements as promptly as practicable, or (b) the filing or effectiveness
of the prospectus relating to the registration statement would require the disclosure of material, non-public information, the premature
disclosure of which would be materially detrimental to the Corporation and, in each case of clauses (a) and (b), subject to the delivery
to the Stockholders of a certificate signed by the chief executive officer or the chief financial officer of the Corporation certifying
as to the determination of the Board described above; provided, however, that any Suspension Period or Deferral Period
shall terminate upon the earliest of (i) the date upon which the Corporation notifies the Stockholders in writing that such Suspension
Period or Deferral Period is no longer necessary, (ii) in the case of clause (a) above, the date upon which the Corporation has filed
such reports or obtained and filed the financial information required to be included or incorporated by reference in a registration statement
and (iii) in the case of clause (b) above, the date upon which the applicable registration statement, prospectus or prospectus supplement
is filed or becomes available for use, as applicable, or at such time as the public disclosure of such information is otherwise made.
The Corporation will use commercially reasonable efforts to limit the length of any Suspension Period or Deferral Period and shall notify
the Stockholders promptly if the Suspension Period or Deferral Period is no longer necessary. Notice of the commencement of a Suspension
Period or Deferral Period shall simply specify such commencement and shall not contain any facts or circumstances relating to such commencement
or any material non-public information. The Corporation shall respond promptly to inquiry by a Stockholder as to such facts and circumstances.
After the expiration of any Suspension Period or Deferral Period and without any further request from a Stockholder, the Corporation
shall, if necessary, as promptly as reasonably practicable prepare a post-effective amendment or supplement to the registration statement
or the prospectus, or any document incorporated therein by reference, or file any other required document so that, as thereafter delivered
to purchasers of the Registrable Securities included therein, the prospectus will not include an untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading. The Corporation shall not register or sell, or permit the registration or sale of, any securities for its own account
or that of any other stockholder during any Suspension Period or Deferral Period.
11
Article
III
PIGGYBACK REGISTRATION
Section
3.1 Right to Piggyback. Subject to the terms and conditions hereof, whenever the Corporation proposes to register any of its Common
Stock or securities convertible into, or exchangeable or exercisable for, Common Stock under the Securities Act or to consummate an Underwritten
Offering with respect to its Common Stock or securities convertible into, or exchangeable or exercisable for, Common Stock (other than
a registration (i) pursuant to Section 2.1, (ii) pursuant to a registration statement on Form S-4 or Form S-8 or similar form
that relates to a transaction subject to Rule 145 under the Securities Act, (iii) pursuant to any form that does not include substantially
the same information as would be required to be included in a registration statement covering the sale of Registrable Securities, (iv)
in connection with any dividend reinvestment or similar plan, (v) for the sole purpose of offering securities to another entity or its
security holders in connection with the acquisition of assets or securities of such entity or any similar transaction or (vi) in which
the only Common Stock being registered are Common Stock issuable upon conversion of debt securities that are also being registered),
(vii) in connection with the establishment, maintenance or operation of any “at-the-market” offering program, including any
sales of securities pursuant thereto, or (viii) in connection with the Closing Offering) (a “Piggyback Registration”),
whether for its own account or for the account of others, the Corporation shall give each Stockholder (other than to the extent a Stockholder
has given written notice (including by e-mail) that such notices should not be given to such Stockholder), prompt written notice thereof
(but not less than ten (10) Business Days prior to the filing by the Corporation with the SEC of any registration statement with respect
thereto).
12
Section
3.2 Notice.
(a)
Such notice (a “Piggyback Notice”) shall specify, at a minimum, the number of equity securities proposed to be registered
or offered, the proposed date of filing of such registration statement with the SEC or pricing of such offering, the proposed means of
distribution, the proposed managing underwriter or underwriters (if any and if known) and a reasonable estimate by the Corporation of
the proposed minimum offering price of such equity securities. Upon the written request of any Person that on the date of the Piggyback
Notice is a Stockholder (a “Piggyback Seller”) (which written request shall specify the number of Registrable Securities
then presently intended to be disposed of by such Piggyback Seller) given within ten (10) Business Days after such Piggyback Notice is
received by such Piggyback Seller, the Corporation, subject to the terms and conditions of this Agreement, shall use its commercially
reasonable efforts to cause all such Registrable Securities held by Piggyback Sellers with respect to which the Corporation has received
such written requests for inclusion to be included in such Piggyback Registration on the same terms and conditions as the Corporation’s
equity securities being sold in such Piggyback Registration. No registration effected under Section 3.1 shall relieve
the Corporation of its obligation to effect any registration upon request under Section 2.1 or Section 2.2 hereof,
and no registration effected pursuant to Section 3.1 shall be deemed to have been effected pursuant to Section 2.1
or Section 2.2 hereof. The Piggyback Notice and the contents thereof shall be kept confidential until the public filing of the
registration statement.
(b)
If a Stockholder does not deliver a written request for inclusion within the period specified in Section 3.2(a) or if a Stockholder
has given written notice (including by e-mail) that Piggyback Notices should not be given to such Stockholder, such Stockholder shall
be deemed to have irrevocably waived any and all rights under this Article III with respect to such registration (but not with
respect to future registrations in accordance with this Article III). For the avoidance of doubt, no Piggyback Registration shall
count towards the number of Demand Registrations that a Stockholder is entitled to make pursuant to Section 2.1 or underwritten
Shelf Takedowns that a Stockholder is entitled to make pursuant to Section 2.2.
Section
3.3 Cutback. If, in connection with a Piggyback Registration, any managing underwriter (or, if such Piggyback Registration is
not an Underwritten Offering, a nationally recognized independent investment bank selected by the Corporation and reasonably acceptable
to the Stockholders holding a majority of the Registrable Securities included in such Piggyback Registration, and whose fees and expenses
shall be borne solely by the Corporation) advises the Corporation in writing that, in its opinion, the inclusion of all the Common Stock,
or securities convertible into, or exchangeable or exercisable for, Common Stock sought to be included in such Piggyback Registration
by (i) the Corporation, (ii) the Piggyback Sellers that request to participate in such registration or offering pursuant to
their piggyback registration rights and (iii) any other proposed sellers of Common Stock, or securities convertible into, or exchangeable
or exercisable for, Common Stock (such Persons being “Other Proposed Sellers”), as the case may be, would adversely
affect the marketability of the Common Stock sought to be sold pursuant thereto, then the Corporation shall include in the registration
statement, or dispose in such offering, applicable to such Piggyback Registration only such Common Stock as the Corporation is so advised
by such underwriter can be sold without such an adverse effect, as follows and in the following order of priority:
13
(a)
if the Piggyback Registration relates to an offering for the Corporation’s own account, then (A) first, such number
of Common Stock to be sold by the Corporation for its own account, (B) second, Registrable Securities requested to be included
in such Piggyback Registration by any Piggyback Sellers, pro rata among such Piggyback Sellers based upon the number of Common
Stock, or securities convertible into, or exchangeable or exercisable for, Common Stock sought to be registered or disposed by such holders
deemed to be owned by such Persons and (C) third, other Common Stock, or securities convertible into, or exchangeable or exercisable
for, Common Stock proposed to be sold by any Other Proposed Sellers.
(b)
if the Piggyback Registration relates to an offering other than for the Corporation’s own account, then (A) first, any Common
Stock proposed to be sold by any Other Proposed Sellers with a contractual right to include such Common Stock in such registration statement
prior to any Stockholder, (B) second, Registrable Securities requested to be included in such Piggyback Registration by any Piggyback
Sellers, pro rata among such Piggyback Sellers based upon the number of Common Stock sought to be registered or disposed by such
holders, and (C) third, the other Common Stock proposed to be sold by any Other Proposed Sellers or to be sold by the Corporation
as determined by the Corporation.
Section
3.4 Underwriting Agreement. In connection with any Underwritten Offering under this Article III, the Corporation shall
not be required to include the Registrable Securities of a Stockholder in the Underwritten Offering unless such Stockholder accepts the
terms of the underwriting as agreed upon between the Corporation and the underwriters selected by the Corporation in accordance with
the terms hereof; provided that if any Stockholder who has requested to participate in such Underwritten Offering reasonably and
in good faith disapproves of the terms of the related underwriting agreement, such Stockholder shall not be required to enter into such
underwriting agreement and shall withdraw from such Underwritten Offering by providing written notice to the Corporation and the underwriter(s)
no later than the earlier of (x) the time at which the public offering price and underwriters’ discount are determined with the
underwriter(s) and (y) the effective date of the applicable registration statement or Shelf Takedown, as applicable.
Section
3.5 Selection of Underwriters. If the Corporation intends to offer and sell Common Stock by means of an Underwritten Offering
(other than an offering pursuant to Section 2.1 or Section 2.2), the Corporation shall select
the managing underwriter or underwriters to administer such Underwritten Offering, which managing underwriter or underwriters shall be
firms of nationally recognized standing.
Section
3.6 Company Control. If, at any time after giving a Piggyback Notice and prior to the time the registration statement filed in
connection with such Piggyback Registration is declared effective, the Corporation shall determine, at its election, for any reason not
to register such equity securities, the Corporation may give written notice of such determination to each Stockholder promptly upon such
determination (but, in any event, within two (2) calendar days thereof) and thereupon shall be relieved of its obligation to register
any Registrable Securities in connection with such particular withdrawn or abandoned Piggyback Registration (but not from its obligation
to pay the Registration Expenses in connection therewith as provided herein); provided, that Stockholders may continue the registration
as a Demand Registration pursuant to the terms of Section 2.1.
14
Article
IV
REGISTRATION PROCEDURES
Section
4.1 Withdrawal Rights. Any Stockholder having notified or directed the Corporation to include any or all of its Registrable Securities
in a registration statement under the Securities Act shall have the right to withdraw any such notice or direction with respect to any
or all of the Registrable Securities designated by it for registration by giving written notice to such effect to the Corporation prior
to the effective date of such registration statement, and no such registration shall be counted for purposes of determining the number
of Demands to which any such Stockholder is entitled pursuant to Section 2.1(a). In the event of any such withdrawal, the Corporation
shall not include such Registrable Securities in the applicable registration and such Registrable Securities shall continue to be Registrable
Securities for all purposes of this Agreement. No such withdrawal shall affect the obligations of the Corporation with respect to the
Registrable Securities not so withdrawn; provided, however, that in the case of a Demand Registration, if such withdrawal
shall reduce the number of Registrable Securities sought to be included in such registration below the Registrable Amount, then the Corporation
shall as promptly as practicable give each Stockholder seeking to register Registrable Securities notice to such effect and, within ten
(10) calendar days following the receipt of such notice, such Stockholders still seeking registration shall, by written notice to the
Corporation, elect to register additional Registrable Securities to satisfy the Registrable Amount or elect that such registration statement
not be filed or, if theretofore filed, be withdrawn. During such ten (10)-calendar day period, the Corporation shall not file such registration
statement if not theretofore filed or, if such registration statement has been theretofore filed, the Corporation shall not seek, and
shall use commercially reasonable efforts to prevent, the effectiveness thereof. If a Stockholder withdraws its notification or direction
to the Corporation to include Registrable Securities in a registration statement in accordance with this Section 4.1 with respect
to a sufficient number of Common Stock so as to reduce the number of Registrable Securities requested to be included in such registration
statement below the Registrable Amount, such Stockholder shall be required to promptly reimburse the Corporation for reasonable and documented
out of pocket expenses incurred by the Corporation in connection with preparing for the registration of such Registrable Securities.
Section
4.2 Holdback Agreements. In the case of an Underwritten Offering with respect to any Demand Registration or any Piggyback Registration,
each Stockholder (other than any Investor Stockholder not participating in such Underwritten Offering) agrees not to effect any public
sale or distribution (including sales pursuant to Rule 144) of equity securities of the Corporation, or any securities convertible into
or exchangeable or exercisable for such equity securities, during the period commencing on the date on which the Corporation gives notice
to the Stockholders that a preliminary prospectus has been circulated for such Underwritten Offering or the “pricing” of
such offering and continuing to the date that is the lesser of (x) sixty (60) days following the date of the final prospectus and (y)
such shorter period as agreed by the managing underwriters. Each person subject to the restrictions of the preceding sentence shall receive
the benefit of any shorter “lock-up” period or permitted exceptions agreed to by the managing underwriter or underwriters
for any Underwritten Offering and the terms of such lock-up agreements shall govern such person in lieu of the preceding sentence; provided
that in no event shall the applicable Stockholders be obligated to enter into such lock-up that are any more restrictive than such agreements
agreed to by the Corporation, its directors and executive officers or the other stockholders of the Corporation participating in such
offering; provided, further, that the Corporation, its directors, executive officers or other stockholders shall not be
released from any holdback agreement unless the Stockholders are similarly released; and provided, further, that any lock-up
shall contain customary exceptions.
15
Section
4.3 Registration Procedures.
(a)
In connection with the registration of any Registrable Securities under the Securities Act pursuant to Article II and Article
III, the Corporation shall as expeditiously as reasonably possible:
(i)
prepare and file with the SEC a registration statement to effect such registration and thereafter use commercially reasonable efforts
to cause such registration statement to become and remain effective pursuant to the terms of this Agreement and cause such registration
statement to contain a “Plan of Distribution” that permits the distribution of securities pursuant to all legal means;
provided, however, that the Corporation may discontinue any registration of its securities which are not Registrable Securities
at any time prior to the effective date of the registration statement relating thereto; provided, further that no
less than five (5) Business Days before filing such registration statement, prospectus or any amendments thereto, the Corporation will
furnish to the counsel selected by the Stockholders which are including Registrable Securities in such registration copies of all such
documents proposed to be filed, which documents will be subject to the review, comment and approval of such counsel prior to filing,
and such review to be conducted with reasonable promptness;
(ii)
prepare and file with the SEC such amendments, post-effective amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such registration statement until the earlier of such time
as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof
set forth in such registration statement (but not in any event before the expiration of any longer period required under the Securities
Act or, if such registration statement relates to an Underwritten Offering, such longer period as in the opinion of counsel for the underwriters
for such Underwritten Offering that a prospectus is required by law to be delivered in connection with sale of Registrable Securities
by an underwriter or dealer);
(iii)
furnish to each Selling Stockholder and each underwriter, if any, of the securities being sold by such Selling Stockholder such number
of conformed copies of such registration statement and of each amendment and supplement thereto (in each case including all exhibits),
such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and any summary
prospectus) and each free writing prospectus (as defined in Rule 405 of the Securities Act) (a “Free Writing Prospectus”)
utilized in connection therewith and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements
of the Securities Act, and such other documents as such Selling Stockholder and underwriter, if any, may reasonably request in order
to facilitate the public sale or other disposition of the Registrable Securities owned by such Selling Stockholder;
16
(iv)
use commercially reasonable efforts to register or qualify such Registrable Securities covered by such registration statement under such
other securities laws or blue sky laws of such jurisdictions as any Selling Stockholder and any underwriter of the securities being sold
by such Selling Stockholder shall reasonably request, and take any other action which may be reasonably necessary or advisable to enable
such Selling Stockholder and underwriter to consummate the disposition in such jurisdictions of the Registrable Securities owned by such
Selling Stockholder, except that the Corporation shall not for any such purpose be required to (A) qualify generally to do business
as a foreign corporation in any jurisdiction wherein it would not but for the requirements of this clause (iv) be obligated to be so
qualified, (B) subject itself to taxation in any such jurisdiction where it is not then so subject or (C) file a general consent
to service of process in any such jurisdiction where it is not then so subject;
(v)
use commercially reasonable efforts to cause such Registrable Securities to be listed on each securities exchange on which similar securities
issued by the Corporation are then listed and, if no such securities are so listed, use commercially reasonable efforts to cause such
Registrable Securities to be listed on the National Securities Exchange on which the Common Stock is listed;
(vi)
use commercially reasonable efforts to cause such Registrable Securities covered by such registration statement to be registered with
or approved by such other Governmental Entities as may be necessary to enable each Selling Stockholder thereof to consummate the disposition
of such Registrable Securities;
(vii)
in connection with an Underwritten Offering, obtain for each Selling Stockholder and underwriter:
(A)
an opinion of counsel for the Corporation, in customary form and covering the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such Selling Stockholder and underwriters, and
(B)
a “comfort” letter (or, in the case of any such Person which does not satisfy the conditions for receipt of a “comfort”
letter specified in Statement on Auditing Standards No. 72, an “agreed upon procedures” letter) signed by the independent
registered public accountants who have certified the Corporation’s financial statements included in such registration statement
and additional comfort letters from the independent registered public accounting firm for any company acquired by the Corporation whose
financial statements are included or incorporated by reference in the registration statement) in customary form and covering such matters
as are customarily covered by comfort letters as such underwriter and such Selling Stockholders may reasonably request; provided,
however, that if the Corporation fails to obtain such legal opinion or comfort letter hereunder and the relevant offering is abandoned,
then such offering will not count as a Demand Registration or Shelf Takedown for purposes of determining when future Demand Registrations
or Shelf Takedowns may be requested by Stockholders hereunder;
17
(viii)
promptly make available for inspection by any Selling Stockholder, any underwriter participating in any disposition pursuant to any registration
statement, and any attorney, accountant or other agent or representative retained by any such Selling Stockholder or underwriter (collectively,
the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Corporation
(collectively, the “Records”), as shall be reasonably necessary to enable them to exercise their due diligence responsibility
in connection with such registration statement, and cause the Corporation’s officers, directors and employees to supply all information
requested by any such Inspector in connection with such registration statement; provided, however, that, unless the
disclosure of such Records is necessary to avoid or correct a misstatement or omission in the registration statement or the release of
such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, the Corporation shall not be required
to provide any information under this subparagraph (viii) if (i) the Corporation reasonably believes, based on the opinion of counsel
for the Corporation, that to do so would cause the Corporation to forfeit an attorney-client privilege that was applicable to such information
(provided that the Corporation will use commercially reasonable efforts to provide any such information with redactions or other customary
limitations to the extent feasible to do so in a manner that would avoid the effect set forth in this clause (i)) or (ii) if either
(A) the Corporation has requested and been granted from the SEC confidential treatment of such information contained in any filing
with the SEC or documents provided supplementally or otherwise or (B) the Corporation reasonably determines that such Records are
confidential and so notifies the Inspectors in writing unless prior to furnishing any such information with respect to (i) or (ii) such
Selling Stockholder requesting such information agrees, and causes each of its Inspectors, to abide by customary confidentiality obligations
on terms reasonably acceptable to the Corporation; and provided, further, that each Selling Stockholder agrees that
it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Corporation
and allow the Corporation, at its expense, to undertake appropriate action and to prevent disclosure of the Records deemed confidential;
(ix)
promptly notify in writing each Selling Stockholder and the underwriters, if any, of the following events:
(A)
the filing of the registration statement, the prospectus or any prospectus supplement related thereto or post-effective amendment to
the registration statement or any Free Writing Prospectus utilized in connection therewith, and, with respect to the registration statement
or any post-effective amendment thereto, when the same has become effective;
(B)
any request by the SEC or any other Governmental Entity for amendments or supplements to the registration statement or the prospectus
or for additional information;
18
(C)
the issuance by the SEC or any other Governmental Entity of any stop order suspending the effectiveness of the registration statement
or of the suspension by any state securities commission of the qualification of the Registrable Securities for offering or sale in any
jurisdiction, or the initiation of any proceedings by any Person for the foregoing purposes; and
(D)
the receipt by the Corporation of any notification with respect to the suspension of the qualification of any Registrable Securities
for sale under the securities or blue sky laws of any jurisdiction or the initiation or threat of any proceeding for such purpose;
(x)
promptly notify each Selling Stockholder, at any time when a prospectus relating thereto is required to be delivered under the Securities
Act, upon discovery that, or upon the happening of any event as a result of which, the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and promptly prepare and furnish to such Selling Stockholder a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not misleading;
(xi)
use commercially reasonable efforts to prevent the issuance of and, if issued, obtain the withdrawal of any order suspending the effectiveness
of such registration statement or any suspension of the qualification of any Registrable Securities for sale under the securities or
blue sky laws of any jurisdiction;
(xii)
otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC, and make available to each
Selling Stockholder, as soon as reasonably practicable, an earning statement of the Corporation covering the period of at least twelve
(12) months, but not more than eighteen (18) months, beginning with the first day of the Corporation’s first full quarter after
the effective date of such registration statement, which earning statement shall satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder;
(xiii)
cooperate with the Selling Stockholders and the managing underwriter to facilitate the timely preparation and delivery of certificates
in a form eligible for deposit with The Depository Trust Company (which shall not be subject to any stop transfer order with any transfer
agent and will not bear any restrictive legends unless required under applicable law) representing securities sold under any registration
statement, and enable such securities to be in such denominations and registered in such names as the managing underwriter or such Selling
Stockholders may request and keep available and make available to the Corporation’s transfer agent prior to the effectiveness of
such registration statement a supply of such certificates, or, if requested by a Selling Stockholder or an underwriter, to facilitate
the delivery of such securities in book-entry form;
19
(xiv)
have appropriate officers of the Corporation prepare and make presentations at any “road shows” and before analysts and rating
agencies, as the case may be, and other information meetings organized by the underwriters, take other actions to obtain ratings for
any Registrable Securities (if they are eligible to be rated) and otherwise use its commercially reasonable efforts to cooperate as requested
by the Selling Stockholders and the underwriters in the offering, marketing or selling of the Registrable Securities; provided,
that such presentations, meetings, actions and efforts do not cause unreasonable disruption to the management of the Corporation’s
business;
(xv)
with respect to each Free Writing Prospectus or other materials to be included in the Disclosure Package, ensure that no Registrable
Securities be sold “by means of” (as defined in Rule 159A(b) promulgated under the Securities Act) such Free Writing Prospectus
or other materials without the prior written consent of the Stockholders holding the Registrable Securities covered by such registration
statement, which Free Writing Prospectuses or other materials shall be subject to the prior reasonable review of the Selling Stockholders
and their counsel;
(xvi)
(A) as expeditiously as possible and within the deadlines specified by the Securities Act, use commercially reasonable efforts to make
all required filings of all prospectuses and Free Writing Prospectuses with the SEC and (B) within the deadlines specified by the Exchange
Act, use commercially reasonable efforts to make all filings of periodic and current reports and other materials required by the Exchange
Act;
(xvii)
as expeditiously as possible and within the deadlines specified by the Securities Act, make all required filing fee payments in respect
of any registration statement or prospectus used under this Agreement (and any offering covered thereby);
(xviii)
as expeditiously as possible keep the Selling Stockholders and their counsel advised as to the initiation and progress of any registration
hereunder;
(xix)
use commercially reasonable efforts to cooperate with each Selling Stockholder and each underwriter participating in the disposition
of such Registrable Securities and their respective counsel in connection with any filings required to be made with the Financial Industry
Regulatory Authority (“FINRA”);
(xx)
furnish the Selling Stockholders, their counsel and the underwriters, as expeditiously as possible, copies of all correspondence with
or from the SEC, the FINRA, any stock exchange or other self-regulatory organization relating to the applicable registration statement
or the transactions contemplated thereby and, a reasonable time prior to furnishing or filing any such correspondence to the SEC, the
FINRA, stock exchange or self-regulatory organization, furnish drafts of such correspondence to the Selling Stockholders, their counsel,
and the underwriters for their reasonable review and comment, such review and comment to be conducted promptly;
(xxi)
not later than the effective date of the applicable registration statement, provide a CUSIP number for all Registrable Securities; and
20
(xxii)
to take all other reasonable steps necessary or advisable to effect the registration and disposition of the Registrable Securities contemplated
hereby.
(b)
The Corporation may require each Selling Stockholder and each underwriter, if any, to furnish the Corporation in writing such information
regarding each Selling Stockholder or underwriter and the distribution of such Registrable Securities as the Corporation may from time
to time reasonably request and as shall be reasonably required to complete or amend the information required by such registration statement.
(c)
Without limiting the terms of Section 2.1(a), in the event that the offering of Registrable Securities is to be made by or through
an underwriter, the Corporation, if requested by the underwriter, shall enter into an underwriting agreement with a managing underwriter
or underwriters in connection with such offering containing representations, warranties, indemnities and agreements customarily included
(but not inconsistent with the covenants and agreements of the Corporation contained herein) by an issuer of common stock in underwriting
agreements with respect to offerings of common stock for the account of, or on behalf of, such issuers. In the event an Underwritten
Offering is not consummated because any condition to the obligations under any related written agreement with such underwriters is not
met or waived, and such failure to be met or waived is not attributable to the fault of any Stockholder, such Underwritten Offering will
not count for purposes of determining when future Demand Registrations of Shelf Takedowns may be requested by such Stockholder hereunder.
(d)
Each Selling Stockholder agrees that upon receipt of any notice from the Corporation of the happening of any event of the kind described
in Sections 4.3(a)(ix)(C), 4.3(a)(ix)(D)), or 4.3(a)(x), such Selling Stockholder shall forthwith discontinue (in
the case of Section 4.3(a)(ix)(D), only in the relevant jurisdiction set forth in such notice) such Selling Stockholder’s
disposition of Registrable Securities pursuant to the applicable registration statement and prospectus relating thereto until such Selling
Stockholder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 4.3(a)(x) and, if
so directed by the Corporation, deliver to the Corporation, at the Corporation’s expense, all copies, other than permanent file
copies, then in such Selling Stockholder’s possession of the prospectus current at the time of receipt of such notice relating
to such Registrable Securities.
Section
4.4 Registration Expenses. All expenses incident to the Corporation’s performance of, or compliance with, its obligations
under Article II of this Agreement including, without limitation, all registration and filing fees, all fees and expenses of compliance
with securities and “blue sky” laws, all fees and expenses associated with filings required to be made with the FINRA (including,
if applicable, reasonable and customary fees and expenses of any “qualified independent underwriter” as such term is defined
in Rule 5121 of the FINRA), all fees and expenses of compliance with securities and “blue sky” laws, all printing (including,
without limitation, expenses of printing certificates for the Registrable Securities in a form eligible for deposit with the Depository
Trust Company and of printing prospectuses if the printing of prospectuses is requested by a holder of Registrable Securities) and copying
expenses, all messenger and delivery expenses, all fees and expenses of the Corporation’s independent certified public accountants
and counsel (including with respect to “comfort” letters and opinions) and reasonable and customary fees and expenses of
one firm of counsel for the Investor Stockholders if they are Selling Stockholders and one firm of counsel for any other Selling Stockholders
(which counsel for such other Selling Stockholders shall be chosen by the holders of a majority of the Registrable Securities held by
such other Selling Stockholders included in the applicable offering or registration) (collectively, the “Registration Expenses”)
shall be borne by the Corporation, regardless of whether a registration is effected. The Corporation will pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties, the expense of any
annual audit and the expense of any liability insurance) and the expenses and fees for listing the securities to be registered on each
securities exchange and included in each established over-the-counter market on which similar securities issued by the Corporation are
then listed or traded. Each Selling Stockholder shall pay its portion of all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale of such Selling Stockholder’s Registrable Securities pursuant to any registration.
21
Section
4.5 Request for Information; Certain Rights.
(a)
Request for Information. Reasonably before the expected filing date of each registration statement pursuant to this Agreement,
the Corporation shall notify each Stockholder who has timely provided the requisite notice hereunder entitling the Stockholder to register
Registrable Securities in such registration statement of the information, documents and instruments from such Stockholder that the Corporation
or any underwriter reasonably requests in connection with such registration statement, including, but not limited to a questionnaire,
custody agreement, power of attorney, lock-up letter and underwriting agreement (the “Requested Information”). Such
Stockholder shall promptly return the Requested Information to the Corporation. If the Corporation has not received the Requested Information
(or a written assurance from such Stockholder that the Requested Information that cannot practicably be provided prior to filing of the
registration statement will be provided in a timely fashion) from such Stockholder within a reasonable period of time (as determined
by the Corporation in good faith) prior to the filing of the applicable Registration Statement, the Corporation may file such Registration
Statement without including Registrable Securities of such Stockholder. The failure to so include in any registration statement the Registrable
Securities of a Stockholder (with regard to that registration statement) shall not in and of itself result in any liability on the part
of the Corporation to such Stockholder.
(b)
Registrable Securities Transactions. If requested by any Stockholder in connection with any transaction involving any Registrable
Securities (including any sale or other transfer of such securities without registration under the Securities Act, any margin loan with
respect to such securities and any pledge of such securities), the Corporation agrees to provide such Stockholder with customary assistance
to facilitate such transaction or similar transaction, including, without limitation, (i) such action as such Stockholder may reasonably
request from time to time to enable such Stockholder to sell Registrable Securities without registration under the Securities Act and
(ii) entering into an “issuer’s agreement” in connection with any margin loan with respect to such securities
in customary form. Without limiting the foregoing, the Corporation acknowledges and agrees that a Stockholder may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Registrable
Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) of Regulation D under the
Securities Act and, if required under the terms of such arrangement, such Stockholder may transfer pledged or secured Registrable Securities
to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Corporation and no legal opinion
of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required
of such pledge. At the appropriate Stockholder’s expense, the Corporation will execute and deliver such reasonable documentation
as a pledgee or secured party of Registrable Securities may reasonably request in connection with a pledge or transfer of the Registrable
Securities, including, if the Registrable Securities are subject to registration pursuant to this Agreement, the preparation and filing
of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act
to appropriately amend the list of selling stockholders thereunder.
22
(c)
In-Kind Distributions. If any Stockholder (and/or any of their Affiliates) seeks to effectuate an in-kind distribution of all
or part of their Registrable Securities to their respective direct or indirect equityholders, the Corporation
will, subject to any applicable lock-ups, work with the foregoing Persons to facilitate such in-kind distribution in the manner
requested and consistent with the Corporation’s obligations under the Securities Act.
(d)
No Grant of Future Registration Rights. Except pursuant to the proviso to Section 6.10 the Corporation shall not grant
any shelf, demand, piggyback or incidental registration rights that are senior to or otherwise inconsistent with the rights granted
to the Stockholders hereunder to any other Person without the prior written consent of the Stockholders holding a majority of the Registrable
Securities then outstanding.
Section
4.6 Exchange Act Compliance. So long as the Corporation (a) has registered a class of securities under Section 12 or Section
15 of the Exchange Act and (b) files reports under Section 13 of the Exchange Act, then the Corporation shall take all actions reasonably
necessary to enable Stockholders to sell Registrable Securities without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144 under the Securities Act, as such rule may be amended from time to time or any similar rules or regulations
adopted by the SEC, including, without limiting the generality of the foregoing, (i) making and keeping public information available,
as those terms are understood and defined in Rule 144 promulgated under the Securities Act, (ii) filing with the SEC in a timely manner
all reports and other documents required of the Corporation under the Exchange Act, (iii) at the request of any Stockholder if such Stockholder
proposes to sell securities in compliance with Rule 144, forthwith furnish to such Stockholder, as applicable, a written statement of
compliance with the reporting requirements of the SEC as set forth in Rule 144 and make available to such Stockholder such information
as will enable the Stockholder to make sales pursuant to Rule 144 and (iv) for securities that will be sold pursuant to Rule 144, reasonably
cooperating with the Stockholders to cause the transfer agent to remove any restrictive legend on certificates evidencing Registrable
Securities. If a legend removal request is made, the Corporation will, no later than one (1) Business Day following the delivery of a
legended certificate representing such Securities (or a request for legend removal, in the case of Securities issued in book-entry form),
deliver or cause to be delivered to such Stockholder a certificate representing such Securities that is free from all restrictive legends
or an equivalent book-entry position, as requested by such Stockholder.
23
Section
4.7 Participating Stockholder. By written notice delivered to the Corporation, any Stockholder (an “Opting-Out
Stockholder”) may elect to waive its right to participate in Underwritten Offerings and to be a Piggyback Seller and participate
in a Piggyback Registration (an “Opt-Out”), until such time as the written notice is rescinded in writing. During
such time as an Opt-Out is in effect: (a) the Opting-Out Stockholder shall not receive notices of any proposed Demand Registration, Shelf
Takedown or Piggyback Registration and (b) shall not be entitled to participate in any such registration or offering.
Article
V
INDEMNIFICATION
Section
5.1 By the Corporation. The Corporation agrees to indemnify, defend and hold harmless, to the fullest extent permitted by law,
each Stockholder and each of their respective Affiliates and their respective officers, directors, employees, managers, partners, advisors,
agents and representatives and each Person who controls (within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act) such Stockholder or such other Person indemnified under this Section 5.1 from and against all losses, claims, damages,
liabilities and expenses, whether joint or several (including reasonable expenses of investigation and reasonable attorneys’ fees
and expenses) (collectively, the “Losses”), to which they are or any of them may become subject under the Securities
Act, the Exchange Act or other U.S. federal or state statutory law (including any applicable “blue sky” laws), rule or regulation,
at common law or otherwise, insofar as such Losses arise out of, are based upon, are caused by or relate to any untrue statement (or
alleged untrue statement) of a material fact contained or incorporated in any registration statement, prospectus or preliminary prospectus,
offering circular, offering memorandum or Disclosure Package (including a Free Writing Prospectus) or any amendment or supplement thereto
or any filing or document incidental to such registration or qualification of the securities as required by this Agreement, or any omission
(or alleged omission) of a material fact required to be stated therein or necessary to make the statements therein not misleading, except
that no Person indemnified shall be indemnified hereunder insofar as the same are made in conformity with and in reliance on information
furnished in writing to the Corporation by such Person concerning such Person expressly for use therein. Such indemnification obligation
shall be in addition to any liability that the Corporation may otherwise have to any such indemnified person. In connection with an Underwritten
Offering and without limiting any of the Corporation’s other obligations under this Agreement, the Corporation shall also indemnify
such underwriters, their officers, directors, employees and agents and each Person who controls (within the meaning of Section 15 of
the Securities Act and Section 20 of the Exchange Act) such underwriters or such other Person indemnified under this Section 5.1
to the same extent as provided above with respect to the indemnification (and exceptions thereto) of Selling Stockholders. Reimbursements
payable pursuant to the indemnification contemplated by this Section 5.1 will be made by periodic payments during the course of
any investigation or defense, as and when bills are received or expenses incurred.
Section
5.2 By the Selling Stockholders. In connection with any registration statement in which a Stockholder is participating, each such
Selling Stockholder will furnish to the Corporation in writing information regarding such Selling Stockholder’s ownership of Registrable
Securities and its intended method of distribution thereof and, to the extent permitted by law, shall, severally and not jointly, indemnify
the Corporation, its Affiliates and their respective directors, officers, employees and agents and each Person who controls (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) the Corporation or such other Person indemnified under
this Section 5.2 against all Losses to which they are or any of them may become subject under the Securities Act, the Exchange
Act or other U.S. federal or state statutory law (including any applicable “blue sky” laws), rule or regulation, at common
law or otherwise, insofar as such Losses arise out of, are based upon, are caused by or relate to any untrue statement of material fact
contained or incorporated in any registration statement, prospectus or preliminary prospectus, offering circular, offering memorandum
or Disclosure Package (including a Free Writing Prospectus) or any amendment or supplement thereto or any filing or document incidental
to such registration or qualification of the securities as required by this Agreement, or any omission of a material fact required to
be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that such untrue statement
or omission is made in conformity with and in reliance on information furnished in writing by such Person concerning such Person expressly
for use therein; provided, however, that each Selling Stockholder’s obligation to indemnify the Corporation
hereunder shall, to the extent more than one Person is subject to the same indemnification obligation, be apportioned between each Person
based upon the net amount received by each Person from the sale of such Registrable Securities, as compared to the total net amount received
by all of the indemnifying Persons pursuant to such registration statement. Notwithstanding the foregoing, no Person shall be liable
to the Corporation and the underwriters for aggregate amounts in excess of the lesser of (i) such apportionment and (ii) the
net amount received by such holder (after deducting any discounts and commissions) from the disposition of Registrable Securities in
the offering giving rise to such liability.
24
Section
5.3 Notice. Any Person entitled to indemnification hereunder shall give prompt (but in any event within 30 days after such Person
has actual knowledge of the facts constituting the basis for indemnification) written notice to the indemnifying party of any claim with
respect to which it seeks indemnification; provided, however, the failure to give such notice shall not release the
indemnifying party from its obligation, except to the extent that the indemnifying party has been materially prejudiced by such failure
to provide such notice on a timely basis.
Section
5.4 Defense of Actions. In any case in which any claim, action or proceeding (including any governmental investigation) is brought
against any Person in respect of which indemnification may be sought pursuant to this Article V (an “indemnified party”),
and it notifies the Person against whom such indemnity may be sought (an “indemnifying party”) of the commencement
thereof (provided that that the failure or delay to give such notice shall not relieve the indemnifying party of its obligations pursuant
to this Agreement except to the extent that it shall be determined by a court of competent jurisdiction that such indemnifying party
has been materially prejudiced by such failure or delay), the indemnifying party will be entitled to participate therein, and, to the
extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party. After notice from the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnified party shall have the right, but not the obligation, to participate in any such defense and to retain
its own counsel, but the indemnifying party will not (so long as it shall continue to have the right to defend, contest, litigate and
settle the matter in question in accordance with this paragraph) be liable to such indemnified party hereunder for any legal or other
expense subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation,
supervision and monitoring (unless (i) such indemnified party reasonably objects to such assumption on the grounds that there may
be defenses available to it which are different from or in addition to the defenses available to such indemnifying party, (ii) counsel
to the indemnifying party has informed the indemnifying party that the joint representation of the indemnifying party and one or more
indemnified parties could be inappropriate under applicable standards of professional conduct, or (iii) the indemnifying party shall
have failed within a reasonable period of time to assume such defense and the indemnified party is or is reasonably likely to be prejudiced
by such delay, in any such event the indemnified party shall be promptly reimbursed by the indemnifying party for the expenses incurred
in connection with retaining separate legal counsel). An indemnifying party shall not be liable for any settlement of an action or claim
effected without its consent (such consent not to be unreasonably withheld, conditioned or delayed). The indemnifying party shall lose
its right to defend, contest, litigate and settle a matter if it shall fail to diligently contest such matter (except to the extent settled
in accordance with the next following sentence). No matter shall be settled by an indemnifying party without the consent of the indemnified
party (which consent shall not be unreasonably withheld, conditioned or delayed, it being understood that the indemnified party shall
not be deemed to be unreasonable in withholding its consent if the proposed settlement imposes any obligation on the indemnified party).
25
Section
5.5 Indemnification Priority.
The Corporation hereby acknowledges and agrees that any of the Persons entitled to indemnification and contribution pursuant to this
Section 5 (each, a “Corporation Indemnitee” and collectively, the “Corporation Indemnitees”)
may have certain rights to indemnification, advancement of expenses and/or insurance provided by other sources. The Corporation hereby
acknowledges and agrees (i) that it is the indemnitor of first resort (i.e., its obligations to a Corporation Indemnitee are primary
and any obligation of such other sources to advance expenses or to provide indemnification for the same expenses or liabilities incurred
by such Corporation Indemnitee are secondary) and (ii) that it shall be required to advance the full amount of expenses incurred by a
Corporation Indemnitee and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement
to the extent legally permitted and as required by the terms of this Agreement without regard to any rights a Corporation Indemnitee
may have against such other sources. The Corporation further agrees that no advancement or payment by such other sources on behalf of
a Corporation Indemnitee with respect to any claim for which such Corporation Indemnitee has sought indemnification, advancement of expenses
or insurance from the Corporation shall affect the foregoing, and that such other sources shall have a right of contribution and/or be
subrogated to the extent of such advancement or payment to all of the rights of recovery of such Corporation Indemnitee against the Corporation.
Section
5.6 Survival. The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified Person and will survive the transfer of the Registrable Securities and the termination of this
Agreement.
Section
5.7 Contribution. If recovery is not available or is insufficient under the foregoing indemnification provisions for any reason
or reasons other than as specified therein, then the indemnifying party shall contribute to the amount paid or payable by such indemnified
party with respect to any Losses (i) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and
indemnified party in connection with the actions that resulted in such Losses, as well as any other relevant equitable considerations,
or (ii) if the allocation provided by clause (i) is not permitted by applicable Law, in such proportion as is appropriate to reflect
not only the relative fault referred to in clause (i) but also the relative benefit of the Corporation, on the one hand, and such Stockholder,
on the other, in connection with the statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations.
The relative fault of a Person will be determined by reference to, among other things, the Persons’ relative knowledge and access
to information concerning the matter with respect to which the claim was asserted, the opportunity to correct and prevent any statement
or omission, and other equitable considerations appropriate under the circumstances. It is hereby agreed that it would not necessarily
be equitable if the amount of such contribution were determined by pro rata or per capita allocation. Each Selling Stockholder’s
obligation to contribute pursuant to this Section 5.7 shall, to the extent more than one Person is subject to the same contribution
obligation, be apportioned between each Person based upon the net amount received by each Person from the sale of such Registrable Securities,
as compared to the total net amount received by all of the indemnifying Persons pursuant to such registration statement. No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not found guilty of such fraudulent misrepresentation. Notwithstanding the foregoing, no Selling Stockholder or transferee
thereof shall be required to make a contribution in excess of the net amount received by such holder from its sale of Registrable Securities
in connection with the offering that gave rise to the contribution obligation.
26
Article
VI
MISCELLANEOUS
Section
6.1 Notices. All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient
if contained in a written instrument delivered in person or sent by electronic mail (delivery receipt requested) or nationally recognized
overnight courier, addressed to such party at the address or electronic mail address set forth below or such other address or electronic
mail address as may hereafter be designated in writing by such party to the other parties:
(a)
if
to the Corporation, to:
Healthy
Choice Wellness Corp.
3800
North 28th Way
Hollywood,
FL 33020
Attention:
John Ollet
E-mail:
[***]
with
a copy to:
Sidley
Austin LLP
1999
Avenue of the Stars, 17th Floor
Los
Angeles, CA 90067
Attention:
Natalie Karam; Nick DeAngelis
Email:
[***]
(b)
if
to the Stockholders, to their respective addresses set forth on Schedule I
Section
6.2 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application
thereof to any person or entity or any circumstance, is found to be invalid or unenforceable in any jurisdiction, (a) a suitable
and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose
of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other
Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
Section
6.3 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all
of which shall, taken together, be considered one and the same agreement, it being understood that both parties need not sign the same
counterpart. Facsimile, scanned or electronic counterpart signatures to this Agreement shall be binding and enforceable.
Section
6.4 Entire Agreement; No Third Party Beneficiaries. This Agreement (a) constitutes the entire agreement and supersedes
all other prior agreements, both written and oral, among the parties with respect to the subject matter hereof and (b) is not intended
to confer upon any Person, other than the parties hereto (and their permitted successors and assigns), any rights or remedies hereunder,
except as provided in Article V, in each case which Persons are intended to benefit from, and to be entitled to enforce, Article
V, as applicable.
Section
6.5 Further Assurances. Each party hereto shall do and perform or cause to be done and performed all such further acts and things
and shall execute and deliver all such other agreements, certificates, instruments, and documents as any other party hereto reasonably
may request in order to carry out the provisions of this Agreement and the consummation of the transactions contemplated hereby.
Section
6.6 Expenses. Except as provided herein, in the Company’s Second Amended and Restated LLC Agreement as in effect on the
date hereof or in the Merger Agreement, each party hereto shall be responsible for all fees and expenses incurred by such party in the
negotiation, preparation and implementation of this Agreement and the transactions contemplated hereby.
27
Section
6.7 Governing Law; Equitable Remedies. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF). The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms
or was otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions and other
equitable remedies to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in the Selected
Courts (as defined below), this being in addition to any other remedy to which they are entitled at law or in equity. Any requirements
for the securing or posting of any bond with respect to such remedy are hereby waived by each of the parties hereto. Each party further
agrees that, in the event of any action for an injunction or other equitable remedy in respect of such breach or enforcement of specific
performance, it will not assert the defense that a remedy at law would be adequate.
Section
6.8 Consent To Jurisdiction. With respect to any suit, action or proceeding (“Proceeding”) arising out of or
relating to this Agreement or any transaction contemplated hereby each of the parties hereto hereby irrevocably (a) submits to the
exclusive jurisdiction of the state courts or the federal courts of the United States of America located in the State of New York (the
“Selected Courts”) and waives any objection to venue being laid in the Selected Courts whether based on the grounds
of forum non conveniens or otherwise and hereby agrees not to commence any such Proceeding other than before one of the Selected
Courts; provided, however, that a party may commence any Proceeding in a court other than a Selected Court solely
for the purpose of enforcing an order or judgment issued by one of the Selected Courts; (b) consents to service of process
in any Proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, or by recognized international express
carrier or delivery service, to the Corporation or to the applicable party hereto at their respective addresses referred to in Section
6.1; provided, however, that nothing herein shall affect the right of any party hereto to serve process in any
other manner permitted by law; and (c) TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, WAIVES, AND
COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN
WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND AGREES THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY
COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL
BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS WILL INSTEAD BE
TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
28
Section
6.9 Amendments; Waivers.
(a)
This Agreement may be amended, waived or supplemented with the written consent of the Corporation, the Investor Stockholders and each
of Hans Thomas, Harmol Samra and Alex Monje, or if the Investor Stockholders are not parties hereto, the holders of a majority in interest
of the Registrable Securities then outstanding.
(b)
No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
Section
6.10 Assignment. Neither this Agreement nor any of the rights or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties; provided, however, that each Investor Stockholder and each
of Hans Thomas, Harmol Samra and Alex Monje may, without the consent of the other parties, assign any of its or his rights and obligations
hereunder as Stockholder and Investor Stockholder, as applicable, and not in any other capacity upon any direct Transfer of Registrable
Securities to an Affiliate, so long as such Affiliate, if not already a party to this Agreement, executes and delivers to the Corporation
a joinder in the form attached hereto as Exhibit A. Subject to the preceding sentence, this Agreement will be binding upon, inure
to the benefit of and be enforceable by the parties and their respective successors and assigns.
Section
6.11 Recapitalizations, Exchanges Affecting the Registrable Securities. The provisions of this Agreement shall apply, to the full
extent set forth herein, with respect to the Registrable Securities, to any and all shares of the Corporation or any successor or assign
of the Corporation (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for,
or in substitution of the Registrable Securities, by reason of a dividend of Common Stock, share subdivision or split, share issuance,
reverse share split, combination, recapitalization, reclassification, merger, consolidation or otherwise.
[Remainder
of page intentionally left blank]
29
IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered, all as of the date first set forth above.
CORPORATION:
HEALTHY
CHOICE WELLNESS CORP.
By:
/s/ John Ollet
Name:
John Ollet
Title:
Chief Financial Officer
[Signature Page to Registration Rights Agreement]
INVESTOR STOCKHOLDERS:
GRAHAM MACRO STRATEGIC LTD.
By:
/s/ Jason Slutsky
Name:
Jason Slutsky
Title:
COO and General Counsel, Graham Capital Management, L.P., as investment advisor
GRAHAM CREDIT OPPORTUNITIES LTD.
By:
/s/ Jason Slutsky
Name:
Jason Slutsky
Title:
COO and General Counsel, Graham Capital Management, L.P., as investment advisor
[Signature Page to Registration Rights Agreement]
10X MASTER LLC
/s/ Hans Thomas
By:
Hans Thomas
Title:
Authorized Signatory
BDS Infrastructure LLC
/s/ Harmol Samra
By:
Harmol Samra
Title:
Authorized Signatory
Biscayne
Ventures LLC
/s/ Alexander Monje
By:
Alexander Monje
Title:
Authorized Signatory
[Signature Page to Registration Rights Agreement]
EX-10.2
EX-10.2
Filename: ex10-2.htm · Sequence: 4
Exhibit
10.2
REGISTRATION
RIGHTS AGREEMENT
This
Registration Rights Agreement (this “Agreement”) is made and entered into as of September 17, 2026, between
Healthy Choice Wellness Corp., a Delaware corporation (“Parent”), and each of the holders of Shares (as defined below)
who are signatories hereto or who become party hereto pursuant to Section 6(f) (each such holder, a “Holder” and,
collectively, the “Holders”).
This
Agreement is made pursuant to the Agreement and Plan of Merger, dated as of May 27, 2026, by and among Parent, Healthy Choice Wellness
II Corp., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”), and Host Digital Infrastructure
LLC, a Delaware limited liability company (the “Company”) (as amended, restated, supplemented or otherwise modified
from time to time, the “Merger Agreement”).
Parent
and each Holder hereby agrees as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined in the Merger Agreement
shall have the meanings given such terms in the Merger Agreement. As used in this Agreement,
the following terms shall have the following meanings:
“Advice”
shall have the meaning set forth in Section 6(c).
“Common
Stock” means the Class A common stock of Parent, par value $0.001 per share.
“Effectiveness
Date” means, when Parent is notified by the Commission that one or more of the Registration Statements will not be reviewed
or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall be the fifth Trading
Day following the date on which Parent is so notified; provided, that if such Effectiveness Date falls on a day that is not a
Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.
“Effectiveness
Period” shall have the meaning set forth in Section 2(a).
“Filing
Date” means, with respect to the Initial Registration Statement required hereunder, the 30th calendar day following
the Closing Date. With respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 3(c),
“Filing Date” means the earliest practical date on which Parent is permitted by SEC Guidance to file such additional Registration
Statement related to the Registrable Securities.
“Holder”
or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.
“Indemnified
Party” shall have the meaning set forth in Section 5(c).
“Indemnifying
Party” shall have the meaning set forth in Section 5(c).
“Initial
Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.
“Losses”
shall have the meaning set forth in Section 5(a).
“Plan
of Distribution” shall have the meaning set forth in Section 2(a).
“Pre-Funded
Warrants” means, collectively, the pre-funded Common Stock purchase warrants issued to the Holders as Merger Consideration
pursuant to the Merger Agreement, which Pre-Funded Warrants shall be exercisable immediately and shall expire when exercised in full.
“Pre-Funded
Warrant Shares” means the shares of Common Stock issued or issuable upon exercise of the Pre-Funded Warrants.
“Prospectus”
means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the
Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to
the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference
in such Prospectus.
“Registrable
Securities” means, as of any date of determination, (a) the Shares and the Pre-Funded Warrant Shares, and (b) any securities
issued or then issuable upon any share split, dividend or other distribution, recapitalization or similar event with respect to the foregoing;
provided, however, that any such Registrable Securities shall cease to be Registrable Securities (and Parent shall not
be required to maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) for so long
as (a) a Registration Statement with respect to the sale of such Registrable Securities has been declared effective by the Commission
under the Securities Act and such Registrable Securities have been sold, transferred, exchanged, or disposed of by the Holder in accordance
with such effective Registration Statement, (b) such Registrable Securities have been previously sold in accordance with Rule 144, or
(c) such securities become eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant
to Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Transfer Agent and the
affected Holders and any restrictive legend is removed to permit the delivery of the securities via the facilities of DTC (assuming that
such securities and any securities issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such securities
were issued or are issuable, were at no time held by any Affiliate of Parent, as reasonably determined by Parent, upon the advice of
counsel to Parent).
“Registration
Statement” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional registration
statements contemplated by Section 2(c) or Section 3(c), including (in each case) the Prospectus, amendments and supplements to any such
registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in any such registration statement.
“Rule
415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.
“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.
2
“Selling
Stockholder Questionnaire” shall have the meaning set forth in Section 3(a).
“SEC
Guidance” means (i) any publicly available written or oral guidance of the Commission staff, or any comments, requirements
or requests of the Commission staff and (ii) the Securities Act.
“Shares”
means 68,592 shares of Common Stock issuable upon conversion of 3,313 shares of the Company’s Series A convertible
preferred stock.
2. Registration.
(a) On
or prior to each Filing Date, Parent shall prepare and file with the Commission a Registration
Statement covering the resale of all of the Registrable Securities that are not then registered
on an effective Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415 (or any successor or similar provision adopted by the Commission then in effect).
Each Registration Statement filed hereunder shall be on Form S-3 or such other appropriate
form of registration statement as is then available to effect a registration of Registrable
Securities and shall contain a Prospectus in such form as to permit the Holders to sell such
Registrable Securities pursuant to Rule 415 under the Securities Act (or any successor or
similar provision adopted by the SEC then in effect) beginning on the effective date for
such Registration Statement. Each Registration Statement shall contain substantially the
“Plan of Distribution” and “Selling Stockholder” sections
attached hereto as Annex A and Annex B, respectively; provided, however,
that no Holder shall be required to be named as an “underwriter” without such
Holder’s express prior written consent. Subject to the terms of this Agreement, Parent
shall use its best efforts to cause a Registration Statement filed under this Agreement (including,
without limitation, under Section 3(c)) to be declared effective under the Securities Act
as promptly as possible after the filing thereof, but in any event no later than the applicable
Effectiveness Date, and shall use its best efforts to keep such Registration Statement continuously
effective under the Securities Act, and to be supplemented and amended to the extent necessary
to ensure that such Registration Statement is available or, if not available, that another
Registration Statement is available, for the resale of all the Registrable Securities held
by the Holders until the date that all Registrable Securities covered by such Registration
Statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without
volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for
Parent to be in compliance with the current public information requirement under Rule 144,
as determined by the counsel to Parent pursuant to a written opinion letter to such effect,
addressed and acceptable to the Transfer Agent and the affected Holders and any restrictive
legend is removed to permit the delivery of the securities via the facilities of DTC (the
“Effectiveness Period”). Parent shall telephonically request effectiveness
of a Registration Statement as of 5:00 p.m. (New York City time) on a Trading Day. Parent
shall promptly notify the Holders via facsimile or by e-mail of the effectiveness of a Registration
Statement on the same Trading Day that Parent telephonically confirms effectiveness with
the Commission, which shall be the date requested for effectiveness of such Registration
Statement. Parent shall, by 9:30 a.m. (New York City time) on the Trading Day after the effective
date of such Registration Statement, file a final Prospectus with the Commission as required
by Rule 424. When effective, a Registration Statement filed pursuant to this Section 2(a)
(including the documents incorporated therein by reference) will comply as to form in all
material respects with all applicable requirements of the Securities Act and the Exchange
Act and will not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein (in the case
of any Prospectus or supplement thereto, in light of the circumstances under which they were
made) not misleading.
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(b) Notwithstanding
the registration obligations set forth in Section 2(a), if the Commission informs Parent
that all of the Registrable Securities cannot, as a result of the application of Rule 415,
be registered for resale as a secondary offering on a single registration statement, Parent
agrees to promptly inform each of the Holders thereof and use its commercially reasonable
efforts to file amendments to the Initial Registration Statement as required by the Commission,
covering the maximum number of Registrable Securities permitted to be registered by the Commission,
on Form S-3 or such other form available to register for resale the Registrable Securities
as a secondary offering.
(c) Notwithstanding
any other provision of this Agreement, if the Commission or any SEC Guidance sets forth a
limitation on the number of Registrable Securities permitted to be registered on a particular
Registration Statement as a secondary offering, unless otherwise directed in writing by a
Holder as to its Registrable Securities, the number of Registrable Securities to be registered
on such Registration Statement will be reduced as follows:
(i) First,
Parent shall reduce or eliminate any securities to be included other than Registrable Securities;
and
(ii) Second,
Parent shall reduce Registrable Securities represented by Shares, the Pre-Funded Warrants
and the Pre-Funded Warrant Shares (applied, in the case that some Shares, Pre-Funded Warrants
and/or Pre-Funded Warrant Shares may be registered, to the Holders on a pro rata basis based
on the total number of unregistered Shares, Pre-Funded Warrants and/or Pre-Funded Warrant
Shares held by such Holders).
In
the event of a cutback hereunder, Parent shall give the Holder at least five (5) Trading Days prior written notice along with the calculations
as to such Holder’s allotment. In the event Parent amends the Initial Registration Statement in accordance with the foregoing,
Parent will use its best efforts to file with the Commission, as promptly as allowed by Commission or SEC Guidance provided to Parent
or to registrants of securities in general, one or more registration statements on Form S-3 or such other form available to register
for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended.
(d) Notwithstanding
anything to the contrary contained herein, in no event shall Parent be permitted to name
any Holder or affiliate of a Holder as an Underwriter without the prior written consent of
such Holder.
(e) Notwithstanding
anything to the contrary contained herein, if due to the occurrence or existence of any pending
development or fact with respect to Parent that Parent believes may be material and that,
in the determination of Parent, makes it not in the best interest of Parent to file a Registration
Statement or Prospectus, and/or obtain the effectiveness of a Registration Statement, Parent
may delay the filing and/or effectiveness of a Registration Statement or Prospectus beyond
the Filing Date. Parent will use its best efforts to resolve such delay as promptly as is
practicable. Parent shall be entitled to exercise its right under this Section 2(e) to delay
for a period not to exceed 30 consecutive calendar days or for a total of 60 calendar days
(which need not be consecutive days) in any 12-month period; provided, that during the calendar
year 2026, any such tolling shall not exceed 14 days in the aggregate.
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3. Registration
Procedures. In connection with Parent’s registration obligations hereunder, Parent
shall:
(a) Not
less than three (3) Trading Days prior to the filing of each Registration Statement and not
less than one (1) Trading Day prior to the filing of any related Prospectus or any amendment
or supplement thereto (including any document that would be incorporated or deemed to be
incorporated therein by reference), Parent shall (i) furnish to each Holder copies of all
such documents proposed to be filed, which documents (other than those incorporated or deemed
to be incorporated by reference) will be subject to the review but not the express approval
of such Holders other than as set forth in the remainder of this subsection as to inquiries
and objections, and (ii) cause its officers and directors, counsel and independent registered
public accountants to respond to such inquiries as shall be necessary, in the reasonable
opinion of respective counsel to each Holder, to conduct a reasonable investigation within
the meaning of the Securities Act. Parent shall not file a Registration Statement or any
such Prospectus or any amendments or supplements thereto to which the Holders of a majority
of the Registrable Securities shall reasonably object in good faith, provided that, Parent
is notified of such objection in writing no later than three (3) Trading Days after the Holders
have been so furnished copies of a Registration Statement or one (1) Trading Day after the
Holders have been so furnished copies of any related Prospectus or amendments or supplements
thereto, which objection will toll any applicable deadline required by this Agreement. Each
Holder agrees to furnish to Parent a completed questionnaire in the form attached to this
Agreement as Annex C (a “Selling Stockholder Questionnaire”) on
a date that is not less than one (1) Trading Days prior to the Filing Date or by the end
of the second (2nd) Trading Day following the date on which such Holder receives draft materials
in accordance with this Section.
(b) (i)
Prepare and file with the Commission such amendments, including post-effective amendments,
to a Registration Statement and the Prospectus used in connection therewith as may be necessary
to keep a Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission such additional
Registration Statements in order to register for resale under the Securities Act all of the
Registrable Securities, (ii) cause the related Prospectus to be amended or supplemented by
any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented
or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible
to any comments received from the Commission with respect to a Registration Statement or
any amendment thereto and provide as promptly as reasonably possible to the Holders true
and complete copies of all correspondence from and to the Commission relating to a Registration
Statement (provided that, Parent shall excise any information contained therein which would
constitute material non-public information regarding Parent or any of its Subsidiaries),
and (iv) comply in all material respects with the applicable provisions of the Securities
Act and the Exchange Act with respect to the disposition of all Registrable Securities covered
by a Registration Statement during the applicable period in accordance (subject to the terms
of this Agreement) with the intended methods of disposition by the Holders thereof set forth
in such Registration Statement as so amended or in such Prospectus as so supplemented.
(c) If
during the Effectiveness Period, the number of Registrable Securities at any time exceeds
100% of the number of shares of Common Stock then registered in a Registration Statement,
then Parent shall file as soon as reasonably practicable, but in any case prior to the applicable
Filing Date, an additional Registration Statement covering the resale by the Holders of not
less than the number of such Registrable Securities.
5
(d) Notify
the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses
(iii) through (vi) hereof, be accompanied by an instruction to suspend the use of the Prospectus
until the requisite changes have been made) as promptly as reasonably possible (and, in the
case of (i)(A) below, not less than one (1) Trading Day prior to such filing) and (if requested
by any such Person) confirm such notice in writing no later than one (1) Trading Day following
the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment
to a Registration Statement is proposed to be filed, (B) when the Commission notifies Parent
whether there will be a “review” of such Registration Statement and whenever
the Commission comments in writing on such Registration Statement, and (C) with respect to
a Registration Statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the Commission or any other federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or for additional
information, (iii) of the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration Statement covering
any or all of the Registrable Securities or the initiation of any Proceedings for that purpose,
(iv) of the receipt by Parent of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence
of any event or passage of time that makes the financial statements included in a Registration
Statement ineligible for inclusion therein or any statement made in a Registration Statement
or Prospectus or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to a Registration Statement,
Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or supplement thereto, in the light of the circumstances
under which they were made) not misleading, and (vi) of the occurrence or existence of any
pending corporate development with respect to Parent that Parent believes may be material
and that, in the determination of Parent, makes it not in the best interest of Parent to
allow continued availability of a Registration Statement or Prospectus; provided,
however, that in no event shall any such notice contain any information which would
constitute material, non-public information regarding Parent or any of its Subsidiaries and
Parent agrees that the Holders shall not have any duty of confidentiality to Parent or any
of its Subsidiaries and shall not have any duty to Parent or any of its Subsidiaries not
to trade on the basis of such information.
(e) Use
its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any
order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension
of the qualification (or exemption from qualification) of any of the Registrable Securities
for sale in any jurisdiction, at the earliest practicable moment.
(f) Furnish
to each Holder, without charge, at least one conformed copy of each such Registration Statement
and each amendment thereto, including financial statements and schedules, all documents incorporated
or deemed to be incorporated therein by reference to the extent requested by such Person,
and all exhibits to the extent requested by such Person (including those previously furnished
or incorporated by reference) promptly after the filing of such documents with the Commission,
provided that any such item which is available on the EDGAR system (or successor thereto)
need not be furnished in physical form.
6
(g) Subject
to the terms of this Agreement, Parent hereby consents to the use of such Prospectus and
each amendment or supplement thereto by each of the selling Holders in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and any amendment
or supplement thereto, except after the giving of any notice pursuant to Section 3(d).Parent
shall cooperate with any broker-dealer through which a Holder proposes to resell its Registrable
Securities in effecting a filing with the FINRA Corporate Financing Department pursuant to
FINRA Rule 5110, as requested by any such Holder, and Parent shall pay the filing fee required
by such filing within two (2) Business Days of receipt of a request therefor.
(h) Prior
to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts
to register or qualify or cooperate with the selling Holders in connection with the registration
or qualification (or exemption from the registration or qualification) of such Registrable
Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions
within the United States as any Holder reasonably requests in writing, to keep each registration
or qualification (or exemption therefrom) effective during the Effectiveness Period and to
do any and all other acts or things reasonably necessary to enable the disposition in such
jurisdictions of the Registrable Securities covered by each Registration Statement, provided
that Parent shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified, subject Parent to any material tax in any such jurisdiction
where it is not then so subject or file a general consent to service of process in any such
jurisdiction.
(i) If
requested by a Holder, cooperate with such Holder to facilitate the timely preparation and
delivery of certificates or book entry notification representing Registrable Securities to
be delivered to a transferee pursuant to a Registration Statement, which certificates or
book entry notification shall be free, to the extent permitted by the Merger Agreement, of
all restrictive legends, and to enable such Registrable Securities to be in such denominations
and registered in such names as any such Holder may request.
(j) Upon
the occurrence of any event contemplated by Section 3(d), as promptly as reasonably possible
under the circumstances taking into account Parent’s good faith assessment of any adverse
consequences to Parent and its stockholders of the premature disclosure of such event, prepare
a supplement or amendment, including a post-effective amendment, to a Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as thereafter delivered,
neither a Registration Statement nor such Prospectus will contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein (in the case of any Prospectus or supplement thereto, in light
of the circumstances under which they were made) not misleading. If Parent notifies the Holders
in accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the use of
any Prospectus until the requisite changes to such Prospectus have been made, then the Holders
shall suspend use of such Prospectus. Parent will use its best efforts to ensure that the
use of the Prospectus may be resumed as promptly as is practicable. Parent shall be entitled
to exercise its right under this Section 3(k) to suspend the availability of a Registration
Statement and Prospectus for a period not to exceed 30 consecutive calendar days or for a
total of 60 calendar days (which need not be consecutive days) in any 12-month period, provided,
that during the 2026 calendar year, Parent shall not suspend the availability of a Registration
Statement and Prospectus for a total of more than 14 calendar days.
7
(k) Otherwise
use commercially reasonable efforts to comply with all applicable rules and regulations of
the Commission under the Securities Act and the Exchange Act, including, without limitation,
Rule 172 under the Securities Act, file any final Prospectus, including any supplement or
amendment thereof, with the Commission pursuant to Rule 424 under the Securities Act, promptly
inform the Holders in writing if, at any time during the Effectiveness Period, Parent does
not satisfy the conditions specified in Rule 172 and, as a result thereof, the Holders are
required to deliver a Prospectus in connection with any disposition of Registrable Securities
and take such other actions as may be reasonably necessary to facilitate the registration
of the Registrable Securities hereunder.
(l) Parent
shall use its reasonable best efforts to maintain eligibility for use of Form S-3 (or any
successor form thereto) for the registration of the resale of the Registrable Securities.
(m) Parent
may require each selling Holder to furnish to Parent a certified statement as to the number
of shares of Common Stock beneficially owned by such Holder and, if required by the Commission,
the natural persons thereof that have voting and dispositive control over the shares.
4. Registration
Expenses. All fees and expenses incident to the performance of or compliance with this
Agreement by Parent shall be borne by Parent whether or not any Registrable Securities are
sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses of Parent’s counsel and independent registered
public accountants) (A) with respect to filings made with the Commission, (B) with respect
to filings required to be made with any Trading Market on which the shares of Common Stock
are then listed for trading, and (C) in compliance with applicable state securities or Blue
Sky laws reasonably agreed to by Parent in writing (including, without limitation, fees and
disbursements of counsel for Parent in connection with Blue Sky qualifications or exemptions
of the Registrable Securities), and (D) if not previously paid by Parent with respect to
any filing that may be required to be made by any broker through which a Holder intends to
make sales of Registrable Securities with FINRA pursuant to FINRA Rule 5110, so long as the
broker is receiving no more than a customary brokerage commission in connection with such
sale, (ii) printing expenses (including, without limitation, expenses of printing certificates
for Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv) fees
and disbursements of counsel for Parent, (v) Securities Act liability insurance, if Parent
so desires such insurance, and (vi) fees and expenses of all other Persons retained by Parent
in connection with the consummation of the transactions contemplated by this Agreement. In
addition, Parent shall be responsible for all of its internal expenses incurred in connection
with the consummation of the transactions contemplated by this Agreement (including, without
limitation, all salaries and expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit and the fees and expenses incurred in connection
with the listing of the Registrable Securities on any securities exchange as required hereunder.
Parent shall also be responsible for all reasonable and documented legal fees and disbursements
of one counsel incurred by the Holders in connection with the consummation of the transactions
contemplated by this Agreement (which counsel shall be selected by the Holders of a majority
of the Registrable Securities in the applicable Registration Statement and identified in
writing to Parent following such selection). In no event shall Parent be responsible for
any broker or similar commissions of any Holder.
8
5. Indemnification.
(a) Indemnification
by Parent. Parent shall, notwithstanding any termination of this Agreement, indemnify
and hold harmless each Holder, the officers, directors, members, partners, agents, brokers
(including brokers who offer and sell Registrable Securities as principal as a result of
a pledge or any failure to perform under a margin call), advisors and employees (and any
other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding
a lack of such title or any other title) of each of them, each Person who controls any such
Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, members, stockholders, partners, agents and employees (and
any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding
a lack of such title or any other title) of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable attorneys’ fees), expenses,
judgments, fines, penalties, charges, and amounts paid in settlement (collectively, “Losses”),
as incurred in investigating, preparing or defending against any litigation, commence or
threatened, or any claim, arising out of or relating to (1) any untrue or alleged untrue
statement of a material fact contained in a Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus,
or arising out of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of any Prospectus
or supplement thereto, in light of the circumstances under which they were made) not misleading
or (2) any violation or alleged violation by Parent of the Securities Act, the Exchange Act
or any state securities law, or any rule or regulation thereunder, in connection with the
performance of its obligations under this Agreement, except to the extent, but only to the
extent, that (i) such untrue statements or omissions are based solely upon information regarding
such Holder furnished in writing to Parent by such Holder expressly for use therein, or to
the extent that such information relates to such Holder and was reviewed and expressly approved
in writing by such Holder expressly for use in a Registration Statement, such Prospectus
or in any amendment or supplement thereto or (ii) in the case of an occurrence of an event
of the type specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated, defective
or otherwise unavailable Prospectus after Parent has notified such Holder in writing that
the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and
prior to the receipt by such Holder of the Advice contemplated in Section 6(c). Parent shall
notify the Holders promptly of the institution, threat or assertion of any Proceeding arising
from or in connection with the transactions contemplated by this Agreement of which Parent
is aware. Such indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such indemnified person and shall survive the transfer of any Registrable
Securities by any of the Holders in accordance with Section 6(f).
(b) Indemnification
by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless
Parent, its directors, officers, agents and employees, each Person who controls Parent (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and
the directors, officers, agents or employees of such controlling Persons, to the fullest
extent permitted by applicable law, from and against all Losses, as incurred, to the extent
arising out of or based solely upon: any untrue or alleged untrue statement of a material
fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to any omission or
alleged omission of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or supplement thereto, in the light of
the circumstances under which they were made) not misleading (i) to the extent, but only
to the extent, that such untrue statement or omission is contained in any information so
furnished in writing by such Holder to Parent expressly for inclusion in such Registration
Statement or such Prospectus or (ii) to the extent, but only to the extent, that such information
is contained in such Holder’s Selling Stockholder Questionnaire and was reviewed and
expressly approved in writing by such Holder expressly for use in a Registration Statement,
such Prospectus or in any amendment or supplement thereto. In no event shall the liability
of a selling Holder be greater in amount than the dollar amount of the proceeds (net of all
expenses paid by such Holder in connection with any claim relating to this Section 5 and
the amount of any damages such Holder has otherwise been required to pay by reason of such
untrue statement or omission) received by such Holder upon the sale of the Registrable Securities
included in the Registration Statement giving rise to such indemnification obligation.
9
(c) Conduct
of Indemnification Proceedings. If any Proceeding shall be brought or asserted against
any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall have the right to assume the
defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with defense thereof,
provided that the failure of any Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except
(and only) to the extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such failure shall
have materially and adversely prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party
has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense of such
Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named parties to
any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to
the Indemnified Party shall reasonably believe that an actual conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to
assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying
Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes
an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.
Subject
to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section)
shall be paid to the Indemnified Party, as incurred, within ten (10) Trading Days of written notice thereof to the Indemnifying Party,
provided that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable
to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) not to be entitled to indemnification hereunder.
(d) Contribution.
If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party
or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying
Party shall contribute to the amount paid or payable by such Indemnified Party, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified
Party in connection with the actions, statements or omissions that resulted in such Losses
as well as any other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other things, whether
any action in question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission of a material fact, has been taken or made by, or relates
to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’
relative intent, knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result of any Losses
shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable
attorneys’ or other fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or expenses
if the indemnification provided for in this Section was available to such party in accordance
with its terms.
10
The
parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately
preceding paragraph. In no event shall the contribution obligation of a Holder of Registrable Securities be greater in amount than the
dollar amount of the proceeds (net of all expenses paid by such Holder in connection with any claim relating to this Section 5 and the
amount of any damages such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.
The
indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
6. Miscellaneous.
(a) Remedies.
Failure of any party to exercise any right or remedy under this Agreement or otherwise, or
delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.
In the event of a breach by Parent or by a Holder of any of their respective obligations
under this Agreement, each Holder or Parent, as the case may be, in addition to being entitled
to exercise all rights granted by law and under this Agreement, including recovery of damages,
shall be entitled to specific performance of its rights under this Agreement (without the
necessity of showing economic loss and without any bond or other security being required).
Each of Parent and each Holder agrees that monetary damages would not provide adequate compensation
for any losses incurred by reason of a breach by it of any of the provisions of this Agreement
and hereby further agrees that, in the event of any action for specific performance in respect
of such breach, it shall not assert or shall waive the defense that a remedy at law would
be adequate.
(b) Discontinued
Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon
receipt of a notice from Parent of the occurrence of any event of the kind described in Section
3(d)(iii) through (vi), such Holder will forthwith discontinue disposition of such Registrable
Securities under a Registration Statement until it is advised in writing (the “Advice”)
by Parent that the use of the applicable Prospectus (as it may have been supplemented or
amended) may be resumed. Parent will use its best efforts to ensure that the use of the Prospectus
may be resumed as promptly as is practicable.
(c) Amendments
and Waivers. The provisions of this Agreement, including the provisions of this sentence,
may not be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the same shall be in writing and signed by
Parent and the Holders of 50.1% or more of the then outstanding Registrable Securities (for
purposes of clarification, this includes any Registrable Securities issuable upon exercise
or conversion of any security); provided that, if any amendment, modification or waiver
disproportionately and adversely impacts a Holder (or group of Holders), the prior written
consent of such disproportionately impacted Holder (or group of Holders) shall be required.
If a Registration Statement does not register all of the Registrable Securities pursuant
to a waiver or amendment done in compliance with the previous sentence, then the number of
Registrable Securities to be registered for each Holder shall be reduced pro rata among all
Holders and each Holder shall have the right to designate which of its Registrable Securities
shall be omitted from such Registration Statement. Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect to a matter that relates exclusively
to the rights of a Holder or some Holders and that does not directly or indirectly affect
the rights of other Holders may be given only by such Holder or Holders of all of the Registrable
Securities to which such waiver or consent relates; provided, however, that
the provisions of this sentence may not be amended, modified, or supplemented except in accordance
with the provisions of the first sentence of this Section 6(e). No consideration shall be
offered or paid to any Person to amend or consent to a waiver or modification of any provision
of this Agreement unless the same consideration also is offered to all of the parties to
this Agreement.
11
(d) Notices.
Any and all notices or other communications or deliveries required or permitted to be provided
hereunder shall be delivered as set forth in the Merger Agreement.
(e) Successors
and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors
and permitted assigns of each of the parties and shall inure to the benefit of each Holder.
Parent may not assign (except by merger, subject to any successor entity assuming in writing
all of the obligations of Parent under this Agreement) its rights or obligations hereunder
without the prior written consent of all of the Holders of the then outstanding Registrable
Securities. Each Holder may assign their respective rights hereunder in the manner and to
the Persons as permitted under the Merger Agreement.
(f) No
Inconsistent Agreements. Neither Parent nor any of its Subsidiaries has entered, as of
the date hereof, nor shall Parent or any of its Subsidiaries, on or after the date of this
Agreement, enter into any agreement with respect to its securities, that would have the effect
of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with
the provisions hereof. Neither Parent nor any of its Subsidiaries has previously entered
into any agreement granting any registration rights with respect to any of its securities
to any Person that have not been satisfied in full.
(g) Execution
and Counterparts. This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party,
it being understood that both parties need not sign the same counterpart. In the event that
any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf”
format data file or Docusign, such signature shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the same force
and effect as if such facsimile or “.pdf” or Docusign signature page were an
original thereof.
(h) Governing
Law. All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be determined in accordance with the provisions of the Merger Agreement.
(i) Cumulative
Remedies. The remedies provided herein are cumulative and not exclusive of any other
remedies provided by law.
12
(j) Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially
the same result as that contemplated by such term, provision, covenant or restriction. It
is hereby stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without including any
of such that may be hereafter declared invalid, illegal, void or unenforceable.
(k) Headings.
The headings in this Agreement are for convenience only, do not constitute a part of the
Agreement and shall not be deemed to limit or affect any of the provisions hereof
(l) .Independent
Nature of Holders’ Obligations and Rights. The obligations of each Holder hereunder
are several and not joint with the obligations of any other Holder hereunder, and no Holder
shall be responsible in any way for the performance of the obligations of any other Holder
hereunder. Nothing contained herein or in any other agreement or document delivered at any
closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or any other kind
of group or entity, or create a presumption that the Holders are in any way acting in concert
or as a group or entity with respect to such obligations or the transactions contemplated
by this Agreement or any other matters, and Parent acknowledges that the Holders are not
acting in concert or as a group, and Parent shall not assert any such claim, with respect
to such obligations or transactions. Each Holder shall be entitled to protect and enforce
its rights, including without limitation the rights arising out of this Agreement, and it
shall not be necessary for any other Holder to be joined as an additional party in any proceeding
for such purpose. The use of a single agreement with respect to the obligations of Parent
contained was solely in the control of Parent, not the action or decision of any Holder,
and was done solely for the convenience of Parent and not because it was required or requested
to do so by any Holder. It is expressly understood and agreed that each provision contained
in this Agreement is between Parent and a Holder, solely, and not between Parent and the
Holders collectively and not between and among Holders.
(m) Further
Acts. Each party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements, certificates, instruments
and documents as any other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.
********************
[Signature
Pages Follow]
13
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.
Healthy
Choice Wellness Corp.
By:
/s/
John Ollet
Name:
John
Ollet
Title:
Chief
Financial Officer
[SIGNATURE
PAGES OF HOLDERS FOLLOWS]
14
[SIGNATURE
PAGE OF HOLDERS TO RRA]
Anson
Investments Master Fund LP
By:
/s/
Amin Nathoo
Name:
Amin
Nathoo
Title:
Director
of Anson Advisors, Inc.,
co
investment advisor of the Purchase
Anson
East Master Fund LP
By:
/s/
Amin Nathoo
Name:
Amin
Nathoo
Title:
Director
of Anson Advisors, Inc.,
co
investment advisor of the Purchase
[SIGNATURE
PAGES CONTINUE]
15
[SIGNATURE
PAGE OF HOLDERS TO RRA]
2021
Mintz Family Trust, a trust formed
under
the laws of the State of Florida
By:
/s/
Allison Mintz
Name:
Allison
Mintz
Title:
Trustee
/s/
Allison Mintz
Allison
Mintz
/s/
Hal Mintz
Hal
Mintz
16
Annex
A
Plan
of Distribution
See
attached.
17
PLAN
OF DISTRIBUTION
Each
of the selling stockholders identified herein of the Securities and any of their pledgees, donees, transferees, assignees, and other
successors-in-interest (the “Selling Stockholders”) may, from time to time, sell any or all of their securities covered hereby
on the principal trading market or any other stock exchange, market or trading facility on which the Securities are traded or in private
transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders will act independently of us in making decisions
with respect to the timing, manner and size of each sale. Such sales may be made on one or more exchanges or in the over-the-counter
market or otherwise, at prices and under terms then prevailing or at prices related to the then current market price or in negotiated
transactions. The Selling Stockholders reserve the right to accept and, together with their respective agents, to reject, any proposed
purchase of securities to be made directly or through agents. The Selling Stockholders and any permitted transferees may sell their securities
offered by this prospectus on any stock exchange, market or trading facility on which the securities are traded or in private transactions.
A Selling Stockholder may use any one or more of the following methods when selling securities:
●
through
brokers or dealers (who may act as agent or principal and who may receive compensation in the form of discounts, concessions or commissions
from such Selling Stockholder, the purchaser or such other persons who may be effecting such sales, which discounts, concessions
or commissions as to any particular broker or dealer may be in excess of those customary to the types of transactions involved) for
resale to the public or to institutional investors at various times;
●
through
negotiated transactions, including, but not limited to, block trades in which the broker or dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
●
through
purchases by a broker or dealer as principal and resale by that broker or dealer for its account;
●
on
any national securities exchange or quotation service on which the shares may be listed or quoted at the time of sale at market prices
prevailing at the time of sale, at prices related to such prevailing market prices, or at negotiated prices;
●
in
privately negotiated transactions other than exchange or quotation service transactions;
●
short
sales, purchases or sales of put, call or other types of options, forward delivery contracts, swaps, offerings of structured equity-linked
securities or other derivative transactions or securities;
18
●
hedging
transactions, including, but not limited to:
●
transactions
with a broker-dealer or its affiliate, whereby the broker-dealer or its affiliate will engage in short sales of shares and may use
shares held by such selling stockholder to close out its short position;
●
options
or other types of transactions that require the delivery of shares to a broker-dealer or an affiliate thereof, who will then resell
or transfer the shares; or
●
loans
or pledges of shares to a broker-dealer or an affiliate, who may sell the loaned shares or, in an event of default in the case of
a pledge, sell the pledged shares;
●
through
offerings of securities exercisable, convertible or exchangeable for shares, including, without limitation, securities issued by
trusts, investment companies or other entities;
●
offerings
directly to one or more purchasers, including institutional investors;
●
through
ordinary brokerage transactions and transactions in which a broker solicits purchasers;
●
through
distribution to the security holders of the Selling Stockholder;
●
by
pledge to secure debts and other obligations;
●
through
a combination of any such methods of sale; or
●
through
any other method permitted under applicable law.
The
Selling Stockholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act, if available,
rather than under this prospectus.
There
can be no assurance that any Selling Stockholder will sell any or all of the shares of Common Stock registered pursuant to the registration
statement of which this prospectus form a part.
In
addition, a Selling Stockholder that is an entity may elect to make an in-kind distribution of securities to its members, partners or
stockholders pursuant to the registration statement of which this prospectus is a part by delivering a prospectus with a plan of distribution.
Such members, partners or stockholders would thereby receive freely tradeable securities pursuant to the distribution through a registration
statement. To the extent a distributee is an affiliate of ours (or to the extent otherwise required by law), we may file a prospectus
supplement in order to permit the distributees to use the prospectus to resell the securities acquired in the distribution.
The
Selling Stockholders also may transfer the securities in other circumstances, in which case the transferees, pledgees or other successors-in-interest
will be the selling beneficial owners for purposes of this prospectus. Upon being notified by the Selling Stockholders that a donee,
pledgee, transferee, other successor-in-interest intends to sell our securities, we will, to the extent required, promptly file a supplement
to this prospectus to name specifically such person as a Selling Securityholder.
19
Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser)
in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in
excess of a customary brokerage commission in compliance with FINRA Rule 2121; and in the case of a principal transaction a markup or
markdown in compliance with FINRA Rule 2121.
In
connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they
assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan
or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option
or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the
delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer
or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The
Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters”
within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers
or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the securities.
We
are required to pay certain fees and expenses incurred by the Company incident to the registration of the Securities. The Company has
agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the
Securities Act. The Company shall not be responsible for any of the Selling Stockholders’ selling costs incurred pursuant to any
available method provided hereunder for selling securities.
We
are obligated to maintain the effectiveness of this registration statement until all of the Shares and Pre-Funded Warrant Shares registered
pursuant to it (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions
pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement
under Rule 144. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable
state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered
or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is
complied with.
Under
applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously
engage in market making activities with respect to the shares of Common Stock for the applicable restricted period, as defined in Regulation
M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the
shares of Common Stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the
sale (including by compliance with Rule 172 under the Securities Act).
20
EX-10.3
EX-10.3
Filename: ex10-3.htm · Sequence: 5
Exhibit
10.3
HOST
DIGITAL INC.
FORM
OF INDEMNIFICATION AGREEMENT
This
Indemnification Agreement (this “Agreement”) is dated as of September 17, 2026 and is between Host Digital
Inc., a Delaware corporation (the “Company”), and [●] (“Indemnitee”).
WHEREAS,
Indemnitee’s service to the Company substantially benefits the Company;
WHEREAS,
individuals are reluctant to serve as directors or officers of corporations or in certain other capacities unless they are provided with
adequate protection through insurance or indemnification against the risks of claims and actions against them arising out of such service;
WHEREAS,
the Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified
individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving
the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread
practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions
and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors,
officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming
litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise
itself. The bylaws and certificate of incorporation of the Company require indemnification of the officers and directors of the Company.
Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (“DGCL”).
The bylaws and certificate of incorporation and the DGCL expressly provide that the indemnification provisions set forth therein are
not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and
other persons with respect to indemnification;
WHEREAS,
Indemnitee does not regard the protection currently provided by applicable law, the Company’s governing documents and any insurance
as adequate under the present circumstances, and Indemnitee may not be willing to serve as a director or officer without additional protection;
WHEREAS,
in order to induce Indemnitee to continue to provide services to the Company, it is reasonable, prudent and necessary for the Company
to contractually obligate itself to indemnify, and to advance expenses on behalf of, Indemnitee as permitted by applicable law; and
WHEREAS,
this Agreement is a supplement to and in furtherance of the indemnification provided in the Company’s certificate of incorporation
and bylaws, and any resolutions adopted pursuant thereto, and this Agreement shall not be deemed a substitute therefor, nor shall this
Agreement be deemed to limit, diminish or abrogate any rights of Indemnitee thereunder. However, to the extent that the provisions of
this Agreement confer on Indemnitee broader rights to indemnification and advancement of Expenses (as defined below) than are provided
for in the Company’s certificate of incorporation or bylaws, the provisions of this Agreement shall control.
NOW,
THEREFORE, the Company and Indemnitee do hereby agree as follows:
1. Definitions.
(a) “Corporate
Status” describes the status of a person who is or was a director, trustee,
general partner, managing member, officer, employee, agent or fiduciary of the Company or
any other Enterprise.
(b) “Enterprise”
means the Company and any other corporation, partnership, limited liability company, joint
venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving
at the request of the Company as a director, trustee, general partner, managing member, officer,
employee, agent or fiduciary.
(c) “Change
in Control” means a transaction other than a bona fide equity financing or
series of financings in which any “person” or “group” (within the
meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock
then outstanding of the Company ordinarily entitled to vote in the election of directors,
empowering such “person” or “group” to elect a majority of the Board
of Directors of the Company, who did not have such power before such transaction.
(d) “Expenses”
include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees
and costs of experts, witness fees, travel expenses, duplicating costs, printing and binding
costs, telephone charges, postage, delivery service fees, and all other disbursements or
expenses of the types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise
participating in, a Proceeding. Expenses also include: (i) Expenses incurred in connection
with any appeal resulting from any Proceeding, including without limitation the premium,
security for, and other costs relating to any cost bond, supersedeas bond or other appeal
bond or their equivalent, and (ii) for purposes of Section 11(c) of this Agreement,
Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense
of Indemnitee’s rights under this Agreement or under any directors’ and officers’
liability insurance policies maintained by the Company. Expenses, however, shall not include
amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
(e) “Independent
Counsel” means a law firm, or a partner (or, if applicable, member) of such
a law firm, selected by Indemnitee that is experienced in matters of corporation law and
neither presently is, nor in the past five years has been, retained to represent: (i) the
Company or Indemnitee in any matter material to either such party (other than with respect
to indemnification matters), or (ii) any other party to the Proceeding giving rise to a claim
for indemnification hereunder. Notwithstanding the foregoing, the term “Independent
Counsel” shall not include any person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The
Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred
to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities
and damages arising out of or relating to this Agreement or its engagement pursuant hereto.
(f) “Proceeding”
means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution
mechanism, formal or informal government or self-regulatory agency investigation or inquiry,
administrative hearing or any other actual, threatened or completed proceeding, whether brought
in the right of the Company or otherwise and whether of a civil, criminal, administrative
or investigative nature, in which Indemnitee was, is or is threatened to be involved as a
party or otherwise by reason of the Indemnitee’s Corporate Status, by reason of any
action taken, or failure to act, by Indemnitee or of any action taken, or failure to take
action, on the Indemnitee’s part while acting as director or officer of the Company,
or by reason the Indemnitee’s Corporate Status, in each case whether or not serving
in such capacity at the time any liability or Expense is incurred for which indemnification,
reimbursement, or any advance of Expenses can be provided under this Agreement; provided,
however, that the term “Proceeding” shall not include any action, suit
or arbitration initiated by Indemnitee to enforce Indemnitee’s rights under this Agreement.
HOST DIGITAL INC. – INDEMNIFICATION AGREEMENT 2
2. Indemnity
in Third-Party Proceedings. The Company shall indemnify Indemnitee in accordance with the provisions of this Section
2 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in
the right of the Company to procure a judgment in its favor. Pursuant to this Section 2, Indemnitee shall be indemnified to
the fullest extent permitted by applicable law against all Expenses, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by Indemnitee or on his or her behalf in connection with such Proceeding or any claim, issue or
matter therein, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best
interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her
conduct was unlawful.
(a) Reference
to “other enterprises” shall include employee benefit plans; references to “fines”
shall include any excise taxes assessed on a person with respect to any employee benefit
plan; references to “serving at the request of the Company” shall include any
service as a director, officer, employee or agent of the Company which imposes duties on,
or involves services by, such director, officer, employee or agent with respect to an employee
benefit plan, its participants or beneficiaries; and a person who acted in good faith and
in a manner he or she reasonably believed to be in the best interests of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not
opposed to the best interests of the Company” as referred to in this Agreement.
3. Indemnity
in Proceedings by or in the Right of the Company. The Company shall indemnify Indemnitee in accordance with the provisions of
this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right
of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified to the fullest
extent permitted by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf
in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the Company. No indemnification for Expenses shall be made under
this Section 3 in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged by a court of competent
jurisdiction to be liable to the Company, unless and only to the extent that the Delaware Court of Chancery or any court in which the
Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances
of the case, Indemnitee is fairly and reasonably entitled to indemnification for such expenses as the Delaware Court of Chancery or such
other court shall deem proper.
4.
Indemnification for Expenses of a Party Who is Wholly or Partly Successful. To the extent that Indemnitee is a party to or
a participant in and is successful (on the merits or otherwise) in defense of any Proceeding or any claim, issue or matter therein, the
Company shall indemnify Indemnitee to the fullest extent permitted by law against all Expenses actually and reasonably incurred by Indemnitee
or on Indemnitee’s behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful,
on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each
successfully resolved claim, issue or matter. For purposes of this Section 4, the term “successful” shall include,
but not be limited to, (i) any termination, withdrawal, or dismissal (with or without prejudice) of such Proceeding without any express
finding of liability or guilt against Indemnitee, (ii) the expiration of 120 days after the making of such Proceeding without the institution
of the same and without any promise or payment made to induce a settlement, or (iii) the settlement of such Proceeding pursuant to which
the Indemnitee pays less than $50,000 irrespective of whether other parties make payments which may be deemed to be on behalf
of Indemnitee.
HOST DIGITAL INC. – INDEMNIFICATION AGREEMENT 3
5. Indemnification
for Expenses of a Witness. To the extent that Indemnitee is, by reason of his or her Corporate Status, a witness in any Proceeding
to which Indemnitee is not a party, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses
actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.
6. Exclusions.
Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection
with any Proceeding (or any part of any Proceeding):
(a) for
which payment has actually been made to or on behalf of Indemnitee under any statute, insurance
policy, indemnity provision, vote or otherwise, except with respect to (i) any excess beyond
the amount paid under any insurance policy or other indemnity provision or (ii) with respect
to any insurance policy to the extent paid for the by the Indemnitee, any increase in premiums
resulting from the amount paid under such policy;
(b) for
an accounting, disgorgement or return of profits made from the purchase and sale (or sale
and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b)
of the Securities Exchange Act of 1934, as amended, or similar provisions of federal, state
or local statutory law or common law, if Indemnitee is held liable therefor (including pursuant
to any settlement arrangements);
(c) for
any claim, issue or matter initiated or brought by Indemnitee, except (i) with respect to
counterclaims or affirmative defenses or to actions or proceedings brought to establish or
enforce a right to receive Expenses or indemnification under this Agreement or any other
agreement or insurance policy or under the certificate of incorporation or bylaws of the
Company now or hereafter in effect relating to indemnification or (ii) if the Board has approved
the initiation or bringing of such claim;
(d) for
any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based
compensation or of any profits realized by Indemnitee from the sale of securities of the
Company, as required in each case under the Securities Exchange Act of 1934, as amended (including
any such reimbursements that arise from an accounting restatement of the Company pursuant
to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”),
or the payment to the Company of profits arising from the purchase and sale by Indemnitee
of securities in violation of Section 306 of the Sarbanes-Oxley Act), if Indemnitee is held
liable therefor (including pursuant to any settlement arrangements);
(e) initiated
by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee
against the Company or its directors, officers, employees, agents or other indemnitees, unless
(i) the Company’s board of directors authorized the Proceeding (or the relevant part
of the Proceeding) prior to its initiation, (ii) the Company provides the indemnification,
in its sole discretion, pursuant to the powers vested in the Company under applicable law,
(iii) otherwise authorized in Section 11(c) of this Agreement (iv) otherwise required
by applicable law;
HOST DIGITAL INC. – INDEMNIFICATION AGREEMENT 4
(f) if
prohibited by applicable law; or
(g) for
any claim, issue or matter as to which Indemnitee shall have (i) entered a plea of guilty
or nolo contendere to a felony or (ii) received a final, unappealable judgment or verdict
of guilty or its equivalent in any criminal proceeding.
7. Advances
of Expenses. The Company shall advance the Expenses incurred by Indemnitee in connection with any Proceeding, and such advancement
shall be made as soon as reasonably practicable, but in any event no later than thirty (30) days, after the receipt by the Company of
a written statement or statements requesting such advances from time to time (which shall include invoices received by Indemnitee in
connection with such Expenses but, in the case of invoices in connection with legal services, any references to legal work performed
or to expenditure made that would cause Indemnitee to waive any privilege accorded by applicable law shall not be included with the invoice).
Advances shall be unsecured and interest free and made without regard to Indemnitee’s ability to repay such advances. Indemnitee
hereby undertakes to repay any advance to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified
by the Company. This Section 7 shall not apply to the extent advancement is prohibited by law and shall not apply to any Proceeding
for which indemnity is not permitted under this Agreement, but shall apply to any Proceeding referenced in Section 6(b) or 6(d)
of this Agreement prior to a determination that Indemnitee is not entitled to be indemnified by the Company.
8. Procedures
for Notification and Defense of Claim.
(a) Indemnitee
shall notify the Company in writing of any matter with respect to which Indemnitee intends
to seek indemnification or advancement of Expenses as soon as reasonably practicable following
the receipt by Indemnitee of notice thereof. The written notification to the Company shall
include, in reasonable detail, a description of the nature of the Proceeding and the facts
underlying the Proceeding. The failure by Indemnitee to notify the Company will not relieve
the Company from any liability which it may have to Indemnitee hereunder or otherwise than
under this Agreement, and any delay in so notifying the Company shall not constitute a waiver
by Indemnitee of any rights, except to the extent that such failure or delay materially prejudices
the Company.
(b) If,
at the time of the receipt of a notice of a Proceeding pursuant to the terms hereof, the
Company has directors’ and officers’ liability insurance in effect, the Company
shall give prompt notice of the commencement of the Proceeding to the insurers in accordance
with the procedures set forth in the applicable policies. The Company shall thereafter take
all commercially reasonable action to cause such insurers to pay, on behalf of Indemnitee,
all amounts payable as a result of such Proceeding in accordance with the terms of such policies.
HOST DIGITAL INC. – INDEMNIFICATION AGREEMENT 5
(c) In
the event the Company may be obligated to make any indemnity in connection with a Proceeding,
the Company shall be entitled to assume the defense of such Proceeding with counsel approved
by Indemnitee, which approval shall not be unreasonably withheld, upon the delivery to Indemnitee
of written notice of its election to do so. After delivery of such notice, approval of such
counsel by Indemnitee and the retention of such counsel by the Company, the Company will
not be liable to Indemnitee for any fees or expenses of counsel subsequently incurred by
Indemnitee with respect to the same Proceeding. Notwithstanding the Company’s assumption
of the defense of any such Proceeding, the Company shall be obligated to pay the fees and
expenses of Indemnitee’s counsel to the extent (i) the employment of counsel by Indemnitee
is authorized by the Company, (ii) counsel for the Company or Indemnitee shall have reasonably
concluded that there is a conflict of interest between the Company and Indemnitee in the
conduct of any such defense such that Indemnitee needs to be separately represented, (iii)
the fees and expenses are non-duplicative and reasonably incurred in connection with Indemnitee’s
role in the Proceeding despite the Company’s assumption of the defense, (iv) the Company
is not financially or legally able to perform its indemnification obligations or (v) the
Company shall not have retained, or shall not continue to retain, such counsel to defend
such Proceeding. The Company shall have the right to conduct such defense as it sees fit
in its sole discretion. Regardless of any provision in this Agreement, Indemnitee shall have
the right to employ counsel in any Proceeding at Indemnitee’s personal expense. The
Company shall not be entitled, without the consent of Indemnitee, to assume the defense of
any claim brought by or in the right of the Company.
(d) Indemnitee
shall give the Company such information and cooperation in connection with the Proceeding
as may be reasonably appropriate.
(e) The
Company shall not be liable to indemnify Indemnitee for any settlement of any Proceeding
(or any part thereof) without the Company’s prior written consent, which shall not
be unreasonably withheld.
9. Procedures
upon Application for Indemnification; Any Repayment of Advances After Disposition of a Proceeding.
(a) The
Company shall not settle any Proceeding (or any part thereof) without Indemnitee’s
prior written consent, which shall not be unreasonably withheld.
(b) To
obtain indemnification, Indemnitee shall submit to the Company a written request, including
therein or therewith such documentation and information as is reasonably available to Indemnitee
and as is reasonably necessary to determine whether and to what extent Indemnitee is entitled
to indemnification following the final disposition of the Proceeding. The Company shall,
as soon as reasonably practicable after receipt of such a request for indemnification, advise
the board of directors that Indemnitee has requested indemnification. Any delay in providing
the request will not relieve the Company from its obligations under this Agreement, except
to the extent such failure is prejudicial.
(c) Promptly
following the disposition of a Proceeding, a determination with respect to Indemnitee’s
entitlement to indemnification and to retain any advances given to Indemnitee shall be made
in the specific case by one of the following methods: (i) if a Change in Control shall have
occurred, by Independent Counsel in a written opinion to the Board; or (ii) if a Change in
Control shall not have occurred, by majority vote of the directors who are neither parties,
nor threatened to be made parties, to any Proceeding, even though less than a quorum, or
by a committee of such directors designated by majority vote of such directors, even though
less than a quorum (in either case, the “Disinterested Directors”)
or, if there are no Disinterested Directors, by Independent Counsel.
HOST DIGITAL INC. – INDEMNIFICATION AGREEMENT 6
(d) If
the determination of entitlement to indemnification is to be made by Independent Counsel,
Independent Counsel shall be selected by the Board if a Change in Control shall not have
occurred or, if a Change in Control shall have occurred, by Indemnitee. The Indemnitee or
the Company, as the case may be, may within ten (10) days after written notice of such selection,
deliver to the Company or the Indemnitee, as the case may be, a written objection to such
selection; provided, however, that such objection may be asserted only on the
ground that Independent Counsel so selected does not meet the requirements of “Independent
Counsel” as defined in this Agreement, and the objection shall set forth with particularity
the factual basis of such assertion. Absent a proper and timely objection, the person so
selected shall act as Independent Counsel. If such written objection is so made and substantiated,
Independent Counsel so selected may not serve as Independent Counsel unless and until such
objection is withdrawn or a court has determined that such objection is without merit. If,
within twenty (20) days after the later of submission by Indemnitee of a written request
for indemnification pursuant to Section 9(a) of this Agreement, and the final disposition
of the Proceeding, including any appeal therein, no Independent Counsel shall have been selected
and not objected to, either the Company or the Indemnitee may petition a court of competent
jurisdiction for resolution of any objection which shall have been made by the Indemnitee
or the Company to the selection of Independent Counsel and/or for the appointment as Independent
Counsel of a person selected by the court or by such other person as the court shall designate,
and the person with respect to whom all objections are so resolved or the person so appointed
shall act as Independent Counsel. Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 11(a) of this Agreement, Independent Counsel shall
be discharged and relieved of any further responsibility in such capacity (subject to the
applicable standards of professional conduct then prevailing).
10. Presumptions
and Effect of Certain Proceedings.
(a) If
it is determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall
be made within ten (10) days after such determination. Indemnitee shall cooperate with the
Disinterested Directors or Independent Counsel, as applicable, making such determination
with respect to Indemnitee’s entitlement to indemnification, including providing to
the Disinterested Directors or Independent Counsel, as applicable, upon reasonable advance
request any documentation or information that is not privileged or otherwise protected from
disclosure and which is reasonably available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorneys’ fees and disbursements)
incurred by Indemnitee in so cooperating with the Disinterested Directors or Independent
Counsel, as applicable, shall be borne by the Company (irrespective of the determination
as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies
and agrees to hold Indemnitee harmless therefrom.
(b) In
making a determination with respect to entitlement to indemnification hereunder, the Disinterested
Directors or Independent Counsel, as applicable, making such determination shall, to the
fullest extent not prohibited by law, presume that Indemnitee is entitled to indemnification
under this Agreement if Indemnitee has submitted a request for indemnification. Neither the
failure of the Company nor of the Disinterested Directors or Independent Counsel, as applicable,
to have made a determination prior to the commencement of any advance or indemnification
action pursuant to this Agreement that indemnification is proper in the circumstances because
Indemnitee has met the applicable standard of conduct, nor an actual determination by the
Company or by the Disinterested Directors or Independent Counsel, as applicable, that Indemnitee
has not met such applicable standard of conduct, shall be a defense available to the Company
to the advance or indemnification action or create a presumption that Indemnitee has not
met the applicable standard of conduct necessary to obtain an advance or indemnification.
HOST DIGITAL INC. – INDEMNIFICATION AGREEMENT 7
(c) The
termination of any Proceeding or of any claim, issue or matter therein, by judgment, order,
settlement or conviction, or upon a plea of nolo contendere other than to a felony, shall
not (except as otherwise expressly provided in this Agreement) of itself create a presumption
that Indemnitee did not act in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the Company or, with respect to any criminal
Proceeding, that Indemnitee had reasonable cause to believe that his or her conduct was unlawful.
(d) For
purposes of any determination of good faith, Indemnitee shall be deemed to have acted in
good faith to the extent Indemnitee relied in good faith on (i) the records or books of account
of the Enterprise, including financial statements, (ii) information supplied to Indemnitee
by the officers of the Enterprise in the course of their duties, (iii) the advice of legal
counsel for the Enterprise or its board of directors or counsel selected by any committee
of the board of directors or (iv) information or records given or reports made to the Enterprise
by an independent certified public accountant, an appraiser, investment banker or other expert
selected with reasonable care by the Enterprise or its board of directors or any committee
of the board of directors. The provisions of this Section 10(c) shall not be deemed
to be exclusive or to limit in any way the other circumstances in which Indemnitee may be
deemed to have met the applicable standard of conduct set forth in this Agreement.
11. Remedies
of Indemnitee.
(a) Neither
the knowledge, actions nor failure to act of any other director, officer, agent or employee
of the Enterprise shall be imputed to Indemnitee for purposes of determining the right to
indemnification under this Agreement.
(b) Subject
to Section 11(f) in the event that (i) a determination is made by the Disinterested
Directors (and for the avoidance of doubt, not by Independent Counsel) pursuant to Section
9 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement,
(ii) advancement of Expenses is not timely made pursuant to Section 11(c) of this
Agreement, (iii) no determination of entitlement to indemnification shall have been made
pursuant to Section 9 of this Agreement within ninety (90) days after the later of
the receipt by the Company of the request for indemnification or the final disposition of
the Proceeding, (iv) payment of indemnification pursuant to this Agreement is not made (A)
within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification
or (B) with respect to indemnification pursuant to Sections 4, 5 and 11(c)
of this Agreement, within thirty (30) days after receipt by the Company of a written request
therefor, or (v) the Company or any other person or entity takes or threatens to take any
action to declare this Agreement void or unenforceable, or institutes any litigation or other
action or proceeding designed to deny, or to recover from, Indemnitee the benefits provided
or intended to be provided to Indemnitee hereunder, Indemnitee shall be entitled to an adjudication
by a court of competent jurisdiction of his or her entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at his or her option, may seek an award
in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration
Rules of the American Arbitration Association. Indemnitee shall commence such proceeding
seeking an adjudication or an award in arbitration within one hundred eighty (180) days following
the date on which Indemnitee first has the right to commence such proceeding pursuant to
this Section 11(a); provided, however, that the foregoing clause shall
not apply in respect of a proceeding brought by Indemnitee to enforce his or her rights under
Section 4 of this Agreement. The Company shall not oppose Indemnitee’s right
to seek any such adjudication or award in arbitration in accordance with this Agreement.
HOST DIGITAL INC. – INDEMNIFICATION AGREEMENT 8
(c) In
the event that a determination shall have been made pursuant to Section 9 of this
Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or
arbitration commenced pursuant to this Section 11 shall be conducted in all respects
as a de novo trial, or arbitration, on the merits, and Indemnitee shall not be prejudiced
by reason of that adverse determination. In any judicial proceeding or arbitration commenced
pursuant to this Section 11, the Company shall, to the fullest extent not prohibited
by law, have the burden of proving Indemnitee is not entitled to indemnification or advancement
of Expenses, as the case may be.
(d) To
the extent not prohibited by law, the Company shall indemnify Indemnitee against all Expenses
that are incurred by Indemnitee in connection with any action for indemnification or advancement
of Expenses from the Company under this Agreement or under any directors’ and officers’
liability insurance policies maintained by the Company to the extent Indemnitee is successful
in such action, and, if requested by Indemnitee, shall (as soon as reasonably practicable,
but in any event no later than sixty (60) days, after receipt by the Company of a written
request therefor) advance such Expenses to Indemnitee.
(e) If
a determination shall have been made pursuant to Section 9 of this Agreement that
Indemnitee is entitled to indemnification, the Company shall be bound by such determination
in any judicial proceeding or arbitration commenced pursuant to this Section 11, absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary
to make Indemnitee’s statement not materially misleading, in connection with the request
for indemnification, or (ii) a prohibition of such indemnification under applicable law.
(f) The
Company shall be precluded from asserting in any judicial proceeding or arbitration commenced
pursuant to this Section 11 that the procedures and presumptions of this Agreement
are not valid, binding and enforceable and shall stipulate in any such court or before any
such arbitrator that the Company is bound by all the provisions of this Agreement. The Company
shall indemnify Indemnitee against any and all Expenses which are incurred by Indemnitee
in connection with any action brought by Indemnitee for indemnification or any advancement
of Expenses from the Company under this Agreement or under any directors’ and officers’
liability insurance policies maintained by the Company only if Indemnitee ultimately is determined
to be entitled to such indemnification, advancement of Expenses or insurance recovery, as
the case may be, in the suit for which indemnification or an advance is being sought.
(g) Notwithstanding
anything in this Agreement to the contrary, no determination as to entitlement to indemnification
under this Agreement shall be required to be made prior to the final disposition of the Proceeding,
including any appeal therein.
HOST DIGITAL INC. – INDEMNIFICATION AGREEMENT 9
12. Contribution.
To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee,
the Company, in lieu of indemnifying Indemnitee, shall contribute to the amounts incurred by Indemnitee, whether for Expenses, judgments,
fines or amounts paid or to be paid in settlement, in connection with any claim relating to an indemnifiable event under this Agreement,
in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the
relative benefits received by the Company and Indemnitee as a result of the events and transactions giving rise to such Proceeding; and
(ii) the relative fault of Indemnitee and the Company (and its other directors, officers, employees and agents) in connection with such
events and transactions. The Company shall not enter into any settlement of any action, suit or proceeding in which the Company is jointly
liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final
release of all claims asserted against Indemnitee.
13. Non-exclusivity.
The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable law, the Company’s certificate of incorporation or
bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No supplement, modification, alteration, waiver,
repeal or amendment of this Agreement or any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in
respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such supplement, modification, alteration,
waiver, repeal or amendment. To the extent that after the date of this Agreement a change in Delaware law, whether by statute or judicial
decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Company’s certificate
of incorporation and bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change, subject to the restrictions expressly set forth herein or therein. Except as expressly
set forth herein, no right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right
and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or
in equity or otherwise. Except as expressly set forth herein, the assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other right or remedy.
14. No
Duplication of Payments. The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable
hereunder (or for which advancement is provided hereunder) if and to the extent that Indemnitee has otherwise actually received payment
for such amounts under any insurance policy, contract, agreement or otherwise.
15. Insurance.
To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, trustees, general
partners, managing members, officers, employees, agents or fiduciaries of the Company or any other Enterprise, Indemnitee shall be covered
by such policy or policies to the same extent as the most favorably-insured persons under such policy or policies in a comparable position.
16. Subrogation.
In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution
of such documents as are necessary to enable the Company to bring suit to enforce such rights.
(a) The
Company shall use commercially reasonable best efforts to (a) maintain an insurance policy
or policies providing liability insurance for directors, officers, employees, or agents of
the Company or of any other Enterprise and (b) to provide that until at least the sixth (6th)
anniversary of the date of expiration of the Indemnitee’s period of service with the
Company, Indemnitee shall be covered by such policy or policies in accordance with its or
their terms to the maximum extent of the coverage available for any such director, officer,
employee or agent under such policy or policies. If, at the time of the receipt of a notice
of a claim pursuant to the terms hereof, the Company has director and officer liability insurance
in effect, the Company shall give prompt notice of the commencement of such proceeding to
the insurers in accordance with the procedures set forth in the respective policies. The
Company shall thereafter take all necessary or desirable action to cause such insurers to
pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance
with the terms of such policies.
HOST DIGITAL INC. – INDEMNIFICATION AGREEMENT 10
17. Duration.
This Agreement shall continue until and terminate upon the later of (a) ten (10) years after the date that Indemnitee shall have ceased
to serve as a director or officer of the Company or as a director, trustee, general partner, managing member, officer, employee, agent
or fiduciary of any other Enterprise, as applicable; or (b) one (1) year after the final termination of any Proceeding, including any
appeal, then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of
any proceeding commenced by Indemnitee pursuant to Section 11 of this Agreement relating thereto.
18. Successors.
This Agreement shall be binding upon the Company and its successors and assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business or assets of the Company, and shall inure to the benefit
of Indemnitee and Indemnitee’s heirs, executors and administrators. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business
and/or assets of the Company, by written agreement in form and substance satisfactory to the Indemnitee, expressly to assume and agree
to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession
had taken place. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken
while serving in Corporate Status even though Indemnitee may have ceased to serve in such capacity at the time of any Proceeding.
19. Severability.
Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation
of applicable law. The Company’s inability, pursuant to court order or other applicable law, to perform its obligations under this
Agreement shall not constitute a breach of this Agreement. If any provision or provisions of this Agreement shall be held to be invalid,
illegal or unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby
and shall remain enforceable to the fullest extent permitted by law; (ii) such provision or provisions shall be deemed reformed to the
extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (iii) to the fullest
extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed
so as to give effect to the intent manifested thereby.
20. Enforcement.
The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in
order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying
upon this Agreement in serving as a director or officer of the Company.
21. Entire
Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject
matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Company’s certificate
of incorporation and bylaws and applicable law.
HOST DIGITAL INC. – INDEMNIFICATION AGREEMENT 11
22. Modification
and Waiver. No supplement, modification, alteration, waiver, repeal or amendment of this Agreement or any provisions of this
Agreement shall be binding unless executed in writing by the parties thereto. No supplement, modification, alteration, waiver, repeal
or amendment of any of the provisions of this Agreement shall adversely affect, limit or restrict any right of Indemnitee under this
Agreement in respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such supplement, modification,
alteration, waiver, repeal or amendment. No waiver of any of the provisions of this Agreement shall constitute or be deemed a waiver
of any other provision of this Agreement nor shall any waiver constitute a continuing waiver.
23. Notices.
All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, sent by facsimile or electronic mail or otherwise delivered by hand, messenger or courier service addressed:
(a) if
to Indemnitee, to Indemnitee’s address, facsimile number or electronic mail address
as shown on the signature page of this Agreement or in the Company’s records, as may
be updated in accordance with the provisions hereof; or
Each
such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered
by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid,
specifying next-business-day delivery, one business day after deposit with the courier), (ii) if sent via mail, at the earlier of its
receipt or five (5) days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States
mail, addressed and mailed as aforesaid, or (iii) if sent via facsimile, upon confirmation of facsimile transfer or, if sent via electronic
mail, upon confirmation of delivery when directed to the relevant electronic mail address, if sent during normal business hours of the
recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day.
(b) if
to the Company, to the attention of the Chief Executive Officer or Chief Financial Officer
of the Company at the address as shown on the signature page of this Agreement, or at such
other current address as the Company shall have furnished to Indemnitee, with a copy (which
shall not constitute notice) to David Stewart and Natalie Karam at Sidley Austin LLP.
24. Internal
Revenue Code 409A. The Company intends for this Agreement to comply with the Indemnification exception under Section 1.409A-1(b)(10)
of the regulations promulgated under the Internal Revenue Code of 1986, as amended (the “Code”),which provides
that indemnification of, or the purchase of an insurance policy providing for payments of, all or part of the expenses incurred or damages
paid or payable by Indemnitee with respect to a bona fide claim against Indemnitee or the Company do not provide for a deferral of compensation,
subject to Section 409A of the Code, where such claim is based on actions or failures to act by Indemnitee in his or her capacity as
a service provider of the Company. The parties intend that this Agreement be interpreted and construed with such intent.
25. Applicable
Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect
to any arbitration commenced by Indemnitee pursuant to Section 10(b) of this Agreement, the Company and Indemnitee hereby irrevocably
and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only
in the Delaware Court of Chancery, and not in any other state or federal court in the United States of America or any court in any other
country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court of Chancery for purposes of any action or proceeding
arising out of or in connection with this Agreement, (iii) appoint, to the extent such party is not otherwise subject to service of process
in the State of Delaware, The Corporation Trust Company, Wilmington, Delaware as its agent in the State of Delaware as such party’s
agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and
validity as if served upon such party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any
such action or proceeding in the Delaware Court of Chancery, and (v) waive, and agree not to plead or to make, any claim that any such
action or proceeding brought in the Delaware Court of Chancery has been brought in an improper or inconvenient forum.
HOST DIGITAL INC. – INDEMNIFICATION AGREEMENT 12
26. Counterparts
and Electronic Signatures. This Agreement may be executed in counterparts, each of which shall for all purposes be deemed to
be an original but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered
by facsimile signature, electronic mail (including, without limitation, “pdf”, “tif” or “jpg”) and
other electronic signatures (including, without limitation, DocuSign and AdobeSign) or other transmission method and any counterpart
so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes, and in counterparts,
each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of
this Agreement. The use of electronic signatures and electronic records (including, without limitation, any contract or other record
created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability
as a manually executed signature or use of a paper- based record-keeping system to the fullest extent permitted by applicable law, including
the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any
other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial
Code.
27. Captions.
The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
(signature
page follows)
HOST DIGITAL INC. – INDEMNIFICATION AGREEMENT 13
The
parties are signing this Indemnification Agreement as of the day and year first above written.
COMPANY:
HOST
DIGITAL INC.
By:
Name:
Harmol
Samra
Title:
Chief
Executive Officer
Address:
INDEMNITEE:
Address:
[Signature
page to Indemnification Agreement]
EX-10.4
EX-10.4
Filename: ex10-4.htm · Sequence: 6
Exhibit
10.4
PREFERENTIAL
RIGHTS AGREEMENT
This
PREFERENTIAL RIGHTS AGREEMENT (this “Agreement”) is entered into as of September 17, 2026 (the “Effective
Date”), by and between Host Infrastructure Holdings LLC, a Delaware limited liability company (“Acquisition HoldCo”),
and Host Digital Inc., a Delaware corporation (“Host”). Acquisition HoldCo and Host are referred to herein, collectively,
as the “Parties” and, each, individually, as a “Party.”
RECITALS
WHEREAS,
upon closing of the merger (the “Merger”) contemplated by that certain Agreement and Plan of Merger, dated as of May
27, 2026, by and among Host, Healthy Choice Wellness II Corp., its wholly-owned subsidiary (“Merger Sub”), and Host
Digital Infrastructure LLC, a Delaware limited liability company (“Host Digital”), Host Digital merged into Merger
Sub, emerged as the surviving company, and became a wholly-owned subsidiary of Host;
WHEREAS,
Acquisition HoldCo was formed by the founders of Host Digital as a Delaware limited liability company to serve as a holding company for
certain existing and future project site acquisition companies (each, a “Project Subsidiary” and, collectively, the
“Project Subsidiaries”), with a view toward contributing such Project Subsidiaries to Acquisition HoldCo from time
to time;
WHEREAS,
this Agreement is intended to memorialize the understanding among the founders of Host Digital and the other owners of Host Digital with
respect to the preferential rights described herein; and
WHEREAS,
in furtherance of the foregoing, Acquisition HoldCo and Host desire to provide Host with both a preferential right of first (i) offer
with respect to any Project Subsidiary that Acquisition HoldCo markets or determines to contribute to a third party, and (ii) refusal
with respect to any unsolicited third-party offer for a Project Subsidiary that Acquisition HoldCo desires to accept, in each case on
the terms and subject to the conditions set forth herein.
NOW,
THEREFORE, in consideration of the premises, the mutual covenants and agreements contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to become legally bound, hereby agree as follows:
AGREEMENT
1.
Definitions. Unless otherwise defined herein, as used in this Agreement, the following terms have the meanings set forth below:
“Person”
means any corporation, limited liability company, partnership, trust, or other entity.
“Pipeline
Transaction” means a proposed contribution, exchange, or other disposition of all or substantially all of the assets or equity
interests of a Project Subsidiary by Acquisition HoldCo to any Person in exchange for, or in connection with the receipt of, securities
of a class that is listed or admitted to trading on a national securities exchange, or to any Person
whose securities are listed or admitted to trading on a national securities exchange.
2.
Preferential Rights.
(a)
First Offer.
(i)
Offer Notice. If during the Term, Acquisition HoldCo markets or otherwise determines to consummate a Pipeline Transaction, Acquisition
HoldCo shall first deliver written notice to Host (A) identifying the applicable Project Subsidiary, (B) indicating Acquisition HoldCo’s
intention to pursue a Pipeline Transaction with respect thereto, and (C) proposing a negotiation period (the “Negotiation Period”)
during which the Parties shall cooperate in good faith to identify a mutually agreeable structure and economic terms for such proposed
Pipeline Transaction.
(ii)
Lapse. If the Parties have not entered into a definitive agreement with respect to the applicable Pipeline Transaction prior
to the expiration of the Negotiation Period, Acquisition HoldCo shall be free to consummate such Pipeline Transaction with any third
party on any terms.
(b)
First Refusal.
(i)
ROFR Notice. If during the Term, Acquisition HoldCo receives an unsolicited bona fide written offer from a third party to consummate
a Pipeline Transaction (a “Third-Party Offer”) that Acquisition HoldCo desires to accept, Acquisition HoldCo shall
promptly deliver written notice to Host (a “ROFR Notice”) setting forth the material terms of the Third-Party Offer.
(ii)
Election Period; Exercise. Host shall have five (5) days following receipt of a ROFR Notice (the “ROFR Election Period”)
to elect to acquire the applicable Project Subsidiary on the same terms as the Third-Party Offer by delivering written notice to Acquisition
HoldCo (a “ROFR Exercise Notice”).
(iii)
Closing. If Host timely delivers a ROFR Exercise Notice, the Parties shall use commercially reasonable efforts to consummate the
applicable Pipeline Transaction within ninety (90) days following such delivery (or such longer period as the Parties may agree in writing).
(iv)
Lapse. If Host does not timely deliver a ROFR Exercise Notice, Acquisition HoldCo shall be free to consummate the Pipeline
Transaction with the applicable third party on terms no more favorable to such third party than those set forth in the applicable ROFR
Notice.
2
3.
Term. This Agreement shall commence on the Effective Date and, unless earlier terminated by mutual written agreement of the Parties,
shall continue in full force and effect until the second (2nd) anniversary of the Effective Date (the “Term”), after
which this Agreement shall automatically expire and be of no further force or effect; provided, however, that any Pipeline
Transaction initiated prior to the expiration of the Term shall be completed in accordance with the terms hereof notwithstanding such
expiration. For the avoidance of doubt, upon expiration of the Term, neither of the preferential rights set forth in Section 2
shall be reinstated or revived with respect to any Pipeline Transaction that was not consummated prior to such expiration, notwithstanding
any reinstatement provision set forth in Section 2.
4.
Additional Project Subsidiaries. Any project site acquisition company formed or acquired by, or contributed to, Acquisition HoldCo
after the Effective Date shall automatically constitute a “Project Subsidiary” for purposes of this Agreement upon such contribution,
without any further action required by the Parties.
5.
Further Acts and Assurances. The Parties will execute and deliver from time to time such further instruments and take such further
actions as may be reasonably required to carry out the provisions and intent of this Agreement.
6.
No Third-Party Beneficiaries. This Agreement is for the sole benefit of the Parties and their permitted successors and assigns
and nothing herein express or implied shall be construed to give any individual, governmental authority, or other Person, other than
the Parties or such permitted successors and assigns, any legal or equitable rights hereunder.
7.
Entire Agreement. This Agreement constitutes the sole, exclusive, and entire agreement among the Parties with respect to the subject
matter hereof and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the
extent they relate in any way to the subject matter hereof.
8.
Amendments; Waivers. No amendment, modification, or waiver of any provision of this Agreement shall be effective unless set forth
in a written instrument duly executed by each of the Parties. No waiver by any Party of any breach or default hereunder shall be deemed
a waiver of any subsequent breach or default.
9.
Governing Law. This Agreement shall be governed by the internal laws of the State of Delaware as to all matters, including matters
of validity, construction, effect, and performance.
3
10.
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument. Counterpart signatures need not be on the same page and shall be deemed effective
upon receipt. Delivery of an executed counterpart of a signature page to this Agreement by means of electronically transmitted portable
document format (PDF) shall be as effective as delivery of a manually executed counterpart of this Agreement.
11.
Notices. All notices, requests, consents, claims, demands, waivers, and other communications hereunder shall be in writing and
shall be deemed to have been duly given: (x) when delivered by hand; (y) when sent by overnight courier; or (z) when sent by email (with
no bounce-back or delivery failure notice received by sender), in each case to the applicable address set forth below, or to such other
address as a Party may designate by written notice given in accordance with this Section 11:
(a)
If
to Acquisition HoldCo:
Host
Infrastructure Holdings LLC
[***]
Attention:
[***]
(b)
If
to Host:
Host
Digital, Inc.
3800
North 28th Way
Hollywood,
FL 33020
Attention:
John Ollet
12.
Arm’s Length Negotiation. This Agreement is the product of arm’s length negotiations between the Parties, each
of which has been represented by counsel of its choosing. This Agreement shall be construed without regard to any presumption or rule
requiring construction against the Party causing this Agreement to be drafted.
[SIGNATURE
PAGE FOLLOWS]
4
IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.
HOST
INFRASTRUCTURE HOLDINGS LLC
By:
/s/ Hans Thomas
Name:
Hans Thomas
Title:
Manager
HOST
DIGITAL, INC.
By:
/s/
Harmol Samra
Name:
Harmol
Samra
Title:
Chief Executive Officer
[Signature Page
to Preferential Rights Agreement]
EX-10.5
EX-10.5
Filename: ex10-5.htm · Sequence: 7
Exhibit
10.5
THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY OTHER APPLICABLE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE SECURITIES LAWS.
FORM
OF PRE-FUNDED COMMON STOCK PURCHASE WARRANT
HEALTHY
CHOICE WELLNESS CORP.
Issue
Date: September [●], 2026 (the “Issue Date”)
THIS
PRE-FUNDED COMMON STOCK PURCHASE WARRANT (this “Warrant”) certifies that, for value received, [●] or its permitted
assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time and from time to time on or after the Issue Date to purchase from Healthy Choice Wellness Corp., a Delaware corporation
(the “Company”), an aggregate of [●] shares (subject to the limitations contained herein, including Section
2(d), and subject to adjustment hereunder, the “Warrant Shares”) of the Company’s Class A common stock, par
value $0.001 per share (the “Common Stock”). The purchase price of one Warrant Share shall be equal to the Exercise
Price, as defined in Section 2(b).
As
used in this Warrant, (a) an “Affiliate” means, with respect to any Person, any other Person who, directly or indirectly,
controls, is controlled by, or under common control with such Person; for purposes of this definition, the term “control”
(including the correlative meanings of the terms “controlled by” and “under common control with”),
as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the
management policies of such Person, whether through the ownership of voting securities or by contract or otherwise, (b) a “Business
Day” means any day excluding Saturday, Sunday or any day which is a legal holiday under the laws of the State of New York or
a day on which banking institutions are authorized or required by law or other governmental action to close, (c) “Capital Stock”
means, with respect to any Person, (i) any capital stock of such Person, (ii) any security convertible, with or without consideration,
into any capital stock of such Person, (iii) any other shares, interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) the capital stock of such Person, (iv) any other equity interest in, or right to
vote generally in elections of directors or the comparable governing body of, such Person, and (v) any other interest or participation
that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person,
(d) “Fair Market Value” of the Common Stock or any other Capital Stock on any date of determination means (i) if the
Common Stock is listed for trading on a United States national securities exchange, the volume-weighted average closing sale price per
share of the Common Stock for the five (5) consecutive Business Days immediately prior to such date of determination, as reported by
the national securities exchange, (ii) if the Common Stock is not listed on a United States national securities exchange but is listed
or quoted in the over-the-counter market, the average last quoted sale price for the Common Stock (or, if no sale price is reported,
the average of the high bid and low asked price for such date) for the thirty (30) consecutive Business Days immediately prior to such
date of determination, in the over-the-counter market as reported by OTC Markets Group Inc. or other similar organization, or (iii) in
all other cases, (A) as agreed upon in good faith by the Holder and the Company or (B) solely if an agreement cannot be reached pursuant
to clause (A), as determined by an independent accounting, appraisal or investment banking firm or consultant of nationally recognized
standing that is retained at the sole cost and expense of the Company and the identity of which is reasonably acceptable to the Holder
and the Company, and (e) a “Person” means any individual, partnership, corporation, limited liability company, association,
joint stock company, trust, joint venture, unincorporated organization or governmental entity (or any department, agency, or political
subdivision thereof).
Section
1. Vesting; Exercisability.
The
Holder’s right to exercise this Warrant with respect to the Warrant Shares is subject to vesting and limitations on exercisability
as follows:
(a) This
Warrant and the Holder’s rights hereunder with respect to the Warrant Shares (subject to adjustment as set forth in this Warrant,
including, without limitation, Section 3) will vest and become exercisable on the Issue Date.
Section
2. Exercise.
(a) Subject
to Section 1, exercise of the purchase rights represented by this Warrant with respect to Warrant Shares may be made, in whole or in
part, at any time and from time to time on or after the Issue Date by delivery to the Company (or such other office or agency of the
Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the
Company) of a duly completed and executed copy of a notice of exercise substantially in the form attached hereto as Exhibit A
(a “Notice of Exercise”). The date on which such delivery shall have taken place (or be deemed to have taken place)
shall be referred to herein as the “Exercise Date”. Within one (1) Business Day following the date of exercise as
aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise, at its
option, (i) by wire transfer or cashier’s check drawn on a United States bank, or (ii) by cashless exercise as set forth in Section
2(e); provided, however, to the extent cashless exercise has not been elected, in the event that the Holder has not delivered
such aggregate Exercise Price within one (1) Business Day following the date of such exercise as aforesaid, the Company shall not be
obligated to deliver such Warrant Shares hereunder until such payment is made. No ink-original Notice of Exercise shall be required,
nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding
anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder
has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three (3) Business Days after the relevant event shall have occurred. Partial
exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the
effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant
Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such
purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The
Holder, by acceptance of this Warrant, acknowledges and agrees that, by reason of the provisions of this paragraph, following the purchase
of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be
less than the amount stated on the face hereof.
2
(b) Exercise
Price. The “Exercise Price” per Warrant Share shall be the remaining unpaid exercise price of $0.001, subject
to any adjustment required by Section 3.
(c) Mechanics
of Exercise.
(i) Delivery
of Warrant Shares Upon Exercise. Upon each exercise of this Warrant, the Company shall promptly, but in no event later than one (1)
Business Day after delivery of the applicable Notice of Exercise (subject to delivery by the Holder to the Company of the aggregate Exercise
Price payable pursuant to Section 2(b) or pursuant to the cashless exercise provisions of Section 2(e)), instruct the transfer agent
for the Common Stock (the “Transfer Agent”) to record the issuance of the Warrant Shares purchased hereunder to the
Holder in book-entry form pursuant to the Transfer Agent’s regular procedures. In connection with the issuance of any Warrant Shares,
if requested by the Holder, the Company shall, after receipt of any documentation reasonably requested by the Company and/or the Transfer
Agent in connection with the removal of the restrictive legend set forth in Section 4(a), direct that the delivery of Warrant Shares
upon exercise of this Warrant shall be made promptly, but in no event later than one (1) Business Day after the delivery of such requested
documentation, by the Transfer Agent to the Holder through the facilities of The Depository Trust Company (“DTC”),
so long as either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or the resale of
such Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale restrictions
pursuant to Rule 144 promulgated under the Securities Act (assuming cashless exercise of this Warrant). If (A) and (B) above are not
true, the Company shall cause the Transfer Agent to issue such Warrant Shares in the name of the Holder or its designee in restricted
book-entry form in the Company’s share register. To the extent that (A) or (B) become true after the issuance of such Warrant Shares
in restricted book-entry form, if requested by the Holder, the Company shall, after receipt of any documentation reasonably requested
by the Company and/or the Transfer Agent in connection with the removal of the restrictive legend set forth in Section 4(a), direct that
the legends be removed and that such Warrant Shares be delivered to the Holder through the facilities of DTC. The Warrant Shares shall
be deemed to have been issued, and the Holder shall be deemed to have become a holder of record of such shares for all purposes, as of
the Exercise Date with payment to the Company of the Exercise Price having been paid. The Company will maintain in the United States
an office or agency, which may be an office of the Company, where the Warrant may be surrendered for registration of transfer or exchange
or for presentation for exercise.
(ii) Rescission
Rights. If the Company fails to issue or cause to have issued the Warrant Shares pursuant to Section 2(c)(i) within one (1) Business
Day after delivery of the applicable Notice of Exercise, then the Holder will have the right to rescind such exercise. The right of rescission
of the Holder under this Section 2(c)(ii) is subject to delivery by the Holder of the aggregate Exercise Price payable pursuant to Section
2(b) or Section 2(e).
(iii) No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall,
at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the
Exercise Price or round up to the next whole share.
(iv) Charges,
Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue, transfer, stamp or other
similar tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid
by the Company, and such Warrant Shares shall be issued in the name of the Holder. Without limiting the generality of the foregoing,
the Company shall pay all fees required for same-day processing of any Notice of Exercise.
(v) Closing
of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
3
(d) Holder’s
Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, and any such exercise shall be null and void and treated as if never
made, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder
(together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s
Affiliates), would, when aggregated with all other shares of Common Stock beneficially owned by such Holder at such time, beneficially
own shares of Common Stock in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of
shares of Common Stock which would be issuable upon (i) exercise of the remaining, non-exercised portion of this Warrant beneficially
owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or non-converted portion of any other
securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)
and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the
Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules
required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination
of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which
portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall
be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the
Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership
Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination and shall have no liability
for exercises of the Warrant that are not in compliance with the Beneficial Ownership Limitation. In addition, a determination as to
any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder and the Company shall have no obligation to verify or confirm the accuracy of such determination and shall have
no liability for exercises of the Warrant that are not in compliance with the Beneficial Ownership Limitation. For purposes of this Section
2(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common
Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the United States Securities and Exchange
Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company
or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Holder,
the Company shall within one (1) Business Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding
shares of Common Stock was reported. In the event that the issuance of shares of Common Stock to the Holder upon exercise of the Warrant
results in the Holder beneficially owning shares of Common Stock in excess of the Beneficial Ownership Limitation (the “Excess
Shares”), the number of shares so issued by which the Holder’s aggregate beneficial ownership exceeds the Beneficial
Ownership Limitation shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote
or transfer the Excess Shares. As soon as reasonably practicable after the issuance of the Excess Shares has been deemed null and void,
the Company shall return to the Holder any exercise price paid by the Holder for the Excess Shares. As used in this Warrant, “Beneficial
Ownership Limitation” means 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to
the issuance of shares of Common Stock issuable upon exercise of this Warrant. The provisions of this Section 2(d) shall be construed
and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d) to correct this paragraph (or any
portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make
changes or supplements necessary or desirable to properly give effect to such limitation.
4
(e) Cashless
Exercise. In lieu of paying the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by
wire transfer or cashier’s check drawn on a United States bank pursuant to Section 2(a), the Holder may elect to exercise the purchase
rights represented by this Warrant by authorizing the Company in the applicable Notice of Exercise to withhold and not issue to the Holder,
in payment of the Exercise Price thereof, a number of such Warrant Shares equal to (x) the number of Warrant Shares for which the Warrant
is being exercised, multiplied by (y) the Exercise Price, and divided by (z) the Fair Market Value on the Exercise Date (and such withheld
Warrant Shares shall no longer be issuable under the Warrant, and the Holder shall not have any rights or be entitled to any payment
with respect to such withheld Warrant Shares).
Section
3. Certain Adjustments.
(a) Stock
Dividends, Subdivisions, Combinations and Consolidations. If the Company, at any time while this Warrant is outstanding (in whole
or in part): (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock (or other class
of Capital Stock of the Company then issuable upon exercise of this Warrant) or any other equity or equity equivalent securities payable
in shares of Common Stock (or such other class of Capital Stock), (ii) subdivides its outstanding shares of Common Stock (or other class
of Capital Stock of the Company then issuable upon exercise of this Warrant) into a larger number of shares or (iii) combines or consolidates
(including, without limitation, by reverse stock split) its outstanding shares of Common Stock (or other class of Capital Stock of the
Company then issuable upon exercise of this Warrant) into a smaller number of shares, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which
the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Concurrently with any adjustment
to the Exercise Price under this Section 3(a) (including any deemed adjustment pursuant to the last sentence of this Section 3(a)), the
number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this
Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision, combination or consolidation. If the Company, at any time while this Warrant is outstanding
(in whole or in part) distributes rights on shares of its Common Stock (or other class of Capital Stock of the Company then issuable
upon exercise of this Warrant) in connection with a shareholder rights plan, no adjustment shall be made pursuant to this Section 3 and
any such rights shall accompany the Warrant Shares issued pursuant to this Warrant for so long as such shareholder rights plan remains
in effect. Notwithstanding the foregoing or anything to the contrary in this Warrant, in no event shall the Company be required to adjust
the Exercise Price to the extent such adjustment would reduce the Exercise Price below the par value per share of Common Stock. In such
case, the number of shares issuable upon exercise of this Warrant shall be adjusted as if the Exercise Price had been adjusted as otherwise
set forth in this Section 3(a) (including below the par value), and each share of Common Stock issuable upon exercise of this Warrant
shall be exercisable for the par value per share issuable upon exercise of this Warrant.
5
(b) Reclassifications,
Reorganizations, Consolidations and Mergers. In the event of (i) any capital reorganization of the Company, (ii) any reclassification
or recapitalization of the stock of the Company (other than (x) a change in par value or from par value to no par value or from no par
value to par value or (y) as a result of a stock dividend, subdivision, combination or consolidation of shares as to which Section 3(a)
shall apply) or (iii) any consolidation or merger of the Company with or into another Person (where the Company is not the surviving
corporation or where there is a change in or distribution with respect to the Common Stock or any other class of Capital Stock then issuable
upon exercise of this Warrant), this Warrant shall, after such reorganization, reclassification, recapitalization, consolidation or merger,
be exercisable for the kind and number of shares of stock or other securities or property (“Alternate Consideration”)
of the Company or of the successor corporation resulting from such consolidation or surviving such merger, if any, to which the holder
of the number of Warrant Shares underlying this Warrant (at the time of such reorganization, reclassification, recapitalization, consolidation
or merger, and subject to the limitations set forth in Section 1 and Section 2 (other than Section 2(d))) would have been entitled upon
such reorganization, reclassification, recapitalization, consolidation or merger. In such event, the aggregate Exercise Price otherwise
payable for the shares of Common Stock (or such other class of Capital Stock) issuable upon exercise of this Warrant shall be allocated
among the Alternate Consideration receivable as a result of such reorganization, reclassification, recapitalization, consolidation, or
merger in proportion to the respective fair market values of such Alternate Consideration (as agreed upon in good faith by the Holder
and the Company). If and to the extent that the holders of Common Stock (or such other class of Capital Stock) have the right to elect
the kind or amount of consideration receivable upon consummation of such reorganization, reclassification, recapitalization, consolidation
or merger, then the consideration that the Holder shall be entitled to receive upon exercise shall be specified by the Holder, which
specification shall be made by the Holder by the later of (A) ten (10) Business Days after the Holder is provided with a final version
of all material information concerning such choice as is provided to the holders of Common Stock (or such other class of Capital Stock),
and (B) the last time at which the holders of Common Stock (or such other class of Capital Stock) are permitted to make their specifications
known to the Company; provided, however, that if the Holder fails to make any specification within such time period, the
Holder’s choice shall be deemed to be whatever choice is made by a plurality of all holders of Common Stock (or such other class
of Capital Stock) that are not affiliated with the Company (or, in the case of a consolidation or merger, any other party thereto) and
affirmatively make an election (or of all such holders if none of them makes an election). From and after any such reorganization, reclassification,
recapitalization, consolidation or merger, all references to “Warrant Shares” herein shall be deemed to refer to the Alternate
Consideration to which the Holder is entitled pursuant to this Section 3(b). The provisions of this clause shall similarly apply to successive
reorganizations, reclassifications, recapitalizations, consolidations, or mergers.
(c) Other
Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution
of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities, evidences of indebtedness of the Company or any other Person
or any other property (including shares of Capital Stock, other securities or evidences of indebtedness of a subsidiary) or options by
way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) other than
any dividend or distribution referred to in Section 3(a) or Section 3(b) (a “Distribution”), at any time after the
issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent
that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete
exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership
Limitation) immediately before the date on which a record is taken for such Distribution, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided,
however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in
the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the
Holder exceeding the Beneficial Ownership Limitation, at which time or times the Holder shall be granted such Distribution). To the extent
that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion of the Distribution shall
be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.
6
(d) Calculations.
All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 3, the number of shares of Common Stock (or such other Company security as is then issuable upon exercise of this Warrant)
deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (or such other Company
security) (excluding treasury shares, if any) issued and outstanding on such date. In the event of any dispute as to any calculation
or determination under this Warrant, the Holder and the Company agree to enter into confidential, good faith negotiations to attempt
to resolve the dispute.
(e) Notice
to Holder.
(i) Adjustment
to Terms of Warrant. Whenever any of the terms of this Warrant are adjusted pursuant to any provision of this Section 3 or any other
applicable provision hereof, the Company shall promptly send to the Holder a notice signed by a duly authorized officer of the Company
and setting forth (x) the Exercise Price, number of Warrant Shares (or other securities issuable upon exercise of this Warrant, as applicable)
and, if applicable, the kind and amount of Alternate Consideration purchasable hereunder after such adjustment and (y) the facts requiring
such adjustment in reasonable detail.
(ii) Notice
to Allow Exercise by Holder. If, during the period in which this Warrant is outstanding, (A) the Company shall declare a dividend
(or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a cash dividend on or a redemption of
the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required
in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address
as it shall appear upon the Warrant Register (as defined below) of the Company, at least 10 calendar days prior to the applicable record
or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock
of record to be entitled to such dividend, distribution, redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date
as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock
for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange;
provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material,
non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Securities
and Exchange Commission (the “SEC”) pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise
this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except
as may otherwise be expressly set forth herein.
7
Section
4. Transfer of Warrant and Warrant Shares.
(a) Restrictive
Legend. The Warrant Shares (unless and until registered under the Securities Act of 1933, as amended (the “Securities Act”)
or transferred pursuant to Rule 144 promulgated under the Securities Act, or any successor rule or regulation hereafter adopted by the
United States Securities and Exchange Commission, as such rule may be amended from time to time (“Rule 144”)) will
be stamped or imprinted with a legend in substantially the following form:
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT UNDER ANY CIRCUMSTANCES
BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND ANY OTHER APPLICABLE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE SECURITIES LAWS.
(b) Transferability.
The Holder may sell, assign, transfer, pledge or dispose of all or any portion of this Warrant without the prior written consent of the
Company. In connection with any transfer of all or any portion of this Warrant, the Holder must provide an assignment form substantially
in the form attached hereto as Exhibit B duly completed and executed by the Holder or any such subsequent Holder, as applicable,
and the proposed transferee must consent in writing to be bound by the terms and conditions of this Warrant. Any transfer of all or any
portion of this Warrant shall also be subject to the Securities Act and other applicable federal or state securities or blue sky laws.
Upon any permitted transfer of this Warrant in full, the Holder shall be required to physically surrender this Warrant to the Company
within three (3) Business Days of the date the Holder delivers an assignment form to the Company assigning this Warrant in full. The
Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having
a new Warrant issued. This Warrant or any portion thereof shall not be sold, assigned, transferred, pledged or disposed of in violation
of the Securities Act or federal or state securities laws.
(c) Warrant
Register. The Company shall register this Warrant upon records to be maintained by the Company for that purpose (the “Warrant
Register”) in the name of the record Holder hereof from time to time. Absent manifest error or actual notice to the contrary,
the Company may deem and treat the Holder of this Warrant so registered as the absolute owner hereof for the purpose of any exercise
hereof or any distribution to the Holder, and for all other purposes.
8
Section
5. Miscellaneous.
(a) No
Rights as Stockholder Until Exercise. Except for U.S. federal income tax purposes or as otherwise expressly set forth herein, this
Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise
hereof as set forth in Section 2.
(b) Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon delivery by the Holder to the Company of (i) notice
of the loss, theft, destruction or mutilation of this Warrant and (ii) in the case of loss, theft or destruction, an indemnity agreement
in a form and amount reasonably satisfactory to the Company or, in the case of mutilation, surrender of the mutilated Warrant, the Company
will make and deliver a new Warrant of like tenor dated as of the Issue Date.
(c) Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
(d) Authorized
Shares. The Company covenants that, during the period this Warrant is exercisable (in whole or in part), it will reserve (and will
direct and instruct the Transfer Agent to reserve) from its authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that
its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates
to execute and issue the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take
all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation
of any applicable law or regulation, or of any requirements of any national securities exchange upon which the Common Stock is listed
or traded. The Company shall cause the Warrant Shares, immediately upon such exercise, to be listed on the NYSE American or the principal
securities exchange on which shares of Common Stock or other securities constituting Warrant Shares are listed at the time of such exercise.
The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant
will, upon exercise of the purchase rights represented by this Warrant and full payment for such Warrant Shares in accordance herewith,
be duly authorized, validly issued, fully paid and non-assessable, not subject to any preemptive rights and free from all taxes, liens
and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue).
(e) Governing
Law. This Warrant shall be governed by and construed in accordance with the laws of the State of New York without giving effect to
the principles of conflict of laws thereof. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
(f) Nonwaiver.
No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a waiver of such
right or otherwise prejudice the Holder’s rights, powers or remedies.
9
(g) Notices.
Any notice, request, instruction or other document to be given hereunder by any party to the other shall be in writing and shall be deemed
to have been duly given if (a) sent by the U.S. Postal Service (registered, return receipt service required), United Parcel Service or
FedEx, in each case on an overnight basis, signature receipt required, one Business Day after mailing, (b) if otherwise personally delivered,
when delivered with signature receipt required or (c) sent by email, provided that if a “system error” or other notice
of non-delivery is generated, such email shall not be deemed effective for purposes of this Section 5(g). All notices hereunder shall
be delivered as set forth below, or in accordance with such other instructions as may be designated in writing by the party to receive
such notice.
If
to the Company, to:
Name:
Healthy
Choice Wellness Corp.
Address:
3800
North 28th Way
Hollywood,
FL 33020
Email:
[***]
Attn:
John
Ollet
with
a copy to (which copy alone shall not constitute notice):
Name:
Sidley
Austin LLP
Address:
1999
Avenue of the Stars, 17th Floor
Los
Angeles, CA 90067
Email:
[***]
Attn:
Natalie
Karam; Nick DeAngelis
If
to the Holder, to:
Name:
[●]
Address:
[●]
Email:
[●]
Attn:
[●]
(h) Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase
price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the
Company.
(i) Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors and permitted assigns of the Company and the permitted assigns of the Holder. The provisions
of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder
or holder of Warrant Shares.
(j) Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
10
(k) Acceptance.
Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.
(l) Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
(m) Headings.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this
Warrant.
(n) Taxes.
(i) Unless
otherwise required by applicable law, the Holder and the Company agree to treat any cashless exercise (if elected by the Holder pursuant
to Section 2(e) hereof) as a “reorganization” within the meaning of Section 368(a)(1)(E) of the Internal Revenue Code of
1986, as amended.
(ii) The
Holder and the Company agree not to report or take any tax position for U.S. federal income tax purposes (and applicable state, local
and non-U.S. income tax purposes) that is inconsistent with this Section 5(n) unless otherwise required by applicable law.
(iii) The
Company and its paying agent shall be entitled to deduct and withhold taxes on all payments and distributions (or deemed distributions)
with respect to this Warrant (or upon the exercise thereof) or the Common Stock issued upon any exercise of this Warrant, in each case,
to the extent required by applicable tax law to be deducted and withheld and paid over to the relevant taxing authority; provided,
that, other than with respect to the failure by the Holder to provide an Internal Revenue Service Form W-9 or an applicable Internal
Revenue Service Form W-8 pursuant to Section 5(n)(iv), the Company and its paying agent shall promptly provide written notice upon determining
any such deduction or withholding is required by applicable tax law (and, in any event, at least five (5) Business Days before making
such deduction or withholding) to the Person in respect of whom such deduction or withholding is to be made and shall cooperate with
such Person in good faith to reduce or eliminate any such deduction or withholding. To the extent that any amounts are so deducted or
withheld and paid over to the relevant taxing authority, such deducted or withheld amounts shall be treated for all purposes of this
Warrant as having been paid to the Person in respect of which such deduction or withholding was made.
(iv) On
or prior to the Issue Date, the Holder shall deliver to the Company a properly completed and duly executed Internal Revenue Service Form
W-9 or applicable Internal Revenue Service Form W-8; provided, that, notwithstanding anything to the contrary in this Warrant,
the sole remedy of the Company for the failure of the Holder to deliver a properly completed and duly executed Internal Revenue Service
Form W-9 or applicable Internal Revenue Service Form W-8 pursuant to this Section 5(n)(iv) shall be to deduct and withhold from any payments
and distributions (or deemed distributions) with respect to this Warrant (or upon the exercise thereof) or the Common Stock issued upon
any exercise of this Warrant such amounts as are required by applicable tax law in accordance with Section 5(n)(iii).
(o) Non-Circumvention.
The Company hereby covenants and agrees that the Company will not, by amendment of its certificate of incorporation or bylaws or through
any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issuance or sale of securities, or
any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all
times in good faith carry out all the provisions of this Warrant and take all action as may reasonably be required to protect the rights
of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common
Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock
upon the exercise of this Warrant and (iii) shall, so long as this Warrant is outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of this Warrant,
the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of this Warrant (without regard to
any limitations on exercise). Notwithstanding anything herein to the contrary, if the Holder is not permitted to exercise this Warrant
in full for any reason (other than pursuant to restrictions set forth in Section 2(d) hereof), the Company shall use its reasonable efforts
to promptly remedy such failure, including, without limitation, obtaining such consents or approvals as necessary to permit such exercise
into shares of Common Stock.
[Signatures
Contained on the Following Page]
11
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the Issue Date.
HEALTHY
CHOICE WELLNESS CORP.
By:
Name:
[●]
Title:
[●]
[Signature
Page to Warrant]
EXHIBIT
A
NOTICE
OF EXERCISE
TO:
HEALTHY CHOICE WELLNESS CORP.
Reference
is made to that certain Pre-Funded Common Stock Purchase Warrant (the “Warrant”) issued by Healthy Choice Wellness Corp.
(the “Company”) on [●]. Capitalized terms used but not otherwise defined herein shall have the respective meanings
given thereto in the Warrant.
(1) The
undersigned Holder of the Warrant hereby elects to exercise the Warrant for ______ Warrant Shares, subject to (check one):
☐
delivery of the aggregate Exercise Price for the Warrant Shares as to which the Warrant is so exercised; or
☐
tender of ______ Warrant Shares pursuant to the cashless exercise provisions of Section 2(e) of the Warrant.
The
undersigned Holder hereby instructs the Company to issue the applicable number of Warrant Shares, or the net number of shares of Common
Stock issuable upon exercise of the Warrant pursuant to the cashless exercise provisions of Section 2(e) of the Warrant, in the name
of the undersigned Holder.
(2) The
undersigned Holder hereby represents and warrants to the Company that, as of the date hereof:
a)
Experience; Accredited Investor Status. The Holder (i) is an accredited investor as that term is defined in Rule 501 of Regulation
D promulgated under the Securities Act, (ii) is capable of evaluating the merits and risks of its investment in the Company, (iii) has
the capacity to protect its own interests, and (iv) has the financial ability to bear the economic risk of its investment in the Company.
b)
Company Information. The Holder has been provided access to all information regarding the business and financial condition of
the Company, its expected plans for future business activities, material contracts, intellectual property, and the merits and risks of
its purchase of the Warrant Shares, which it has requested or otherwise needs to evaluate an investment in the Warrant Shares. It has
had an opportunity to discuss the Company’s business, management and financial affairs with directors, officers and management
of the Company and has had the opportunity to review the Company’s operations and facilities. It has also had the opportunity to
ask questions of, and receive answers from, the Company and its management regarding the terms and conditions of this investment and
all such questions have been answered to its satisfaction.
c)
Investment. The Holder has not been formed solely for the purpose of making this investment and is acquiring the Warrant Shares
for investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution
of any part thereof. It understands that the Warrant Shares have not been registered under the Securities Act or applicable state and
other securities laws and are being issued by reason of a specific exemption from the registration provisions of the Securities Act and
applicable state and other securities laws, the availability of which depends upon, among other things, the bona fide nature of the investment
intent and the accuracy of its representations as expressed herein.
d)
Transfer Restrictions. The Holder acknowledges and understands that (i) transfers of the Warrant Shares are subject to transfer
restrictions under the federal securities laws and (ii) it may have to bear the economic risk of this investment for an indefinite period
of time unless the Warrant Shares are subsequently registered under the Securities Act and applicable state and other securities laws
or unless an exemption from such registration is available.
(e)
Beneficial Ownership Limitation. The Holder certifies that after giving effect to the issuance of shares of Common Stock issuable
pursuant to this Notice of Exercise, the number of shares of Common Stock the Holder will own will not exceed the Beneficial Ownership
Limitation.
Name
of Registered Owner: __________________________________________________________________________
Signature
of Authorized Signatory of Registered Owner: ____________________________________________________
Name
of Authorized Signatory: _______________________________________________________________________
Title
of Authorized Signatory: ________________________________________________________________________
Date: ___________________________________________________________________________________________
EXHIBIT
B
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
Name:
(Please
Print)
Address:
(Please
Print)
Dated:
_______________ __, ______
Holder’s
Signature: _______________________________
Holder’s
Address: ________________________________
EX-16.1
EX-16.1
Filename: ex16-1.htm · Sequence: 8
Exhibit
16.1
UHY
LLP
uhy-us.com
Securities
and Exchange Commission
100
F Street, N.E.
Washington,
D.C. 20549
We
have read the statements made by Host Digital Inc., (formerly known as Healthy Choice Wellness Corp.) under Item 4.01 of Form 8-K which
we understand will be filed with the Securities and Exchange Commission on or soon after September 17, 2026 in regard to its change
in auditors. We agree with the statements made regarding our firm contained in the paragraph within Item 4.01 “Dismissal of UHY
LLP.” We have no basis to agree or disagree with other statements of Healthy Choice Wellness Corp. contained therein.
/s/
UHY LLP
Hudson,
New York
September
17, 2026
EX-21.1
EX-21.1
Filename: ex21-1.htm · Sequence: 9
Exhibit 21.1
Subsidiaries
of Host Digital Inc.
Subsidiary
Jurisdiction
Host
Digital Infrastructure LLC
Delaware
10X
East Tulsa LLC
Delaware
T20
Mining Group LLC
Oklahoma
T20
Manufacturing LLC
Oklahoma
Healthy
Choice Markets, Inc.
Florida
Healthy
Choice Markets 2, LLC
Florida
Healthy
Choice Markets 3, LLC
Florida
Healthy
Choice Markets IV, LLC
Florida
Healthy
Choice Markets V, LLC
Florida
Healthy
Choice Markets VI, LLC
Florida
Healthy
Choice Wellness, LLC
Florida
Healthy
U Wholesale, Inc.
Florida
The
Vitamin Store, LLC
Florida
Healthy
Choice Wellness II, LLC
Florida
EX-23.1
EX-23.1
Filename: ex23-1.htm · Sequence: 10
Exhibit
23.1
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
hereby consent to the incorporation by reference in this Registration Statement on Form 8-K of our report dated March 16, 2026 related
to the consolidated financial statements appearing in the Annual Report on Form 10-K of Healthy Choice Wellness Corp. for the years ended
December 31, 2025 and 2024.
Our
report on Healthy Choice Wellness Corp.’s consolidated financial statements includes an emphasis of matter paragraph related to
Healthy Choice Wellness Corp.’s recurring losses from operations and its net working capital deficit, and management’s plans
to mitigate these matters.
/s/
UHY LLP
Hudson,
New York
September
17, 2026
EX-23.2
EX-23.2
Filename: ex23-2.htm · Sequence: 11
Exhibit
23.2
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
consent to the incorporation by reference in the Registration Statement on Form S-3 (File No. 333-291258) and Form S-8 (File Nos. 333-288839
and 333-294339) of Host Digital Inc. (formerly known as Healthy Choice Wellness Corp.) of our report dated May 29, 2026, which included
an explanatory paragraph as to the Company’s ability to continue as a going concern, with respect to our audit on the consolidated
financial statements of Host Digital Infrastructure LLC as of January 31, 2026 and for the period from July 8, 2025 (inception) through
January 31, 2026 appearing in this Current Report on Form 8-K.
/s/ Carr, Riggs & Ingram, L.L.C.
Palm
Beach Gardens, Florida
September
17, 2026
EX-99.1
EX-99.1
Filename: ex99-1.htm · Sequence: 12
Exhibit 99.1
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF HOST DIGITAL INFRASTRUCTURE LLC
The
following discussion should be read together with Host Digital Infrastructure LLC’s (the “Company”, “we”,
“our” and “us”) financial statements and the related notes included elsewhere in this Current Report on Form
8-K. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions, including those described
under “Risk Factors” and elsewhere in this Current Report on Form 8-K. Actual results may differ materially. Except as required
by law, the Company undertakes no obligation to update any forward-looking statements.
Overview
The
Company is a development-stage entity with no material revenue from operations. The Company was organized to develop, own and operate
large-scale data center campuses in the United States serving high-performance computing and artificial intelligence workloads. The Company
has no significant operating history. The Company’s continuing operations did not generate revenue during the periods presented.
The
Company’s initial project is expected to be the development of an approximately 45+ megawatt data center campus in Northeast Oklahoma
(the “Project Facility”), comprising 45+ megawatts of contracted power capacity, related electrical
equipment, and an 80,000+
square foot building under an exercised acquisition option. In the event that the Company does not complete the acquisition of the Project
Facility, the Company may instead pursue the lease or acquisition of one or more other facilities with similar power output and other
characteristics to the Project Facility.
In
February 2026, we acquired T-20 Mining LLC (“T-20”), a Delaware limited liability company that held an Electric Service Agreement
(“ESA”) with the applicable utility provider for the Project Facility’s location. The ESA provides us with a contractual
right to a specified level of electrical power capacity at the Project Facility, a critical infrastructure asset for the Project Facility
to be used as a data center by the tenant as discussed below. The acquisition of T-20 was undertaken specifically to secure power access
at the Project Facility and is directly related to our intended use of the Project Facility.
On
August 7, 2026, we entered into a 15-year lease with one of the world’s largest privately held cloud infrastructure companies,
pursuant to which we will provide 43 MW of critical IT load capacity at the Project Facility (the “Lease”). The Lease is
structured on a take-or-pay basis, which is expected to be backstopped by an investment-grade technology company, with aggregate base-term
contracted rent of approximately $1.25 billion, inclusive of 3% annual escalators. The Lease may be renewed for a total Lease term of
30 years. The Project Facility is not currently generating revenue and the Lease is expected to commence in the first quarter of 2027,
which is when we expect to deliver to the tenant the Project Facility.
This
lease strengthens our ability to obtain project financing for the acquisition of the Project Facility and supports management’s
plans to address the going concern uncertainty (see Note 1 — Organization and Nature of Operations and Note 2 — Going Concern
to the Company’s unaudited condensed consolidated financial statements for the three and six months ended July 31, 2026 included
elsewhere in this Current Report on Form 8-K).
The
Company will not commence material revenue-generating operations until, at the earliest, a lease has been executed, construction of the
Project Facility or another similar facility has been completed and the tenant has occupied the property. As of the date of this filing
the Company has executed the Lease, but neither of the other steps has occurred.
Plan
of Operations
Because
the Company has not commenced material revenue-generating operations, its principal activities for the foreseeable future will consist
of: (i) closing the contemplated project financing described below; (ii) completing construction and commissioning of the Project Facility;
(iii) achieving tenant occupancy and lease commencement at the Project Facility; and (iv) advancing site control, utility arrangements,
customer dialogue and design work across future developments. The timing and achievement of each of these milestones is subject to a
number of risks and uncertainties, including construction risk, supply-chain availability for long-lead-time equipment, utility delivery
risk, anchor tenant negotiation risk, the timing of the project financing, and capital markets conditions.
Results
of Operations
We
have not generated material revenue from operations during any period presented and do not expect to generate material revenue until,
at the earliest, the prospective anchor tenant has executed a lease, occupied the Project Facility and commenced rent payments, of which
only execution of the Lease has occurred. The Company’s operating expenses to date have consisted principally of (i) general and
administrative expenses, including legal, accounting, audit and tax-advisory fees, (ii) project pre-development costs (including engineering,
environmental, surveying, permitting, power costs, and pre-construction expenses), (iii) compensation expense, and (iv) costs of pursuing
its public listing and the contemplated project financing.
Liquidity
and Capital Resources
The
Company’s activities to date have been funded principally through sponsor equity and related-party advances. We have not generated
material cash from operations during any period presented. As of January 31, 2026, the Company had no cash and incurred a net loss of
$518,705. In addition, the Company had net cash used in operations of $1,208,046 and a working capital deficit of $1,195,242 as of January
31, 2026. As of July 31, 2026, the Company had no cash and incurred a net loss of $3,703,223 and $5,039,396 as of the three and six
months ended July 31, 2026, respectively. In addition, the Company had net cash used in operations of $480,181 and a working capital
deficit of $27,465,029 as of the six months ended July 31, 2026.
The
Company expect its principal future sources of liquidity to be (i) the net proceeds of a contemplated project financing the proceeds
of which would fund the balance of the development and construction costs at the Project Facility, together with a debt service reserve
and cost-overrun protection; (ii) continued sponsor or affiliate funding; and (iii) following tenant occupancy, contracted cash flows
under the Lease. The pricing and closing of the contemplated project financing is dependent on, among other things, prevailing capital
markets conditions, interest rates, and the overall progress of the Project Facility’s development. There can be no assurance that
the financing will be completed on the contemplated terms, or at all.
Off-Balance
Sheet Arrangements
As
of the date of this filing, the Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have,
a current or future effect on its financial condition, results of operations, liquidity, capital expenditures or capital resources that
is material to investors.
Critical
Accounting Policies and Estimates
The
preparation of the Company’s financial statements in accordance with U.S. generally accepted accounting principles requires management
to make estimates, judgments and assumptions. The Company considers the following to be its critical accounting policies:
Business
Combination Accounting
The
Merger was accounted for as a reverse acquisition under GAAP in accordance with Accounting Standards Codification Topic 805, Business
Combinations. We were identified as the accounting acquirer because its former members hold a majority of the voting rights in the
combined entity, designate a majority of the board of directors, and appoint senior management. Host Digital Inc. (f/k/a Healthy Choice
Wellness Corp.) was the accounting acquiree. Under the acquisition method of accounting, the assets and liabilities of Host Digital Inc.
will be recorded at their estimated fair values as of the acquisition date, and any excess of the purchase price over the fair value
of the net assets acquired will be recorded as goodwill. The assets and liabilities of the Company will be carried over at their historical
carrying values, as the combined entity is a continuation of the Company’s financial statements.
Asset
Acquisition Accounting
The
Company accounts for acquisitions of assets or groups of assets that do not meet the definition of a business under ASC 805, Business
Combinations, as asset acquisitions in accordance with ASC 805-50, Business Combinations — Related Issues.
Under
the asset acquisition model, the total cost of the acquisition, including direct and incremental transaction costs (such as legal, valuation,
and due diligence fees), is allocated to the identifiable assets acquired and liabilities assumed based on their relative fair values.
No goodwill is recognized in an asset acquisition. The cost of the acquisition is allocated to the individual assets and liabilities
based on their relative fair values at the acquisition date.
Transaction
costs directly attributable to the acquisition are capitalized as part of the cost of the assets acquired. The Company determines the
fair value of acquired assets using appropriate valuation techniques, which may include income approaches (e.g., discounted cash flow
models), market approaches, or cost approaches, depending on the nature of the assets.
Going
Concern
The
Company has evaluated its ability to continue as a going concern for at least twelve months from the issuance of its consolidated financial
statements. The ability of the Company to continue its operations is dependent on management’s plans, which include the raising
of capital through debt and/or equity markets, including as a result of the Company’s access to public capital markets as a result
of the Merger, with some additional funding from other traditional financing sources, including pursuing project financing, until such
time that funds provided by operations are sufficient to fund working capital requirements. The Company also believes that execution
of the Lease strengthens the Company’s ability to obtain project financing in connection with development of the Project Facility
and supports management’s plans to address the going concern uncertainty.
The
future viability of the Company is dependent on its ability to raise additional capital to finance its operations, which is uncertain.
The Company has concluded that there is substantial doubt about its ability to continue as a going concern for at least one year after
the date that the consolidated financial statements are issued.
For
further discussion on the Company’s ability to continue as a going concern, see Note 2 to the Company’s financial statements
included elsewhere in this Current Report on Form 8-K.
Recent
Accounting Pronouncements
For
a discussion of recently issued accounting pronouncements that may affect the Company, see Note 3 to the Company’s financial statements
included elsewhere in this Current Report on Form 8-K.
EX-99.2
EX-99.2
Filename: ex99-2.htm · Sequence: 13
Exhibit
99.2
INFORMATION
ABOUT HOST DIGITAL INC.
Unless
the context otherwise requires, references to “Host Digital”, the “Company”, “we”, “our”
and “us” refers to Host Digital Inc. and its consolidated subsidiaries following the completion of its merger with Host Digital
Infrastructure LLC, unless otherwise indicated.
Business
Overview
We
are a pure-play vertically integrated digital infrastructure platform, serving as owner and operator of institutional quality data centers
in the United States, focused on supporting artificial intelligence (“AI”) and high-performance computing (“HPC”)
workloads. Our strategy is focused aggregation and control of powered assets, with a mix of on-grid (controlled with long term power
purchase agreements with the utility) and behind-the-meter or private grid power. We plan to integrate power procurement, site development
and delivery of fully commissioned data centers on both a powered-shell and turnkey basis, and contract our capacity to Tier 1, AI compute
and enterprise customers under long-term lease arrangements with credit-enhanced counterparties.
We
partner with our sponsor, Host Infrastructure Holdings LLC (“Sponsor”), pursuant to a Preferential Rights Agreement whereby
our Sponsor provides us with an exclusive right of first offer and right of first refusal to acquire key assets being developed by our
Sponsor to be contributed to a public company, which we believe will help support our growing data center platform. Under the Preferential
Rights Agreement, for 24 months we will have priority with respect to acquisitions of all data center assets being acquired and developed
by our sponsor and its affiliates.
Our
team is highly experienced with building digital infrastructure platforms, both at the data center level and in the capital markets,
led by Chief Executive Officer Harmol Samra, who in his previous roles at ICONIQ Capital and Starwood Capital helped build large real
estate and data center platforms. During his time at ICONIQ, he helped build one of the largest digital infrastructure development platforms
in the world, IPI, prior to its sale to Blue Owl, and Chairman Shawn Matthews, the former CEO of Cantor Fitzgerald.
Following
the Merger (as defined below), our legacy natural and organic grocery retail operations continue as a division of the combined company.
Through our subsidiaries, these operations include Ada’s Natural Market, Paradise Health & Nutrition, Mother Earth’s
Storehouse, Green’s Natural Foods, Ellwood Thompson’s and GreenAcres Market, as well as our online vitamin, supplement and
personal care products business operated through Healthy U Wholesale, Inc.
Recent
Developments
Closing
of the Merger with Host LLC
On
September 17, 2026, we completed our previously announced business combination with Host Digital Infrastructure LLC (“Host
LLC”) pursuant to the Agreement and Plan of Merger, dated as of May 27, 2026 (the “Merger Agreement”), by and among
the Company, Host LLC and our wholly owned subsidiary, Healthy Choice Wellness II Corp. (“Merger Sub”). Pursuant to the Merger
Agreement, Merger Sub merged with and into Host LLC, with Host LLC surviving as our wholly owned subsidiary (the “Merger”).
In connection with the Merger, the outstanding equity interests of Host LLC were converted into the right to receive shares of our Class
A common stock, par value $0.001 per share (the “Common Stock”) and/or pre-funded warrants to purchase shares of our Common
Stock, in each case, in accordance with the terms of the Merger Agreement.
In
connection with the closing of the Merger, we changed our corporate name from “Healthy Choice Wellness Corp.” to “Host
Digital Inc.”, effective as of September 17, 2026.
Reverse
Stock Split
On
August 27, 2026, our board of directors (the “Board”) approved a one-for-35 reverse stock split of our Common Stock (the
“Reverse Stock Split”), following approval by our stockholders of an amendment to our certificate of incorporation authorizing
the Board to effect a reverse stock split at a ratio of up to and including one-for-100. The Reverse Stock Split became effective at
11:59 p.m., Eastern Time, on August 28, 2026, and our Common Stock began trading on a split-adjusted basis on the NYSE American at market
open on August 31, 2026. As a result of the Reverse Stock Split, every 35 shares of our Common Stock issued and outstanding immediately
prior to the effective time were automatically converted into one share of our Common Stock, without any change in the par value per
share. No fractional shares were issued in connection with the Reverse Stock Split; fractional shares otherwise issuable to a stockholder
were rounded up to the next whole share after aggregating all fractional shares issuable to such stockholder.
Unless
otherwise indicated, all share and per-share amounts presented herein have been adjusted to reflect the Reverse Stock Split.
Business
Strategy
Our
business strategy is focused on the development, acquisition, ownership, and operation of medium-to-large scale, power-advantaged data
centers with long-term contracted tenancy with Tier 1 clients. The key elements of our strategy are:
● Power-First
Site Sourcing. We prioritize sites with executed or executable power agreements,
with scalable capacity over its hold and access to long-duration, cost-competitive electricity
rates.
● Control
of Core Infrastructure. We seek to retain ownership or long-term control of key infrastructure
assets, including land, interconnection rights, executed utility service agreements, electrical
and cooling infrastructure and, where appropriate, on-site generation.
● Long-Term
Contracting with Strong Tenants. We seek to enter into leases with contracted rent
and market standard escalators, and renewal options, with credit support from credit-enhanced
counterparties.
● Phased,
Scalable Development. We aim to acquire campuses ready for phased build-out, aligned
with customer deployment schedules and power availability.
● Brownfield
Conversion Where Available. Where suitable, we may repurpose existing energized
industrial facilities and completed substation infrastructure to reduce development, interconnection
and ramp-up risk relative to greenfield development.
● Private
Grid / Behind the Meter Where Available. Wherever possible, we seek to augment grid
capacity with novel generation from a variety of power sources.
The
Project Facility – Northeast Oklahoma
On
November 25, 2025, we entered into a lease agreement (the “Property Lease”) for a facility located in northeastern Oklahoma
(the “Project Facility”), with Host LLC as lessee and the current owner as lessor. Pursuant to the Property Lease, we have
the right to occupy and prepare the Project Facility for data center development. The annual base rent under the Property Lease is $495,581.
In addition, we are responsible for ongoing monthly expenses of approximately $6,500 under the Property Lease. On March 26, 2026, we
exercised the purchase option contained in the Property Lease, which gives us the right to purchase the Project Facility. The purchase
agreement was executed in June 2026, which also reflects the exercise of our option to purchase the Project Facility’s parking
lot. The purchase price for the Project Facility, inclusive of the parking lot, under the purchase agreement is $27.7 million. Host Digital
expects to complete the acquisition by September 26, 2026.
On
August 7, 2026, we entered into a 15-year lease with one of the world’s largest privately held cloud infrastructure companies,
pursuant to which we will provide 43 MW of critical IT load capacity at the Project Facility (the “Lease”). The Lease is
structured on a take-or-pay basis, and is expected to be supported by a backstop from an investment-grade technology company, which backstop
has not yet taken effect and is subject to the completion of our anticipated project financing, with aggregate base-term contracted rent
of approximately $1.25 billion, inclusive of 3% annual escalators. The Lease may be renewed for a total Lease term of 30 years. The Project
Facility is not currently generating revenue and the Lease is expected to commence in the first quarter of 2027, which is when we expect
to deliver to the tenant the Project Facility.
The
service level agreement (the “SLA”) with the tenant is in line with market standards. The SLA provides significant monthly
abatements in the event of outages of significant duration (with abatements ranging from 10% of monthly rent for the affected racks to
100% depending on the cumulative duration of the outage). Total rent abatements payable on account of service level failures in any given
calendar month are capped at 100% of the monthly base rent payable in such calendar month (i.e. base rent abatements are not compounding
or cumulative across multiple months).
Development
Pipeline and Preferential Rights Agreement
Our
initial asset is the development of the Project Facility, which we acquired through the Merger. Separately our Sponsor holds or controls
a pipeline of additional data center development opportunities held in project site acquisition subsidiaries (each, a “Project
Subsidiary”). We do not own these Project Subsidiaries. Currently, the Sponsor’s pipeline consists of sites with an aggregate
of approximately 450 MW at various and preliminary stages of development and site control across multiple markets, certain of which are
associated with prospective or signed tenant arrangements.
In
connection with the Merger, we entered into a Preferential Rights Agreement with the Sponsor. Under the agreement, if the Sponsor markets
or determines to contribute, sell, or otherwise dispose of a Project Subsidiary to a public company vehicle, we have a right of first
offer to acquire that Project Subsidiary (exercisable within 30 days), and if the Sponsor receives an unsolicited third-party offer it
desires to accept, we have a right of first refusal to acquire that Project Subsidiary on the same terms (exercisable within five days).
The Sponsor is not obligated to develop, retain, or contribute any Project Subsidiary, and if we do not exercise our rights, the Sponsor
may transact with third parties. The agreement expires on the second anniversary of its effective date. Because the Sponsor is controlled
by, among others, our chief executive officer and one of our stockholders who owns a substantial interest in our company, we have determined
that the Preferential Rights Agreement is a related-party arrangement. See “Risk Factors” and “Certain Relationships
and Related Person Transactions” below. Because the assets in the Sponsor’s pipeline are owned by the Sponsor and not by
us, and our ability to acquire these assets is subject to the Preferential Rights Agreement. Neither the Preferential Rights Agreement
nor any other agreement prohibits us from acquiring, owning, or developing data center projects on our own or with parties other than
the Sponsor.
The
base price of our initial asset was $425 million under the Merger Agreement. Newmark, a third-party firm that, in part, provides valuations,
provided an indicated valuation range for the Northeast Oklahoma facility of approximately $676 million to $954 million, based on an
indicated capitalization rate range of 5.0% to 6.5%. The negotiated base price represents an implied discount of approximately 48% to
the midpoint of that indicated range. The Newmark indicated valuation is an estimate based on assumptions and does not represent an offer
to purchase or a determination of fair value; there can be no assurance that we would realize the indicated value upon a sale, financing,
or otherwise. See “Risk Factors” below.
We
intend to fund the $27.7 million purchase price following the closing of the Merger through project financing in connection with the
development of the Project Facility from one or more lenders, the terms of which are currently being negotiated. There can be no assurance
that project financing will be available on acceptable terms or within the time required to complete the acquisition by September 26,
2026. In the event the acquisition of the Project Facility is not consummated by September 26, 2026, for any reason, we have the right
to request two additional 30-day extensions of the purchase option deadline from the seller, if required. Our acquisition of the Project
Facility is at our option, and we are under no obligation to consummate the acquisition or to obtain project financing. The scheduled
closing date under the purchase agreement is October 1, 2026, and we have the unilateral right, exercisable by delivery of notice to
the seller prior to the then-scheduled closing date, to extend the closing date for two consecutive 30-day periods. If we do not obtain
project financing on acceptable terms prior to the extended closing date and the acquisition of the Project Facility is not consummated,
we would be in breach of the purchase agreement and could be subject to claims by the seller for damages or specific performance, and
could forfeit any deposit paid in connection with the purchase agreement. Any such claim, if successful, could adversely affect our liquidity
and ability to develop the Project Facility. If the acquisition of the Project Facility is not consummated, we would continue to hold
our rights as lessee under the Property Lease, which has approximately five years of remaining term, and would continue to own the Electric
Service Agreement (as defined below) and the adjacent land we acquired for approximately $33.5 million, each of which would remain available
to support our operations and our performance of our obligations under the Lease, irrespective of whether we consummate the acquisition
of the Project Facility.
Development
and Construction. The Project Facility consists of an existing building that will be retrofitted and built out as a data center
for artificial intelligence and/or high-performance computing in accordance with specifications agreed to with the Tenant. The majority
of the required construction will occur within the existing building structure. The Project Facility is expected to be delivered as a
single phase. The estimated cost of the required buildout and the anticipated completion date are currently being finalized in coordination
with the Tenant’s design specifications, which are in the final stages of development.
Alternative
Facilities. The identification and evaluation of sites to be developed for use as an AI or HPC data center is part of the ordinary
course of our business as a digital infrastructure owner. As of the date hereof, no specific alternative facilities have been identified
or pursued as a replacement for the Project Facility. In the event that the acquisition of the Project Facility is not consummated for
any reason, we reserve the right to identify, acquire and/or develop one or more alternative facilities in the ordinary course of our
business development activities.
Acquisition
of T-20 Mining LLC. In February 2026, we acquired T-20 Mining LLC (“T-20”), a Delaware limited liability company
that held an Electric Service Agreement (“Electric Service Agreement”) with the applicable utility provider for the Project
Facility’s location, for an aggregate purchase price of approximately 33.5 million. The Electric Service Agreement provides us
with a contractual right to a specified level of electrical power capacity at the Project Facility, a critical infrastructure asset for
the Project Facility to be used as a data center by the Tenant. The acquisition of T-20 was undertaken specifically to secure power access
at the Project Facility and is directly related to our intended use of the Project Facility. For information regarding certain related-party
financing used in connection with the acquisition of T-20, see “Certain Relationships and Related Person Transactions” below.
Grocery
Operations. We operate full-service natural and organic grocery stores throughout six regional natural-foods banners:
Ada’s Natural Market, a full-service grocery store, and Greenleaf Grill, Ada’s flagship fast-casual in-store restaurant, serving
Fort Myers, FL; Greens Natural Foods stores in New Jersey and New York; Paradise Health & Nutrition, with locations in the
greater Melbourne, Florida area; Mother Earth’s Storehouse, located in Hudson Valley, NY; Ellwood Thompson’s, located in Richmond,
Virginia; and GreenAcres Market, with stores located in Oklahoma and Kansas. We have retail stores in Florida, New York, New Jersey,
Virginia, Kansas and Oklahoma. We consider these locations strategically important to our operations, serving key markets in the
Southeastern, Northeastern, and Midwestern United States. We offer high-quality products and brands, including an extensive
selection of widely recognized natural and organic food, dietary supplements, body care products, pet care products and books. We
operate our stores in compliance with National Organic Program standards, which restrict the use of certain substances for cleaning
and pest control and require rigorous recordkeeping, among other requirements. Our Grocery operating segment has been aggregated
with our Wellness operating segment into a single reportable segment under ASC 280, given their shared economic characteristics and
similarities in products sold, acquisition process, customer base, distribution methods and regulatory environment. Following
the Merger, our existing grocery retail operations continue to operate as a division of the combined company.
Power
Strategy
Our
power strategy emphasizes reliability, cost-competitiveness and responsible integration with regional electric grids. Across our identified
development opportunities, we target a meaningful share of capacity to be supported by behind-the-meter power resources, with the balance
served by contracted utility-supplied electricity. On our first asset, the power is supplied by Public Service Company of Oklahoma (PSO)
under the executed Electric Service Agreements described above; the project contemplates behind-the-meter generation for potential future
expansion.
Competition
The
market for digital infrastructure serving HPC and AI workloads is competitive. We compete with data center REITs, independent data center
developers and colocation providers, hyperscale cloud platforms (which also build their own data centers), infrastructure funds, AI cloud
providers and, in certain cases, digital asset miners with energized infrastructure suitable for HPC use. Principal competitive factors
include site and power availability, delivered power economics, speed to market, execution capability, access to capital and customer
relationships. Many of our competitors have substantially greater financial, operational and technical resources than we do.
The
industry of our grocery and dietary supplement retail business is large, fragmented and highly competitive, with few barriers to entry.
Our competition varies by market and includes conventional supermarkets, independent health food stores, dietary supplement retailers,
drug stores, farmers’ markets, food co-ops, mail order and online retailers and multi-level marketers. These businesses compete
with our grocery and dietary supplement retail business segment for customers on the basis of price, selection, quality, customer service,
shopping experience or any combination of these or other factors. They also compete with us for products and locations. In addition,
some of our competitors are expanding to offer a greater range of natural and organic foods. We believe our commitment to carrying only
carefully vetted, affordably priced and high-quality natural and organic products and dietary supplements, as well as our focus on providing
nutritional education, differentiate us in the industry and provide a competitive advantage.
Regulation
Regulation
in the industry is evolving and we are or may become subject to a variety of federal, state and local laws, rules and regulations, and
moratoria applicable to data center development, the supply and use of electricity, grid interconnection, environmental compliance, land
use and zoning. The Project is served by PSO, a regulated electric utility subsidiary of American Electric Power Company, Inc., operating
within the Southwest Power Pool. Power supply, capacity and tariff arrangements at the Project Facility are subject to oversight by the
Oklahoma Corporation Commission and, where applicable, the Federal Energy Regulatory Commission. To the extent we develop on-site generation
or storage at any site, additional federal, state and local permitting, environmental and reliability requirements may apply.
In operating our full-service natural and organic
grocery stores and dietary supplement stores, we work with reputable suppliers we believe comply with established regulatory and industry
standards, and our purchasing department requires a complete supplier and product profile as part of our approval process. Our dietary
supplement suppliers are expected to follow FDA current good manufacturing practices, supported by quality assurance testing of both
base ingredients and finished products. We operate our stores in accordance with National Organic Program requirements, which restrict
certain substances used in cleaning and pest control and impose detailed recordkeeping obligations. We sell meat naturally raised without
hormones, antibiotics or treatments and that were not fed animal by-products, and we primarily sell USDA certified organic produce. Many
of our suppliers are inspected and certified under the USDA National Organic Program, along with voluntary industry associations and
other third-party auditing programs covering ingredients, manufacturing, and handling standards.
Human
Capital Resources
As
of the date hereof, we have approximately 442 employees.
Our operations are conducted by our senior leadership team and a small number of additional employees and contractors. Day-to-day construction,
commissioning and ongoing facility operations at the Project are performed by nationally recognized and highly experienced third-party
partners under contractual arrangements. We expect to expand our internal capabilities across power, development, operations, finance
and capital markets as our platform scales.
Cybersecurity
We
are in the process of designing a cybersecurity program covering our information systems and operational technology, including administrative,
physical and technical controls and incident response procedures. Under the Lease, the Tenant is responsible for the deployment, configuration
and information security of its compute hardware. Site-level monitoring of electrical and mechanical systems at the Project Facility
is supported by our third-party operations partner.
Properties
Our
principal property is the Project Facility, described under “The Project Facility — Northeast Oklahoma” above. We lease
our corporate headquarters.
Our
grocery and dietary supplement retail business operates from numerous facilities in Florida, Virginia, New York, New Jersey, Kansas and
Oklahoma. These leased facilities include our office location, warehouse and retail stores. In addition to real estate leases, the Company
also leases mission-critical data center equipment under a long-term finance lease to support its corporate and store operations. As
of the date hereof, we had 19 retail stores in Florida, New York, New Jersey, Virginia, Kansas and Oklahoma, which aggregate approximately
181,000 square feet, all of which are leased by our grocery stores.
Insurance
We
maintain property and casualty insurance for the Project Facility consistent with industry practice for assets of this type, including
replacement-cost all-risk property coverage, builder’s risk coverage during construction, general liability coverage and other
customary lines, including cyber liability. We review coverage levels periodically and adjust them in consultation with our insurance
advisors.
Environmental
and Power Considerations
Our
approach to environmental and energy considerations is grounded in responsible infrastructure design, operational efficiency, and reliable
integration with regional electric grids. We develop and operate digital infrastructure on existing industrial and energy sites, prioritizing
reuse of legacy assets and minimizing incremental land disturbance.
Our
data center campuses are engineered to support high-density, mission-critical compute while emphasizing efficient power utilization,
advanced cooling architectures, and resilient electrical design. These facilities are designed to operate with a range of long-duration
power resources, including grid-supplied electricity and, where appropriate, on-site generation.
Our
environmental focus is centered on disciplined development, efficient operations, and long-term infrastructure stewardship rather than
reliance on any single energy source or environmental attribute.
Corporate
Information
Host
Digital Inc. (f/k/a Healthy Choice Wellness Corp.) was incorporated in the State of Delaware on September 26, 2022. As of the date hereof,
our Common Stock trades on the NYSE American under the symbol “HCWC”. The symbol for our Common Stock will change to “HOST,”
effective at the opening of trading on September 18, 2026.
Our
principal executive offices are located at 3800 North 28th Way, Hollywood, Florida 33020, and our telephone number is (305) 600-5004.
Our corporate website address is https://www.hostdigital.ai/. The information contained on or accessible through our website is
not a part of this filing, and the inclusion of our website address in this filing is an inactive textual reference only.
RISK
FACTORS
You
should carefully consider the following risk factors. These risk factors are not exhaustive, and investors are encouraged to perform
their own investigation with respect to our business. The occurrence of one or more of the events or circumstances described in these
risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to realize the anticipated
benefits of the Merger (as defined below), and may have a material adverse effect on the combined company and its financial condition
or results of operations going forward. The risks discussed below may not prove to be exhaustive and are based on certain assumptions
made by us which later may prove to be incorrect or incomplete. We may face additional risks and uncertainties that are not presently
known to us, or that are currently deemed immaterial, which may also impair their business or financial condition.
You
should also read and consider the risk factors specific to our pre-Merger business and operations that will affect the combined company
after completion of the Merger. These risks are described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December
31, 2025.
For
purposes of this section, references to “the Company”, “Host Digital”, “we”, “our” and
“us” are to Host Digital Inc. (f/k/a Healthy Choice Wellness Corp.) and its subsidiaries.
Risks
Related to the Merger
The
market price of our Common Stock following the Merger may decline as a result of the Merger.
On
September 17, 2026 (the “Closing Date”), we completed the previously announced Merger pursuant to the Agreement
and Plan of Merger (the “Merger Agreement”) dated May 27, 2026, by and among the Company, Healthy Choice Wellness II Corp.,
a Delaware corporation and wholly owned subsidiary of HCWC (“Merger Sub”), and Host LLC. On the Closing Date, pursuant to
the Merger Agreement and on the terms and conditions set forth therein, Merger Sub merged with and into Host LLC, with Host LLC surviving
the Merger as a wholly owned subsidiary of the Company (the “Merger”). In connection with the Merger, all of the Common Units
and Preferred Units of Host Digital, in each case as defined in that certain Amended and Restated Limited Liability Company Agreement
of Host LLC, dated effective as of February 13, 2026, outstanding immediately prior to the effective time of the Merger (the “Effective
Time”), were converted into the right to receive shares of Class A common stock, par value $0.001 per share, of the Company (the
“Common Stock”), or pre-funded warrants (“Pre-Funded Warrants”) to purchase Common Stock at an exercise price
of $0.001 per share, in lieu of such shares of Common Stock.
The
market price of our Common Stock may decline as a result of the Merger for a number of reasons including if:
● investors
react negatively to the prospects of the combined company’s business and financial
condition following the Merger;
● the
effect of the Merger on the combined company’s business and prospects is not consistent
with the expectations of financial or industry analysts; or
● the
combined company does not achieve the perceived benefits of the Merger as rapidly or to the
extent anticipated by financial or industry analysts.
Our
stockholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with
the Merger.
If
we are not able to realize the strategic and financial benefits currently anticipated from the Merger, our pre-Merger stockholders and
the Host LLC members will have experienced substantial dilution of their ownership interests in their respective companies without receiving
the expected commensurate benefit, or only receiving part of the commensurate benefit to the extent that the combined company is able
to realize only part of the expected strategic and financial benefits currently anticipated from the Merger.
We
may be unable to obtain project financing on acceptable terms within the timeframe required to consummate the acquisition of the Project
Facility (as defined below), which could delay or prevent the development of the Project Facility.
The
purchase price for the Project Facility, inclusive of the parking lot, is $27.7 million, which we intend to fund through project financing
from one or more lenders in connection with the development of the Project Facility following the closing of the Merger. As of July
31, 2026, we had current assets of approximately $1,047,940 and had no committed financing facility in place for the acquisition of the
Project Facility. Our ability to obtain project financing on acceptable terms will depend on a number of factors outside our control,
including general credit market conditions, lender appetite for early-stage digital infrastructure development projects, interest rates,
and the overall progress of the Project Facility’s development. There can be no assurance that we will be able to obtain project
financing on acceptable terms, or at all. We must complete the acquisition of the Project Facility by September 26, 2026 pursuant to
our purchase option under the Property Lease. We have the right to request two additional 30-day extensions of the purchase option deadline
from the seller, if required. If we unable to consummate the acquisition of the Project Facility pursuant to its purchase option, it
could adversely affect the timing and scale of the Project Facility’s development, or it could prevent the development of the Project
Facility.
We
do not own the development pipeline attributed to our Sponsor, and our Sponsor is under no obligation to contribute any of those assets
to us.
The
data center projects and development opportunities described as our “pipeline” are owned or controlled by Host Infrastructure
Holdings LLC, an entity formed and controlled by the founders of Host LLC (the “Sponsor”), and are not owned by us. Under
the Preferential Rights Agreement, we have a right of first offer and a right of first refusal with respect to the Sponsor’s project
site acquisition subsidiaries (each, a “Project Subsidiary”). The Sponsor is under no obligation to develop, retain, market,
or contribute any Project Subsidiary to us, may elect not to pursue or to abandon any project, and may dispose of Project Subsidiaries
to third parties if we do not exercise our rights. As a result, none of the pipeline assets may ever be contributed to or acquired by
us, and you should not assume that we will acquire any of them or realize any revenue, EBITDA, or other results attributed to them.
Our
preferential rights are limited, and we may be unable to acquire Project Subsidiaries on favorable terms or at all.
Our
rights under the Preferential Rights Agreement are limited to a right of first offer, exercisable within 30 days after the Sponsor markets
or determines to contribute a Project Subsidiary, and a right of first refusal, exercisable within five days after the Sponsor receives
an unsolicited third-party offer it desires to accept. The valuation and other terms of any proposed transaction are proposed by the
Sponsor or a third party. If we do not timely exercise our rights, or if we fail to consummate a transaction within the prescribed period,
the Sponsor may sell the applicable Project Subsidiary to a third party, and our rights with respect to that Project Subsidiary will
not be reinstated. The Preferential Rights Agreement expires on the second anniversary of its effective date, after which we will have
no contractual rights with respect to the Sponsor’s pipeline. Accordingly, our preferential rights may not result in any acquisitions,
or in acquisitions on terms favorable to us, which may materially adversely impact our business and results of operations.
Our
relationship with the Sponsor presents conflicts of interest.
The
Sponsor is controlled by the founders of Host LLC,
some of whom also serve as executive officers and/or employees of, and hold substantial equity interests in, the Company, including our
chief executive officer. As a result, the same persons effectively control both the Sponsor and, to a significant extent, the Company.
These persons will decide whether and when the Sponsor develops, markets, or contributes Project Subsidiaries, the valuation and terms
proposed to us, and whether to transact with us or with third parties, and they may have economic and other incentives that differ from,
or conflict with, the interests of our other stockholders. The Preferential Rights Agreement was not negotiated at arm’s length.
Any transaction under the Preferential Rights Agreement will be subject to review and approval by a committee of independent directors
in accordance with our related-person transaction policy; however, such procedures may not eliminate the conflicts described above.
We
will require substantial additional capital to exercise our preferential rights and to acquire and develop any Project Subsidiary.
Even
if we elect to acquire a Project Subsidiary, we will require substantial additional debt or equity financing to fund the acquisition
and the subsequent site acquisition, development, construction, and commissioning, which financing may not be available on acceptable
terms, or at all. Any such financing may be dilutive to our stockholders or increase our leverage and debt service obligations. For example,
if we elect to acquire a Project Subsidiary, we may use shares of our capital stock as some or all of the consideration for such acquisition,
which could cause immediate and significant dilution to our stockholders.
Absent
any such financing described above, we may be unable to fund an acquisition even where we wish to exercise our preferential rights.
Pipeline
information, including any projected capacity, contracted values, delivery dates, or any other financial metrics, is illustrative and
subject to significant uncertainty.
Any
information regarding the Sponsor’s potential development pipeline, including projected power capacity, in-service or delivery
dates, contracted values, and any projected financial metrics, is illustrative only, is based on assumptions and estimates that are inherently
uncertain, and does not represent our assets or results. These Project Subsidiaries are held or controlled by the Sponsor, and not by
us, and our ability to acquire these assets is subject to the Preferential Rights Agreement. The Project Subsidiaries are at varying
and preliminary stages of development; may not be subject to signed leases (and any leases may be terminated or may not commence); require
power, permitting, site control, construction, and financing that may not be obtained; and are subject to the risk that they are never
contributed to or acquired by us. Actual results may differ materially from any pipeline information, and you should not place undue
reliance on it.
The
negotiated base price for Host LLC reflects a discount to a third-party indicated valuation range that may not be realized.
Our
disclosure references an indicated valuation range for the Project Facility provided by Newmark of approximately $676 million to $954
million (based on an indicated capitalization rate range of 5.0% to 6.5%), and a negotiated base price of $425 million representing an
implied discount to that range. The indicated valuation is an estimate based on assumptions regarding capitalization rates, contracted
cash flows, development, and market conditions, any of which may prove incorrect. It does not represent an offer to purchase or a determination
of fair value, and we may be unable to realize the indicated value, or any premium to our negotiated base price, upon a sale, financing,
or otherwise. You should not rely on the indicated valuation range or the implied discount as an indication of the value of our Common
Stock.
The
credit support for our anchor lease has not yet taken effect, and we may not obtain investment-grade backstop or guaranty arrangements
if we do not consummate our project financing.
Our
Lease is described as backstopped by, or supported by the credit of, an investment-grade technology company. As of the date hereof, the
backstop arrangement has not yet taken effect and is subject to the completion of our anticipated project financing. There can be no
assurance that the backstop arrangement will commence, that any backstop provider will maintain an investment-grade rating, or that the
credit support will be sufficient. If the credit support is not obtained or proves inadequate, our exposure to the tenant’s credit,
the value of the Lease, and our ability to obtain project financing could be materially and adversely affected.
Our
Common Stock ownership is highly concentrated, and a small number of holders will control matters submitted to stockholders.
Following the Merger, our chief executive officer,
the other founders of Host LLC and other insiders hold a substantial majority of our outstanding common stock, with Mr. Samra and Mr.
Thomas each holding approximately 38%, and our directors and executive officers as a group holding approximately 76%. As a result,
these holders, acting together, will be able to control or significantly influence the outcome of matters submitted to our stockholders,
including the election of directors and the approval of significant transactions, and their interests may differ from those of our other
stockholders. This concentration of ownership may also limit the liquidity of, and adversely affect the market price of, our Common Stock.
Litigation
relating to the Merger could require us to incur significant costs and suffer management distraction.
We
could be subject to demands or litigation relating to the Merger, even after consummation. In the past, securities class action or shareholder
derivative litigation often follows certain significant business transactions, such as the announcement of a merger. Litigation is often
expensive and diverts management’s attention and resources, which could adversely affect our business. Insurance may not be sufficient
to cover all costs or damages related to this type of litigation.
The
unaudited pro forma financial information included in our filings may not necessarily reflect our operating results and financial condition
following the Merger.
The
unaudited pro forma condensed combined financial information (“pro forma financial information”) included in our filings
with the U.S. Securities and Exchange Commission (the “SEC”) is derived from separate historical consolidated financial statements
of the Company (pre-Merger) and Host LLC. The preparation of this pro forma financial information is based upon available information
and certain assumptions and estimates that we currently believe are reasonable. These assumptions and estimates may not prove to be accurate,
and this pro forma financial information does not necessarily reflect what the combined company’s results of operations and financial
position would have been had the Merger been completed on the relevant dates assumed and the assumptions and estimates were to prove
accurate, or what our results of operations or financial position will be in the future.
The
Merger could result in significant tax liability, and we may be obligated to indemnify HCMC for any such tax liability imposed on HCMC.
The
completion of the Merger was conditioned upon the receipt by us and Host LLC of (a) an opinion to the effect that, for U.S. federal income
tax purposes, the Merger qualified as a transaction under Section 351(a) of the Code (the “Merger Tax Opinion”), and (b)
an opinion to the effect that, among other things, for U.S. federal income tax purposes, the Merger did not affect the tax-free status
of certain prior transactions, including the Spin-Off (as defined below) (the “Spin-Off Tax Opinion”).
In rendering the Merger Tax Opinion and the Spin-Off
Tax Opinion, tax counsel relied on, among other things, (1) customary representations and covenants made by Host LLC, us, and Healthier
Choices Management Corp. (“HCMC”) and (2) specific assumptions. If any of those representations, covenants or assumptions
were inaccurate, or the facts upon which either the Merger Tax Opinion or the Spin-Off Tax Opinion were based were
materially different from the facts at the time of the transactions, the conclusions expressed in such opinions may be incorrect and
the transactions may not qualify (in whole or part) for tax-free treatment. Opinions of counsel are not binding on the IRS. As a result,
such conclusions therein could be challenged by the IRS, and if the IRS prevails in such a challenge, the consequences to us and our
stockholders could be materially less favorable than anticipated.
Furthermore,
HCMC announced on August 22, 2022 that its Board of Directors approved the separation of the grocery business, including wellness business,
into an independent, publicly traded company (the “Spin-Off”). Prior to the Spin-Off, we were a subsidiary under HCMC. On
September 13, 2024, after the NYSE American (“NYSEAM”) market closing, the Spin-Off of the Company business was completed.
On September 14, 2024, we became an independent, publicly traded company, and on September 16, 2024, our Common Stock commenced trading
on the NYSEAM under the stock ticker “HCWC.”
We and HCMC entered into a tax matters
agreement, dated as of December 11, 2023, governing the respective rights, responsibilities and obligations of us and HCMC after
the Spin-Off with respect to certain tax matters (the “Tax Matters Agreement”). The Tax Matters Agreement imposes certain
restrictions on us and its subsidiaries that are designed to preserve the tax-free status of the Spin-Off and certain related transactions.
The Merger was subject to these restrictions under the Tax Matters Agreement. In particular, under the Tax Matters Agreement, we were
not permitted to complete the Merger without the consent of HCMC, which consent was obtained subject to satisfaction of certain
conditions.
In particular, under the Tax Matters Agreement, the
Merger was permitted on the condition that we provided HCMC with an Unqualified Tax Opinion (as defined in the Tax Matters Agreement)
in form and substance satisfactory to HCMC in its sole and absolute discretion addressing the consequences of the Merger on the Spin-Off.
We delivered to HCMC, with respect to the Merger, the Spin-Off Tax Opinion, which was intended to be an Unqualified Tax Opinion.
HCMC has reviewed the Spin-Off Tax Opinion, accepted it as an Unqualified Tax Opinion, and consented to the completion of the Merger
under the Tax Matters Agreement. Notwithstanding our delivery of such Unqualified Tax Opinion, we remain obligated under the Tax Matters
Agreement to indemnify HCMC for certain tax liabilities imposed on HCMC as a result of the Merger.
Even if the Merger otherwise qualified generally
for non-recognition treatment under Section 351(a) of the Code, the Distribution (as defined in the Tax Matters Agreement) would be taxable
to HCMC (but not to our stockholders who received our stock in the Spin-Off) pursuant to Section 355(e) of the Code if one or
more persons acquire a 50% or greater interest (measured by vote or value) in the our stock or the stock of HCMC, directly or
indirectly, as part of a plan or series of related transactions that includes the Spin-Off. For this purpose, any acquisitions of our
or HCMC common stock within the period beginning two years before the Spin-Off and ending two years after the Spin-Off are presumed to
be part of such a plan, although we, HCMC, or Host LLC, as the case may be, may be able to rebut that presumption, depending on the facts
and circumstances. For purposes of this test, the Spin-Off Tax Opinion concluded that the Merger will not be treated as part of such
a plan. If the IRS determines that the Merger or other acquisitions of our Common Stock or HCMC common stock, either before or
after the Spin-Off, are part of a plan or series of related transactions that included the Spin-Off, such determination, if sustained,
could result in the recognition of a material amount of taxable gain by HCMC under Section 355(e) of the Code. In general, under the
Tax Matters Agreement, we are liable for any taxes imposed on, and certain related amounts payable by, HCMC that arise from the failure
of the Spin-Off, together with certain related transactions, to qualify as a tax-free transaction for U.S. federal income tax purposes
under Sections 355 and 368(a)(1)(D) and certain other relevant provisions of the Code, to the extent that the failure to so qualify is
attributable to actions, events or transactions relating to our Common Stock or assets or business (such as the Merger), or a breach
of relevant representations or covenants made by us in the Tax Matters Agreement.
In addition, changes in tax law could adversely affect the intended tax
treatment of the completed Merger or could adversely affect the ability to rely on the Merger Tax Opinion and Spin-Off Tax Opinion.
The
Merger may have resulted in the termination of any consolidated group of which were the common parent.
For
certain U.S. federal income tax purposes, the Merger may constitute a “reverse acquisition” described in Treasury Regulations
Section 1.1502-75(d)(3). As required under these regulations, for certain consolidated return compliance following the Merger, Host Digital
may calculate and file consolidated tax returns as though Host LLC is the parent of the consolidated group of which we are a part. In
addition, the Merger may result in the termination of any U.S. affiliated group as defined in Section 1502 of the Code of which we are
the common parent, in accordance with Treasury Regulations Section 1.1502-75(d). Such termination may have a range of U.S. federal income
tax consequences, including costs or expenses associated with modifying or otherwise preparing certain tax returns.
Our
ability to use net operating losses (“NOLs”), research and development tax credits and other tax attributes to offset future
taxable income may be subject to certain limitations.
In
general, under Sections 382 and 383 of the Code, a corporation that undergoes an “ownership change” is subject to limitations
on its ability to utilize certain pre-change NOLs, tax credits, or or other tax attributes to offset future taxable income or taxes.
For these purposes, an ownership change generally occurs where the aggregate stock ownership of one or more stockholders or groups of
stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest
ownership percentage within a specified testing period. We have not conducted a study to assess whether a change of control has occurred
or whether there have been multiple changes of control since inception due to the significant complexity and cost associated with such
a study. The Merger is expected to have constituted an ownership change with respect to us and accordingly our utilization of our NOLs,
research and development tax credit carryforwards and other tax attributes would be subject to an annual limitation under Section 382
of the Code. Any limitation may result in expiration of a portion of the NOLs, research and development tax credit carryforwards or other
tax attributes before utilization. In addition, NOLs, tax credits or other tax attributes may also be impaired under state law. Accordingly,
we may not be able to utilize a material portion of certain NOLs, tax credits, or other tax attributes. Future changes in our stock ownership,
some of which may be outside our control, could result in additional ownership changes and could further limit our ability to utilize
these tax attributes.
Our
shares of Common Stock and Company Units of Host LLC may constitute a United States real property interest before or after the Merger.
Our
shares of Common Stock and the Company Units previously outstanding in Host LLC may have constituted a United States real property interest
(a “USRPI”) by reason of Host LLC’s status as a “United States real property holding corporation” as such
term is defined in Section 897(c) of the Code (a “USRPHC”), at any time within the shorter of the five-year period preceding
the Merger or a non-U.S. Holder’s holding period with respect to the applicable shares of Host Digital (the “Relevant
Period”). Generally, a corporation is a USRPHC if the fair market value of its USRPIs equals or exceeds 50% of the sum of the fair
market value of its worldwide real property interests plus its other assets used or held for use in a trade or business. We believe that
prior to the Merger, neither the Company nor Host LLC was a USRPHC during the Relevant Period. However, because the determination of
whether an entity is a USRPHC depends on the fair market value of its U.S. real property interests relative to the fair market value
of its other business assets, and because the determination of whether certain assets constitute U.S. real property interests may be
uncertain, there can be no assurance that the Company or Host LLC was not a USRPHC, whether before or after the Merger. If Host LLC was
a USRPHC during the Relevant Period, we would have been required to withhold and remit to the IRS tax in respect of the Merger Consideration
paid to non-U.S. Holders of Company Units. Host LLC believed it was not a USRPHC and, as a condition to completing the Merger, delivered
to us certain certifications that it had not been a USRPHC during the Relevant Period. As a result, we did not withhold in respect of
the Merger Consideration. If the IRS disagrees and asserts that we were required to withhold, we and Host LLC may be liable for certain
taxes, interest and penalties which could negatively impact our earnings and financial condition.
In
addition, our asset composition may change significantly over time, including as we acquire, develop and own additional data center properties
and related infrastructure. Accordingly, even if we are not a USRPHC today, there can be no assurance that we will not become a USRPHC
in the future.
Acquisitions
may expose us to inherited tax liabilities, uncertain tax attributes and other adverse tax consequences.
As
part of our business strategy, we may acquire entities or assets, including data center sites, power-related entities and other infrastructure.
In connection with such acquisitions, we may succeed to historical tax liabilities or tax attributes of an acquired entity, assume tax
risks relating to periods before the acquisition, or become responsible for unpaid taxes, interest or penalties attributable to the acquired
entity or assets. Contractual indemnities or other protections, if any, may be unavailable or insufficient to protect us from these liabilities.
Acquisitions may also affect the tax basis of acquired assets, the timing or amount of depreciation or amortization deductions, the availability
or utilization of tax attributes, or other tax consequences in ways that differ from our expectations. Any such liabilities or adverse
tax consequences could materially adversely affect our business, financial condition, results of operations and cash flows.
Risks
Related to our Business, Financial Position and Capital Requirements
Our
subsidiary Host LLC is at an early stage of development of its business with no material operating history or revenues.
Host
LLC is an early stage company with a limited operating history and no history of generating material revenue from operations. Host LLC
is subject to the risks and uncertainties of a new business, including the risk that it may never further develop, complete development
of or successfully market any of its proposed services. Host LLC’s business model, which is focused on the development, ownership
and operation of data center infrastructure supporting AI and HPC workloads, remains unproven. Host LLC has not yet completed development
of its initial project, entered into a binding long-term customer lease, or commenced material revenue-generating operations. As a result,
Host LLC’s historical financial and operating information may not be meaningful for evaluating its business or prospects, and investors
may have limited information upon which to assess Host LLC’s ability to successfully develop and operate its business. Host LLC’s
future success will depend on a number of factors, many of which are beyond its or our control, including its ability to complete construction
of its initial facility, secure customers, obtain financing, access sufficient electrical power and effectively manage growth. Host LLC
may not successfully execute its business plan, and its business may never achieve commercial success.
Host
LLC has not commenced material revenue-generating operations and has not achieved or maintained. and may never achieve or maintain, profitability,
which may have a material adverse impact on our business, financial condition and results of operations.
Host
LLC has not commenced material revenue-generating operations and has incurred losses since inception. Following the Merger, we expect
to incur substantial operating expenses and capital expenditures as we pursue development of our initial data center facility and broader
infrastructure platform. Our ability to achieve profitability will depend on numerous factors, including our ability to execute any future
leases with a creditworthy tenant, complete development and commissioning of the Project Facility on a timely and cost-effective basis,
obtain sufficient financing, manage operating costs and successfully compete in the evolving AI and HPC infrastructure market. Even if
we begin generating revenue from our data center operations, we may not be able to achieve or sustain profitability. In addition, our
costs may increase significantly over time as we expand operations, hire additional personnel and develop additional projects.. If we
are unable to generate sufficient revenues to offset our costs, our business, financial condition and results of operations could be
materially adversely affected.
We
may be unable to access sufficient additional capital needed to grow our business.
Our
post-Merger business plan requires substantial additional capital. We expect to need to raise substantial additional capital to acquire
the property for our Project Facility, complete construction and commissioning of the Project Facility, support working capital needs,
and pursue development opportunities. We currently expect that our future liquidity needs will be funded through a combination of project
financing, equity financings, debt financings, and, eventually, cash flows from operations. However, there can be no assurance that such
financing will be available on acceptable terms, or at all. Our ability to raise capital may be adversely affected by many factors, including
general market conditions, volatility in the technology, digital infrastructure and AI sectors, rising interest rates, lender appetite
for data center development projects, construction and execution risks, and its limited operating history. If we are unable to obtain
sufficient financing when needed, we may be required to delay, scale back or abandon one or more projects, reduce operations, sell assets,
issue equity securities on dilutive terms or cease operations altogether.
Our
near-term business plan depends substantially on the successful development and delivery of a single initial project in northeast Oklahoma.
Our
near-term business prospects depend substantially on the successful development, completion and delivery to the Tenant of our initial
project located in northeast Oklahoma. We currently expect the Project Facility to be our principal operating asset and primary source
of anticipated future revenue in the near term. As a result, our business is highly concentrated and exposed to risks affecting a single
facility, including construction delays, cost overruns, equipment failures, utility service interruptions, permitting or regulatory issues,
customer concentration, adverse weather events, operational disruptions and changes in market demand for AI and HPC infrastructure. Any
failure to successfully complete, lease, operate or expand the Project could materially and adversely affect our business, financial
condition, results of operations and growth prospects.
Any
delays or unexpected costs implementing the Project or our future developments may delay and harm our growth prospects, future operating
results and financial condition.
The
development of the Project Facility involves significant risks and uncertainties. Construction and commissioning of data center infrastructure
is complex and capital intensive and may be adversely affected by numerous factors, including those associated with:
● delays
in obtaining permits or approvals;
● labor
shortages;
● federal,
state, or local/municipal governmental legislation, rules, executive orders, actions, or
moratoria being determined to apply to the Project, resulting in, among other things, delays
or denials of entitlements or permits, including zoning, siting, utility and other permits,
or other delays resulting from requirements of public agencies and utility companies;
● budget
overruns, increased prices for raw materials or building supplies, or lack of availability
and/or increased costs for specialized data center components, including long lead time items
such as generators;
● construction
site accidents and other casualties;
● labor
availability, costs, disputes and work stoppages with contractors, subcontractors or others
that are constructing the project;
● failure
of contractors to perform on a timely basis or at all, or other misconduct on the part of
contractors;
● access
to sufficient power and related costs of providing such power to Host Digital’s customers;
● environmental
issues;
● supply
chain constraints;
● fire,
flooding, earthquakes and other natural disasters; and
● geological,
construction, excavation and equipment problems.
In
addition, the Project Facility is being retrofitted from an existing energized site for AI/HPC workloads, which may involve additional
design, integration and operational complexities. Any delays in construction, energization, commissioning or tenant readiness could delay
revenue generation, increase project costs and impair our ability to satisfy contractual obligations or obtain additional financing.
Any material delay or cost overrun could materially adversely affect our business, financial condition, results of operations and growth
prospects.
We
expect to depend heavily on a single tenant for substantially all near-term revenue.
On
August 7, 2026, we entered into a 15-year lease with one of the world’s largest privately-held cloud infrastructure companies,
pursuant to which we will provide 43 MW of critical IT load capacity at the Project Facility. We currently expect that substantially
all of our anticipated near-term revenue will be derived from the single tenant at the Project. We currently expect to deliver the Project
Facility to the tenant by the end of the first quarter of 2027, subject to completion of our construction efforts, and prior to such
time, we will not generate any revenue from the Lease. As a result, our business will be highly dependent on the financial condition,
operational performance and contractual compliance of a single customer and its affiliate guarantor. The loss of such tenant, the failure
of the tenant to commence occupancy or operations as expected, a reduction in the tenant’s compute usage or infrastructure requirements,
or any deterioration in the tenant’s or guarantor’s creditworthiness could materially adversely affect our revenues, cash
flows and ability to satisfy its financial obligations. In addition, because our near-term customer base is expected to be highly concentrated,
we may have limited leverage in negotiating commercial terms and may be more vulnerable to customer-specific operational or strategic
decisions. Any adverse change affecting such tenant or guarantor could materially adversely affect our business, financial condition
and results of operations.
We
are subject to risks associated with our need for significant electrical power.
Our
business depends on the availability of significant amounts of reliable electrical power. AI and HPC data center operations are highly
energy intensive, and our ability to develop and operate facilities depends on obtaining sufficient electrical capacity from utilities
and other power providers. If we are unable to continue to obtain sufficient electrical power, we may not realize the anticipated benefits
of our significant capital investments.
Additionally,
our operations could be materially adversely affected by prolonged power outages. Although our data center campuses are designed to operate
with a range of long-duration power resources, including grid-supplied electricity and, where appropriate, on-site generation, the availability
of electrical power may be limited by grid constraints, transmission congestion, interconnection delays, utility allocation policies,
generation shortages, regulatory restrictions, severe weather events or competing demand from other users. Therefore, we may have to
reduce or cease our operations in the event of an extended power outage, or as a result of the unavailability or increased cost of electrical
power. If this were to occur, our business and results of operations could be materially and adversely affected.
We
depend upon third-party suppliers for power, and are vulnerable to service failures by such suppliers and to volatility in the supply
of power in the open market.
We
rely on third-party utility providers and other energy suppliers to provide power to its facilities. The Project Facility is served by
Public Service Company of Oklahoma, and we cannot ensure that these third parties will deliver such power in adequate quantities or on
a consistent basis. We are also reliant on third parties to deliver additional power capacity to support the growth of our business.
If the amount of power available to us is inadequate to support our customer requirements, we may be unable to satisfy our obligations
to our customers or grow our business. In addition, our data centers may be susceptible to power shortages and planned or unplanned power
outages caused by these shortages. Power outages may last beyond our backup and alternative power arrangements, which would harm our
customers and our business. Any loss of services or equipment damage could adversely affect both our ability to generate revenues and
its operating results, harm our reputation and potentially lead to customer disputes or litigation.
Because
electrical power is a significant component of data center operations, any reduction in power availability could materially adversely
affect our business, financial condition and results of operations.
We
have an evolving business model that is subject to various uncertainties.
Our
business model continues to evolve, and our long-term strategy, operational structure and market positioning may change over time as
we respond to technological developments, customer requirements, financing conditions and competitive pressures. Our strategy involves
developing and operating infrastructure supporting AI and HPC workloads, including the potential use of behind the meter generation and
repurposed industrial infrastructure. Because our business is at an early stage of development, we may modify our development plans,
customer strategy, operational approach, financing structure or expansion plans in ways that may not be successful. In addition, portions
of our current site infrastructure have historically supported digital asset mining activities, and we are transitioning the facility
toward AI/HPC use cases. There can be no assurance that our business model will achieve market acceptance, generate anticipated returns
or successfully adapt to changes in technology, customer demand or industry conditions. Any failure to successfully execute our evolving
strategy could materially adversely affect our business, financial condition and results of operations.
We
are subject to a highly evolving regulatory landscape and any adverse changes to certain laws or regulations could adversely affect its
customers and its business, prospects or operations.
Our
business is subject to extensive laws, rules and regulations relating to data center development, electricity usage, environmental compliance,
energy generation, data protection, cybersecurity and tax. Many of these legal and regulatory regimes were adopted prior to the advent
of the internet, mobile technologies, digital assets and related technologies. As a result, they do not contemplate or address unique
issues associated with the data center economy, are subject to significant uncertainty, and vary widely across U.S. federal, state and
local and international jurisdictions. These legal and regulatory regimes, including the laws, rules and regulations thereunder, evolve
frequently and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict
with one another.
Moreover,
the complexity and evolving nature of our business and the significant uncertainty surrounding the regulation of the digital asset economy
requires us to exercise judgment as to whether certain laws, rules and regulations apply to us or our customers, and it is possible that
governmental bodies and regulators may disagree with our or our customers’ conclusions. To the extent we or our customers have
not complied with such laws, rules and regulations, we could be subject to significant fines and other regulatory consequences, which
could adversely affect our business, prospects or operations. As digital assets have grown in popularity and in market size, the Federal
Reserve Board, U.S. Congress and certain U.S. agencies (e.g., the Commodity Futures Trading Commission, the SEC, the Financial Crimes
Enforcement Network and the Federal Bureau of Investigation) have begun to examine the operations of such digital asset technologies,
including regarding the energy consumption and environmental impact associated with AI and data center infrastructure. For example, power
supply, capacity and tariff arrangements at the Project Facility are subject to oversight by the Oklahoma Corporation Commission and,
where applicable, the Federal Energy Regulatory Commission. To the extent we develop on-site generation or storage at any site, additional
federal, state and local permitting, environmental and reliability requirements may apply.
Ongoing
and future regulatory actions could effectively prevent our mining operations, limiting or preventing future revenue generation or rendering
our operations obsolete. Such actions could severely impact our ability to continue to operate and our ability to continue as a going
concern or to pursue our strategy at all, which would have a material adverse effect on our business, prospects or operations.
We
may not be able to compete with other companies, some of which have greater resources and experience.
The
markets for AI, HPC and other digital infrastructure services are highly competitive and rapidly evolving. We may not be able to compete
successfully against present or future competitors, including data center REITs, independent data center developers and colocation providers,
hyperscale cloud companies, infrastructure funds, AI cloud providers and private developers or other operators of powered infrastructure
assets. Many of our competitors have substantially greater financial, technical, operational and marketing resources than we do, as well
as longer operating histories, more established customer bases, larger development pipelines and greater access to capital. In addition,
certain hyperscale cloud providers and technology companies may continue to develop and operate their own infrastructure rather than
lease capacity from third parties such as us.
With
the limited resources we have available, we may experience great difficulties in expanding and improving our services and product offerings
to remain competitive. Competition from existing and future competitors, particularly those that have access to competitively priced
energy, could result in our inability to secure acquisitions and partnerships that it may need to expand its business in the future.
This competition from other entities with greater resources, experience and reputations may result in our failure to maintain or expand
its business, as we may never be able to successfully execute our business plan. If we are unable to expand and compete effectively,
secure customers and develop projects on attractive terms, our business, results of operations and financial condition could be materially
adversely affected.
We
are substantially dependent on our ability to maintain a commercial relationship with a single tenant and if we are unable to do so,
our business, financial condition and results of operations could be materially adversely affected.
We
have entered into the Lease for the Project Facility with a single tenant, whose obligations under the Lease are backed by an affiliate
guarantor. The Project Facility may be our only contracted asset in the immediate term, and if so substantially all of our near-term
contracted revenue may be attributable to the single tenant and its affiliate guarantor. The loss of, or a material adverse change in
the credit quality of, the tenant or its affiliate guarantor would have a material adverse effect on us.
Risks
Relating to the Market for Our Common Stock and Listing
Raising
additional capital may cause dilution to our existing stockholders and may restrict our operations.
We
may raise additional capital at any time and may do so through one or more financing alternatives, including public or private sales
of equity or debt securities directly to investors or through underwriters or placement agents. Raising capital through the issuance
of common stock (or securities convertible into or exchangeable or exercisable for shares of our common stock) may depress the market
price of our stock and may substantially dilute our existing stockholders. In addition, our board of directors may issue preferred stock
with rights, preferences and privileges senior to those of the holders of our Common Stock. Debt financings could involve covenants that
restrict our operations. These restrictive covenants may include limitations on additional borrowing and specific restrictions on the
use of our assets, as well as prohibitions on our ability to create liens or make investments and may, among other things, preclude us
from making distributions to stockholders (either by paying dividends or redeeming stock) and taking other actions beneficial to our
stockholders. In addition, investors could impose more one-sided investment terms on companies that have or are perceived to have limited
remaining funds or limited ability to raise additional funds. The lower our cash balance, the more difficult it is likely to be for us
to raise additional capital on commercially reasonable terms, or at all.
The
future exercise of registration rights may adversely affect the market price of our Common Stock.
In
connection with the Merger, we have entered into Registration Rights Agreements, each dated September 17, 2026 (the “Registration
Rights Agreements”) with certain of our stockholders (each, a “Holder”). Pursuant to the Registration Rights Agreements,
we are obligated to prepare and file a shelf registration statement covering the resale by the Holders of covered shares of Common Stock
within 30 calendar days following the closing of the Merger. Certain Holders will also be entitled to demand that we engage in an underwritten
offering or shelf takedown of their shares of Common Stock. The presence of these additional shares of Common Stock trading in the public
market or the expectation that the Holders plan to sell some or all of their shares may have an adverse effect on the market price of
our Common Stock.
If
we fail to maintain compliance with the NYSE American continued listing standards, the NYSE American may delist our Common Stock, which
could materially and adversely affect our Company, the market price of our Common Stock and your ability to sell your shares.
Our
Common Stock is currently listed on NYSE American. To maintain this listing, we must satisfy continued listing requirements and standards.
If we fail to maintain compliance with the NYSE American continued listing standards, NYSE American may delist our Common Stock.
The
delisting of our Common Stock could materially and adversely affect us by, among other things, reducing the liquidity and market price
of our Common Stock; reducing the number of investors willing to hold or acquire our Common Stock, which could negatively impact our
ability to raise equity financing; decreasing the amount of news and analyst coverage of us; and limiting our ability to issue additional
securities or obtain additional financing in the future. In addition, delisting from the NYSE American may negatively impact our reputation
and, consequently, our business and operations.
The
stock price and trading volume for our securities may be volatile, which could result in substantial losses to investors.
The
trading price for our Common Stock may be volatile and subject to wide fluctuations in response to factors, some of which are beyond
our control, including the following:
● developments
relating to the closing of the Merger, including our ability to successfully integrate the
business and operations of Host LLC, to execute the combined company’s business strategy
and to realize the anticipated benefits of the Merger;
● actual
or anticipated sales of shares of our Common Stock under any equity financings, and the potential
dilutive effect of such transactions;
● changes
in earnings estimates or recommendations by securities analysts;
● changes
in applicable laws or regulations affecting our business;
● general
economic, industry and market conditions;
● low
trading volume of our Common Stock; or
● the
other factors described in the “Risk Factors” sections of our Annual Report on
Form 10-K for the year ended December 31, 2025 and in subsequent filings.
In
addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are not related to
the operating performance of particular companies. As a result, to the extent stockholders sell our securities in negative market fluctuation,
they may not receive a price per share that is based solely upon our business performance. We cannot guarantee that stockholders will
not lose some of their entire investment in our securities.
We
do not intend to pay dividends on our Common Stock, so any returns will be limited to the value of our stock.
We
currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate
declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the appreciation
of their stock.
Future
sales of our Common Stock in the public market, or the perception that such sales could occur, could cause our stock price to fall.
Sales
of a substantial number of shares of our Common Stock or other equity-related securities in the public market could occur at any time.
These sales, or the perception that such sales could occur, could depress the market price of our Common Stock and impair our ability
to raise capital through the sale of additional equity securities. We may sell large quantities of our Common Stock at any time pursuant
to one or more separate offerings. We cannot predict the effect that future sales of Common Stock or other equity-related securities
would have on the market price of our Common Stock.
CERTAIN
RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
The
following describes transactions since January 1, 2025, and currently proposed transactions, to which we or our subsidiaries were or
are to be a participant, in which the amount involved exceeded or will exceed $120,000, and in which any related person had or will have
a direct or indirect material interest, other than compensation arrangements described elsewhere.
The
Merger and Merger Consideration
In
connection with the Merger, Mr. Samra, our Chief Executive Officer, and Mr. Thomas received Merger Consideration representing an aggregate
of approximately 76% of our outstanding common stock (or approximately 44% assuming exercise of all of the Pre-Funded Warrants).
Preferential
Rights Agreement
In
connection with the Merger, we entered into a Preferential Rights Agreement with Host Infrastructure Holdings LLC, a Delaware limited
liability company formed by the founders of Host LLC (the “Sponsor”), which holds project site acquisition companies (each,
a “Project Subsidiary”). The Sponsor is controlled by the founders of Host LLC. Under the agreement, if the Sponsor markets
or determines to contribute, sell, or otherwise dispose of a Project Subsidiary, we have a right of first offer (exercisable within 30
days) on the Sponsor’s proposed terms, and if the Sponsor receives an unsolicited third-party offer it desires to accept, we have
a right of first refusal (exercisable within five days) on the same terms. Project Subsidiaries formed or acquired by the Sponsor after
the effective date are automatically included. The Sponsor is under no obligation to develop, retain, market, or contribute any Project
Subsidiary to us; if we do not exercise our rights, the Sponsor may transact with third parties, and our rights are not reinstated. The
agreement expires on the second anniversary of its effective date. We do not own the Project Subsidiaries or the Sponsor’s pipeline,
and no assurance can be given that any Project Subsidiary will be contributed to, or acquired by, us. See “Risk Factors”
above.
Registration
Rights Agreements; Lock-Up Agreements
In
connection with the Merger, we entered into a Registration Rights Agreements certain holders of our Common Stock, including Mr. Samra
and Mr. Thomas as well as certain of our former executive officers prior to the Merger, providing for the resale registration of their
shares.
In
connection with the signing of the Merger Agreement, we entered into lock up agreements with our directors and executive officers.
Incentive
Awards
In
connection with the Closing, we awarded an aggregate of 342,864 shares of Common Stock to certain employees and officers pursuant to
the Merger Agreement, including awards to Mr. Ollet.
Indemnification
Agreements
In
connection with the Closing, we entered into indemnification agreements with each of our directors and executive officers and certain
non-executive officers as of the Closing.
Policies
and Procedures for Related Person Transactions
Our
Board has adopted a written related person transaction policy under which our audit committee reviews and approves or ratifies transactions
in which we are a participant, the amount involved exceeds $120,000, and a related person has a direct or indirect material interest,
considering, among other things, whether the terms are no less favorable than those available from an unaffiliated third party. Any transaction
under the Preferential Rights Agreement will be subject to this policy.
EX-99.3
EX-99.3
Filename: ex99-3.htm · Sequence: 14
Exhibit 99.3
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS OF
HOST
DIGITAL INFRASTRUCTURE LLC
Page
Consolidated
Financial Statements:
Report of Independent Registered Public Accounting Firm (PCAOB 213)
F-1
Consolidated Balance Sheet as of January 31, 2026
F-2
Consolidated Statement of Operations for the period from July 8, 2025 (inception) through January 31, 2026
F-3
Consolidated Statement of Members’ Deficit for the period from July 8, 2025 (inception) through January 31, 2026
F-4
Consolidated Statement of Cash Flows for the period from July 8, 2025 (inception) through January 31, 2026
F-5
Notes to Consolidated Financial Statements
F-6
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Members of
Host
Digital Infrastructure LLC
Opinion
on the Consolidated Financial Statements
We
have audited the accompanying consolidated balance sheet of Host Digital Infrastructure LLC (formerly known as 10X Digital Infrastructure
LLC) (the “Company”) as of January 31, 2026, and the related consolidated statements of operations, members’ deficit,
and cash flows for the period from July 8, 2025 (inception) through January 31, 2026, and the related notes (collectively referred to
as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of January 31, 2026, and the results of its operations and its cash flows for the period from July 8, 2025
(inception) through January 31, 2026, in conformity with accounting principles generally accepted in the United States of America.
Substantial
Doubt about the Company’s Ability to Continue as a Going Concern
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note
2 to the financial statements, the Company has no cash, has a working capital deficit, and an accumulated deficit that raises substantial
doubt about its ability to continue as a going concern. Management’s plans in regard to these matters also are described in Note
2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit,
we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our
audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides
a reasonable basis for our opinion.
/s/
Carr, Riggs & Ingram, L.L.C.
We
have served as the Company’s auditor since 2026.
Palm
Beach Gardens, Florida
May
29, 2026
F-1
HOST
DIGITAL INFRASTRUCTURE LLC
(FORMERLY
KNOWN AS 10X DIGITAL INFRASTRUCTURE LLC)
CONSOLIDATED
BALANCE SHEET
JANUARY
31, 2026
ASSETS
Current assets:
Deposit
$ 500,000
Total current assets
500,000
Right-of-use asset – operating lease
1,906,639
Security deposit
123,895
Total assets
$ 2,530,534
LIABILITIES AND MEMBERS’ DEFICIT
Current liabilities:
Loan payable – related party
$ 1,372,067
Accrued expenses
300,929
Operating lease liability – current portion
22,246
Total current liabilities
1,695,242
Operating lease liability – long-term
1,353,997
Total liabilities
$ 3,049,239
Commitments and contingencies (Note 8)
MEMBERS’ DEFICIT
Accumulated deficit
$ (518,705 )
Total members’ deficit
(518,705 )
Total liabilities and members’ deficit
$ 2,530,534
The
accompanying notes are an integral part of these consolidated financial statements.
F-2
HOST
DIGITAL INFRASTRUCTURE LLC
(FORMERLY
KNOWN AS 10X DIGITAL INFRASTRUCTURE LLC)
CONSOLIDATED
STATEMENT OF OPERATIONS
FOR
THE PERIOD FROM JULY 8, 2025 (INCEPTION) THROUGH JANUARY 31, 2026
Operating expenses
General and administrative expense
$ 346,371
Loss on disposal of equipment
164,021
Total operating expenses
(510,392 )
Loss from operations
(510,392 )
Interest expense
(8,313 )
Net Loss
$ (518,705 )
The
accompanying notes are an integral part of these consolidated financial statements.
F-3
HOST
DIGITAL INFRASTRUCTURE LLC
(FORMERLY
KNOWN AS 10X DIGITAL INFRASTRUCTURE LLC)
CONSOLIDATED
STATEMENT OF MEMBERS’ DEFICIT
FOR
THE PERIOD FROM JULY 8, 2025 (INCEPTION) THROUGH JANUARY 31, 2026
Accumulated
Total Members’
Deficit
Deficit
July 8, 2025 (inception)
$ —
$ —
Net loss
(518,705 )
(518,705 )
Balance January 31, 2026
$ (518,705 )
$ (518,705 )
The
accompanying notes are an integral part of these consolidated financial statements.
F-4
HOST
DIGITAL INFRASTRUCTURE LLC
(FORMERLY
KNOWN AS 10X DIGITAL INFRASTRUCTURE LLC)
CONSOLIDATED
STATEMENT OF CASH FLOWS
FOR
THE PERIOD FROM JULY 8, 2025 (INCEPTION) THROUGH JANUARY 31, 2026
2026
Cash flows from operating activities:
Net loss
$ (518,705 )
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on disposal of equipment
164,021
Non-cash lease expense
45,185
Changes in operating assets and liabilities:
Prepaid-lease incentive
(80,000 )
Accrued expenses
300,929
Deposit
(500,000 )
Security deposit
(123,895 )
Operating lease liability
(495,581 )
Net cash (used in) operating activities
(1,208,046 )
Cash flows from Investing activities:
Purchase of fixed assets
(164,021 )
Cash (used in) investing activities
(164,021 )
Cash flows from financing activities
Loan Payable – related party payable proceeds
1,372,067
Cash provided by financing activities
1,372,067
Change in cash during the period
-
Cash beginning of the period
-
Cash end of the period
$ -
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Right-of-use asset obtained in exchange for lease liability
$ 1,853,995
The
accompanying notes are an integral part of these consolidated financial statements.
F-5
HOST
DIGITAL INFRASTRUCTURE LLC
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
1 – Organization and Nature of Operations
Organization
Host
Digital Infrastructure LLC, formerly known as 10X Digital Infrastructure LLC, is a U.S.-based infrastructure company focused on the development
and operation of power-intensive data centers designed to support high-performance computing workloads, including artificial intelligence,
data processing, and other compute-intensive applications. The Company’s strategy is centered on securing reliable, low-cost power
and deploying scalable computing capacity in energy-efficient regions across the United States.
The
Company was formed as a limited liability company (“LLC”) in the State of Delaware on July 8, 2025, and is based in Oklahoma.
In accordance with the Company’s operating agreement, the Company shall continue to exist indefinitely unless dissolved earlier
in accordance with the provisions of the operating agreement or by operation of law. The accompanying consolidated financial statements
include the accounts of the Company and its wholly owned subsidiary, a special purpose entity that leases and controls the building purchase
option. All significant intercompany balances and transactions have been eliminated in consolidation.
The
Company is in the early stages of executing its business plan and has not yet commenced revenue-generating operations.
As
of January 31, 2026, the Company’s activities have primarily consisted of organizational efforts, capital formation, and initial
infrastructure development planning. The Company entered into a long-term lease agreement commencing January 1, 2026, for a facility
intended to support its future data center operations.
Note
2 – Going Concern
The
Company has evaluated its ability to continue as a going concern for at least twelve months from the issuance of these consolidated financial
statements. As of January 31, 2026, the Company had no cash and incurred a net loss of $518,705. In addition, the Company had net cash
used in operations of $1,208,046 and had a working capital deficit of $1,195,242 as of January 31, 2026.
The
ability of the Company to continue its operations is dependent on management’s plans, which include the raising of capital through
debt and/or equity markets with some additional funding from other traditional financing sources, including term notes, until such time
that funds provided by operations are sufficient to fund working capital requirements.
As
of the issuance date of these annual consolidated financial statements, the Company expects its cash will not be sufficient to fund its
operating expenses and capital expenditure requirements for a reasonable period of time from the date of issuance of these consolidated
financial statements. The future viability of the Company is dependent on its ability to raise additional capital to finance its operations,
which is uncertain. The Company has concluded that there is substantial doubt about its ability to continue as a going concern for at
least one year after the date that the consolidated financial statements are issued.
The
accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. These consolidated financial statements do not include any adjustments
relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be
unable to continue as a going concern.
F-6
Note
3 – Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”)
for financial information. The consolidated financial statements present the cumulative results of operations, cash flows and changes
in members’ deficit since the Company’s inception on July 8, 2025.
Recent
Accounting Pronouncements
On
December 14, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 amends ASC 740, Income Taxes to expand
income tax disclosures and requires that we disclose (i) the income tax rate reconciliation using both percentages and reporting currency
amounts; (ii) specific categories within the income tax rate reconciliation; (iii) additional information for reconciling items that
meet a quantitative threshold; (iv) the composition of state and local income taxes by jurisdiction; and (v) the amount of income taxes
paid disaggregated by jurisdiction. The Company is currently evaluating the impact of adopting ASU 2023-09 on its consolidated financial
statement disclosures.
In
November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures
(Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires public business
entities to disclose, in the notes to the financial statements, additional disaggregated information about certain expense captions presented
on the face of the income statement, including amounts for specified categories such as purchases of inventory, employee compensation,
depreciation, intangible asset amortization, and depletion, as applicable. The amendments also require disclosure of selling expenses
and, in annual reporting periods, the entity’s definition of selling expenses. The amendments are effective for annual reporting
periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15,
2027. Early adoption is permitted. The amendments may be applied prospectively or retrospectively. The Company is currently evaluating
the impact of adopting ASU 2024-03 on its consolidated financial statement disclosures.
In
December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”).
ASU 2025-11 amends Topic 270 to improve the navigability of interim reporting guidance, clarify the applicability of interim reporting
requirements, and provide additional guidance regarding the form and content of interim financial statements and related notes. The amendments
also add a disclosure principle requiring entities to disclose events and changes since the end of the most recent annual reporting period
that have had a material impact on the entity. The amendments are not intended to change the fundamental nature of interim reporting
or expand or reduce current interim disclosure requirements. For public business entities, ASU 2025-11 is effective for interim reporting
periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied
prospectively or retrospectively. The Company is currently evaluating the impact of adopting ASU 2025-11 on its interim consolidated
financial statement disclosures.
Equipment
Equipment
consists primarily of data center racking equipment and is stated at cost less accumulated depreciation. Costs include expenditures that
are directly attributable to the acquisition and installation of the assets necessary to prepare them for their intended use.
Depreciation
is computed using the straight-line method over the estimated useful life of the assets, which is seven years.
Expenditures
for maintenance and repairs are expensed as incurred, while expenditures that improve or extend the useful life of the assets are capitalized.
Upon
retirement or disposal of property and equipment, the cost and related accumulated depreciation are removed from the accounts, and any
resulting gain or loss is recognized in the consolidated statements of operations.
The
Company evaluates property and equipment for impairment in accordance with its policy for long-lived assets.
F-7
Long-Lived
Assets
The
Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable.
Recoverability
is assessed by comparing the carrying amount of the asset to the estimated undiscounted future cash flow expected to result from the
use and eventual disposition of the asset. If the carrying amount exceeds those cash flows, an impairment loss is recognized in an amount
equal to the excess of the carrying amount over the asset’s fair value.
Fair
value is determined using appropriate valuation techniques, which may include discounted cash flow analyses or market-based approaches.
Assets
to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.
During
the period ended January 31, 2026, the Company determined that racking equipment with a carry value of $164,021 would not provide future
economic benefit to the Company. Accordingly, the Company recorded a loss on disposal of equipment of $164,021, which is included in
operating expenses in the consolidated statement of operations. As of January 31, 2026, the Company had no remaining book value related
to the disposed equipment.
Income
Taxes
The
Company is treated as an LLC for legal purposes and generally is not subject to federal and state income taxes, as its taxable income
or loss is passed through to its members. Accordingly, no provision for federal and state income taxes have been recorded in the accompanying
consolidated financial statements.
The
Company is subject to certain state and local taxes, including franchise and other similar taxes, which will be recorded as general and
administrative expenses in the accompanying consolidated statement of operations.
The
Company accounts for uncertainty in income taxes in accordance with generally accepted accounting principles in the United States of
America (“U.S. GAAP”). The Company recognizes the effect of income tax positions only if those positions are more likely
than not to be sustained upon examination by taxing authorities. The Company did not have any significant unrecognized tax benefits as
of January 31, 2026.
The
Company’s tax returns remain subject to examination by taxing authorities since inception.
Use
of Estimates
The
preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. GAAP requires
management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying
notes.
As
an early-stage company that has not yet generated revenue, the Company’s estimates are based on limited historical information
and therefore involve a higher degree of judgment and uncertainty. Management is required to make assumptions regarding, among other
things, the estimated useful lives of data center equipment and the recoverability of long-lived assets. In addition, estimates are required
in evaluating the classification and measurement of the related party loan payable, as well as the recoverability of security deposits
and other prepaid assets.
Management
also evaluates the Company’s ability to continue as a going concern and to meet its obligations as they become due within one year
from the date the consolidated financial statements are issued.
These
estimates are based on management’s best judgment using currently available information and assumptions believed to be reasonable
under the circumstances. However, due to the Company’s limited operating history and absence of revenues, actual results could
differ materially from those estimates. Estimates are reviewed on an ongoing basis, and revisions are recognized in the period in which
they become known.
F-8
Earnings
Per Share
The
Company is an LLC with no issued or outstanding shares of common stock. Accordingly, Accounting Standards Codification (“ASC”)
260, Earnings Per Share, does not apply, and the presentation of earnings per share is not provided.
Segment
Information
Operating
segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief
operating decision maker, or decision-making group, in deciding how to allocate resources and assess performance. The Company views its
operations and manages its business in one segment.
Related
Party Transactions
The
Company identifies related-party transactions in accordance with ASC 850, Related Party Disclosures, which requires disclosure
of the nature of the relationship, the terms of the transaction, and any outstanding balances. Transactions with members, including promissory
notes, are evaluated to ensure terms approximate those of comparable market transactions (See Note 5).
Leases
The
Company accounts for leases in accordance with ASC Topic 842, Leases. The Company determines whether an arrangement is, or contains,
a lease at inception. For leases with an initial term greater than 12 months, the Company recognizes a right-of-use (“ROU”)
asset and a lease liability based on the present value of the future lease payments over the lease term. The Company uses an estimated
incremental borrowing rate to discount future lease payments, as the rates implicit in the leases are not readily determinable. The Company
has elected the practical expedient to not separate lease and non-lease components for its real estate leases. Lease expense for operating
leases is recognized on a straight-line basis over the lease term.
Note
4 – Leases
The
Company leases operating facilities under non-cancelable operating lease agreements. Lease commencement occurs on the date the Company
obtains control of the leased property. On November 25, 2025, the Company executed a lease agreement for a facility with a lease commencement
date of January 1, 2026, and an initial non-cancelable lease term of four years. The lease agreement also includes one optional one-year
renewal period, which management determined was reasonably certain to be exercised and, accordingly, was included in the determination
of the lease term.
In
connection with the lease agreement, an entity owned by a member of the Company paid $80,000 to the landlord on behalf of the Company
for costs associated with the relocation of the prior tenant, as required under the lease agreement. The Company accounted for this payment
as a lease incentive in accordance with ASC 842.
Upon
lease commencement on January 1, 2026, the Company recognized an ROU asset and corresponding operating lease liability based on the present
value of future lease payments over the lease term. The prepaid lease incentive reduced the initial measurement of the ROU asset.
As
the lease does not provide a readily determinable implicit rate, the Company utilizes its estimated incremental borrowing rate, determined
on a collateralized basis, to discount lease payments. Renewal options are included in determining lease payments when management determines
such options are reasonably certain of exercise.
F-9
The
lease agreement requires payment of certain variable costs, including common area maintenance, real estate taxes, insurance, and operating
expenses, which are expensed as incurred and are not included in the measurement of lease liabilities. The lease agreement does not contain
any material residual value guarantees or restrictive covenants.
Balance Sheet Classification
January 31, 2026
Assets:
Operating lease
Right-of-use lease asset
$ 1,906,639
Liabilities:
Current:
Operating lease
Right-of-use lease liability
$ 22,246
Noncurrent:
Operating lease
Right-of-use lease liability
1,353,997
Total right-of-use lease liabilities
$ 1,376,243
Weighted average remaining term of operating leases, including option periods expected to renew
4.92 years
Discount rate
15.75 %
The
following table presents supplemental cash flow information for the period ended January 31, 2026:
2026
Cash paid for operating lease liability
$ 495,581
Aggregate
future minimum lease payments under right-of-use operating lease are as follows:
Operating Leases
Twelve months ending:
January 31, 2027
$ 42,537
January 31, 2028
511,725
January 31, 2029
527,076
January 31, 2030
542,889
January 31, 2031
511,298
Total gross operating lease payments
2,135,525
Less: imputed interest
(759,282 )
Present value of future minimum lease payments
1,376,243
Less current portion of right-of-use lease liability
22,246
Operating lease liability, net of current portion
$ 1,353,997
Note
5 – Related Party Transactions
The
Company entered into a loan agreement dated December 31, 2025, with 10X LLC, an entity owned by a Member of the Company, pursuant to
which the Company consolidated prior advances into a loan with an aggregate principal balance of $1,372,067.
The
loan bears interest at a rate of 8% per annum and matures on January 31, 2027. Interest accrues on the outstanding principal balance
and is payable at maturity.
F-10
The
loan represents a senior unsecured obligation of the Company and ranks senior in right of payment to all other existing and future indebtedness
of the Company, except for any indebtedness that is expressly designated as senior in right of payment and approved in writing by 10X
LLC. The loan may be prepaid at any time without penalty.
Upon
the occurrence of a change of control or transformation transaction, the entire outstanding principal balance of the loan, together with
all accrued but unpaid interest, becomes immediately due and payable. A change of control is defined as any transaction or series of
related transactions in which a person or group acquires more than fifty percent (50%) of the outstanding equity or voting power of the
Company. A transformation transaction includes any merger, consolidation, equity exchange, contribution of substantially all assets to
another entity, or similar reorganization in which the Company’s equity holders receive securities or ownership interests in another
entity.
The
loan represents the consolidation of prior advances made by the related party to fund the Company’s operations. The proceeds of
the loan were used to fund substantially all of the Company’s assets as of January 31, 2026, including equipment, security deposits,
lease-related costs, and land deposits, as well as general operating expenses.
As
of January 31, 2026, the outstanding balance of the loan was $1,372,067, with accrued interest of $8,313.
Note
6 – Members’ Deficit
The
Company is organized as a Delaware LLC and, as such, does not have authorized or issued shares of common or preferred stock. Ownership
interests are represented by membership interests.
As
of January 31, 2026, no members have made capital contributions to the Company, and no membership interests have been issued. The Company
has been funded through loans and has incurred a net loss since inception, resulting in a member’s deficit as of January 31, 2026.
Note
7 – Segment Information
ASC
280, Segment Reporting, establishes standards for companies to report in their financial statement information about operating
segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for
which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker,
or group, in deciding how to allocate resources and assess performance.
The
Company’s chief operating decision maker has been identified as the Chief Executive Officer (“CODM”), who reviews the
operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly,
management has determined that the Company only has one operating segment.
When
evaluating the Company’s performance and making key decisions regarding resource allocation, the CODM reviews several key metrics,
which include the following from the consolidated statement of operations:
For the Period from July 8, 2025 (inception) through January 31, 2026
General and administrative costs
$ (346,371 )
Loss on disposal of Equipment
$ (164,021 )
Interest expense
$ (8,313 )
Note
8 – Commitments and Contingencies
On
January 12, 2026, the Company entered into a Limited Liability Company Interest Purchase Agreement with T20 Mining Group, LLC. The Company
made an initial escrow deposit of $500,000 on January 13, 2026. Pursuant to the terms and conditions of the Limited Liability Company
Interest Purchase Agreement, the transaction closing date was February 12, 2026 (See Note 9).
F-11
Note
9– Subsequent Events
We
have evaluated subsequent events through May 29, 2026, the date these consolidated financial statements were issued.
The
Company filed a Form 8832 with the IRS to elect to be treated as a corporation for United States federal income Tax purposes, which was
effective as of February 12, 2026.
On
February 13, 2026, the Company entered into and consummated a Unit Purchase Agreement (the “Agreement”) with Graham Macro
Strategic Ltd. and Graham Credit Opportunities Ltd. (collectively, the “Purchasers”), pursuant to which the Purchasers purchased
all of the Preferred Units for total consideration of $33,500,000 (the “Investment”). The proceeds from the Investment were
used to fund the acquisition of T20 Mining Group, LLC (the “T20 Acquisition”).
Pursuant
to the Agreement, the Company is contractually obligated to consummate a transaction (the “Contribution”) within a specified
period, pursuant to which substantially all of the Company’s assets will be contributed to a publicly- traded company (“PubCo”)
in exchange for equity securities of PubCo, subject to applicable regulatory approvals. Upon completion of the Contribution, the Purchasers
will be entitled to receive 50% of the equity consideration issued by PubCo, which may consist of common stock or, at the election of
the Purchasers, warrants or other equity-linked securities. If the Contribution is not completed within the required timeframe, the Purchasers
have the right to require the Company to redeem all of the Preferred Units for cash at a price equal to 150% of the original Investment,
senior to all other equity interests of the Company.
On
February 13, 2026, the Company amended its Limited Liability Company Agreement to authorize a new class of Preferred Units, consisting
of up to 1,000 units. The Preferred Units rank senior to Common Units with respect to distributions and payments upon any voluntary or
involuntary liquidation, dissolution, or winding up of the Company. They do not bear dividends but participate in distributions according
to the distribution waterfall. Each Preferred Unit is convertible into one Common Unit solely for purposes of calculating as-converted
entitlements, and such conversion does not confer voting rights or other ownership rights. Holders of Preferred Units are entitled to
certain mandatory redemption rights if the Contribution is not consummated within the specified period, including a cash redemption at
150% of the purchase price, senior to all other equity interests. Until the earlier of the consummation of the Contribution or the redemption
of all Preferred Units, the Company may not, without the prior written consent of the Purchasers, declare or pay dividends or make distributions
(other than redemption of Preferred Units), incur indebtedness or preferred equity (other than project financing), issue or sell equity,
make investments or acquisitions outside approved transactions, sell or transfer assets (other than in the ordinary course or as part
of the Contribution), enter into affiliate transactions on non-arm’s-length terms, amend the Certificate of Formation or LLC Agreement,
enter into or amend material contracts outside the ordinary course, dissolve or wind up the Company, or consummate the T20 Acquisition
or Contribution on terms unacceptable to the Purchasers. Except as expressly provided in the LLC Agreement (including the consent rights
described above), Preferred Units do not carry voting rights.
On
March 26, 2026, a wholly owned subsidiary of the Company exercised a purchase option contained within its operating lease agreement for
the Project Facility. The purchase option was included in the original lease agreement executed on November 25, 2025 and was exercised
through delivery of a formal notice to the landlord pursuant to Section 54(f) of the lease agreement. The agreement provides the Company
with the right to purchase the facility for $23,500,000, subject to certain contractual conditions and customary closing adjustments.
Management
determined that exercise of the purchase option was not reasonably certain as of January 31, 2026, as the decision to exercise the option
remained contingent upon operational developments occurring subsequent to year end, including completion of the T20 acquisition, securing
the related power agreement, and obtaining visibility into prospective tenant arrangements. Accordingly, the purchase option was not
included in the initial measurement of the Company’s operating lease right-of-use asset and lease liability as of January 31, 2026.
The Company is currently evaluating the accounting implications of the exercised purchase option under ASC 842.
On
May 27, 2026, the Company entered into a definitive Agreement and Plan of Merger with Healthy Choice Wellness Corp. and Healthy Choice
Wellness II Corp.
F-12
INDEX
TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF HOST DIGITAL INFRASTRUCTURE LLC
PAGE
Condensed Consolidated Balance Sheets as of July 31, 2026 (Unaudited) and January 31, 2026
F-14
Condensed
Consolidated Statements of Operations for the Three and Six Months Ended July 31, 2026 and for the Period from July 8, 2025
(Inception) through July 31, 2025 (Unaudited)
F-15
Condensed
Consolidated Statements of Changes in Redeemable Preferred Units (Temporary Equity) and Members’ Deficit for the Three
and Six Months Ended July 31, 2026 and for the Period from July 8, 2025 (Inception) through July 31, 2025 (Unaudited)
F-16
Condensed
Consolidated Statements of Cash Flows for the Six Months Ended July 31, 2026 and for the Period July 8, 2025 (Inception) through
July 31, 2025 (Unaudited)
F-17
Notes to Condensed Consolidated Financial Statements (Unaudited)
F-18
F-13
HOST
DIGITAL INFRASTRUCTURE LLC
(FORMERLY
KNOWN AS 10X DIGITAL INFRASTRUCTURE LLC)
CONDENSED
CONSOLIDATED BALANCE SHEETS
July 31, 2026
January 31, 2026
(Unaudited)
ASSETS
Current assets:
Prepaid expenses and deposits
$ 236,546
$ 500,000
Deferred costs
811,394
-
Total current assets
1,047,940
500,000
Right-of-use asset – operating lease
1,347,182
1,906,639
Right-of-use asset – finance lease
21,871,038
-
Security deposit
-
123,895
Intangible assets - electric service agreement
32,642,125
-
Total assets
$ 56,908,285
$ 2,530,534
LIABILITIES, PREFERRED RIGHTS AND MEMBERS’ DEFICIT
Current liabilities:
Loan payable – related party
$ 1,852,248
$ 1,372,067
Accrued expenses
3,707,689
300,929
Operating lease liability – current portion
80,911
22,246
Finance lease liability – current portion
22,872,121
-
Total current liabilities
28,512,969
1,695,242
Operating lease liability – long-term
1,296,650
1,353,997
Total liabilities
$ 29,809,619
$ 3,049,239
Commitments and contingencies (Note 11)
Redeemable Preferred Units (Temporary Equity)
33,500,000
-
MEMBERS’ DEFICIT
Common units (1,000 units issued and outstanding as of July 31, 2026 and January 31, 2026, no par value; no capital contributions)
-
-
Members’ capital
(843,233 )
-
Accumulated deficit
$ (5,558,101 )
$ (518,705 )
Total members’ deficit
(6,401,334 )
(518,705 )
Total liabilities, redeemable preferred units and members’ deficit
$ 56,908,285
$ 2,530,534
The
accompanying notes are an integral part of these condensed consolidated financial statements.
F-14
HOST
DIGITAL INFRASTRUCTURE LLC
(FORMERLY
KNOWN AS 10X DIGITAL INFRASTRUCTURE LLC)
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
July 31, 2026
For the period from July 8, 2025
(Inception) through
July 31, 2025
Six Months Ended
July 31, 2026
For the period from July 8, 2025
(Inception) through
July 31, 2025
Sales, net
$ -
$ -
$ -
$ -
Cost of sales
-
-
-
-
Gross profit
-
-
-
-
Operating expenses
2,793,597
-
3,617,954
-
Loss from operations
(2,793,597 )
-
(3,617,954 )
-
Interest expense
(909,626 )
-
(1,256,800 )
-
Net loss from continuing operations before income taxes
$ (3,703,223 )
$ -
$ (4,874,754 )
$ -
Income tax benefit
-
-
-
-
Net loss from continuing operations
$ (3,703,223 )
$ -
$ (4,874,754 )
$ -
Net loss from discontinued operations, net of tax
-
-
(164,642 )
-
Net loss
$ (3,703,223 )
$ -
$ (5,039,396 )
$ -
The
accompanying notes are an integral part of these condensed consolidated financial statements.
F-15
HOST
DIGITAL INFRASTRUCTURE LLC
(FORMERLY
KNOWN AS 10X DIGITAL INFRASTRUCTURE LLC)
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE PREFERRED UNITS (TEMPORARY EQUITY) AND MEMBERS’ DEFICIT
(Unaudited)
Six
Months Ended July 31, 2026
Redeemable Preferred Units
Common Units
Accumulated
Members’
Total Members’
Shares
Amount
Shares
Amount
Deficit
Capital
Deficit
Balance February 1, 2026
-
$ -
-
$ -
$ (518,705 )
$ -
$ (518,705 )
Issuance of preferred units
1,000
33,500,000
-
-
-
-
-
Issuance of common units
-
-
1,000
-
-
-
-
Distribution to owners
-
-
-
-
-
(843,233 )
(843,233 )
Net loss
-
-
-
-
(1,336,173 )
-
(1,336,173 )
Balance April 30, 2026
1,000
$ 33,500,000
1,000
$ -
$ (1,854,878 )
$ (843,233 )
$ (2,698,111 )
Net loss
-
-
-
-
(3,703,223 )
-
(3,703,223 )
Balance July 31, 2026
1,000
$ 33,500,000
1,000
$ -
$ (5,558,101 )
$ (843,233 )
$ (6,401,334 )
For
the period from July 8, 2025 (Inception) through July 31, 2025
Redeemable Preferred Units
Common Units
Accumulated
Members’
Total Members’
Shares
Amount
Shares
Amount
Deficit
Capital
Deficit
Balance July 8, 2025 (Inception)
-
$ -
-
$ -
$ -
$ -
$ -
Net loss
-
-
-
-
-
-
-
Balance July 31, 2025
-
$ -
-
$ -
$ -
$ -
$ -
The
accompanying notes are an integral part of these condensed consolidated financial statements.
F-16
HOST
DIGITAL INFRASTRUCTURE LLC
(FORMERLY
KNOWN AS 10X DIGITAL INFRASTRUCTURE LLC)
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
July 31, 2026
For the period from
July 8, 2025
(Inception) through
July 31, 2025
Cash flows from operating activities — continuing operations:
Net loss from continuing operations
$ (4,874,754 )
$ -
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of right-of-use assets
337,676
-
Accrued expenses
2,445,366
-
Prepaid expenses and deposits
387,349
-
Lease liabilities
1,224,182
-
Net cash used in operating activities — continuing operations
(480,181 )
-
Cash flows from Investing activities — continuing operations
Cash paid for T20 Mining Group LLC asset acquisition
(33,500,000 )
-
Cash (used in) investing activities — continuing operations
(33,500,000 )
-
Cash flows from financing activities — continuing operations
Principal payment on related party loan
(500,000 )
-
Proceeds from related party loan
980,181
-
Proceeds from issuance of preferred units
33,500,000
-
Net cash provided by financing activities — continuing operations
33,980,181
-
Cash flows from discontinued operations:
Net cash provided by (used in) operating activities (1)
-
-
Net cash provided by (used in) investing activities
-
-
Net cash provided by (used in) financing activities
-
-
Change in cash during the period
-
-
Cash beginning of the period
-
-
Cash end of the period
$ -
$ -
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Cash paid for interest
$ -
$ -
Cash paid for income tax
$ -
$ -
Right-of-use asset obtained in exchange for lease liability
$ 22,107,226
$ -
Non-cash transfer of net assets to a related entity under common control
$ 32,373
$ -
Capitalized transaction costs
$ 150,000
$ -
Non-cash deferred costs
$ 811,394
$ -
(1)
Net cash provided by (used in) operating activities from discontinued operations is calculated as follows: Net loss from discontinued
operations ($164,642) + Depreciation expense $11,696 + Impairment loss $82,946 + Loss on crypto asset remeasurement $70,000 = $0.
The
accompanying notes are an integral part of these condensed consolidated financial statements.
F-17
HOST
DIGITAL INFRASTRUCTURE LLC
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note
1 – Organization and Nature of Operations
Organization
Host
Digital Infrastructure LLC (the “Company,” “Host Digital,” “we,” “us,” or “our”)
was formed as a limited liability company under the laws of the State of Delaware on July 8, 2025. The Company’s principal executive
offices are located at 3800 North 28th Way, Hollywood, FL 33020. The Company was formerly known as 10X Digital Infrastructure
LLC and changed its name to Host Digital Infrastructure LLC on May 18, 2026.
The
Company operates through its wholly owned subsidiaries, 10X East Tulsa LLC, a Delaware limited liability company, and T20 Mining Group
LLC (“T20”), an Oklahoma limited liability company. All significant intercompany balances and transactions have been eliminated
in consolidation.
Nature
of Operations
Host
Digital is a U.S.-based digital infrastructure platform focused on the development, ownership, and operation of institutional-quality
data centers supporting artificial intelligence (AI) and high-performance computing (HPC) workloads. The Company’s strategy is
to secure reliable, low-cost power and to provide scalable computing capacity on a long-term contracted basis. The Company entered into
a long-term lease agreement commenced January 1, 2026, for a facility intended to support its future data center operations.
Property
Acquisition
On
November 25, 2025, the Company, through its wholly owned subsidiary 10X East Tulsa LLC, entered into a Commercial Real Estate Lease (the
“Property Lease”) with 5555 Property Developers, LLC (the “Seller”) for a data center facility located in Tulsa,
Oklahoma (the “Property”). The Property Lease commenced on January 1, 2026, and originally had a five-year non-cancelable
term. The Property Lease contained a purchase option allowing the tenant to acquire the Property for a fixed price of $23.5 million,
exercisable with six months’ advance notice and closing required by October 1, 2026.
On
March 26, 2026, the Company exercised the purchase option contained in the Property Lease to acquire the Property. On June 23, 2026,
10X East Tulsa LLC (the “Purchaser”) entered into a Purchase and Sale Agreement (the “PSA”) with the Seller to
formally memorialize the acquisition of the Property and parking lot. The total purchase price under the PSA is (a) $27,650,000 plus
(b) an amount equal to the aggregate of all payments that would otherwise become due and payable under the Property Lease from and after
the Closing Date through the expiration of the term of the Property Lease. The Closing is scheduled to occur no later than October 1,
2026, subject to Purchaser’s right to adjourn the Closing Date for up to two successive 30-day periods by written notice to Seller.
The closing of the purchase is conditioned upon, among other things, Purchaser’s receipt of certain requisite approvals, including
zoning and land development plan approvals, and satisfactory completion of its due diligence investigations. The PSA includes representations
and warranties from Seller, title review provisions, and inspection rights for Purchaser.
As
of July 31, 2026, the acquisition of the Property and parking lot had not yet closed. The Company intends to fund the purchase price
through project financing obtained in connection with the development of the Property.
Agreement
and Plan of Merger with Healthy Choice Wellness Corp.
On
May 27, 2026, the Company entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) with Healthy Choice
Wellness Corp. (“HCWC”), a Delaware corporation whose Class A common stock is listed on the NYSE American, and Healthy Choice
Wellness II Corp., a Delaware corporation and a wholly owned subsidiary of HCWC (“Merger Sub”).
Pursuant
to the Merger Agreement, and in accordance with the Delaware General Corporation Law (the “DGCL”) and the Delaware Limited
Liability Company Act (the “DLLCA”), at the effective time of the Merger (the “Effective Time”), Merger Sub will
merge with and into Host Digital, with Host Digital surviving as a wholly owned subsidiary of HCWC (the “Surviving Entity”).
F-18
The
Merger is intended to provide the Company with access to public capital markets and is expected to close in the third quarter of 2026,
subject to the satisfaction or waiver of customary closing conditions, including approvals by HCWC’s stockholders and the Company’s
members.
Merger
Consideration
At
the Effective Time, all outstanding Common Units and Preferred Units of the Company (collectively, the “Company Units”) will
be automatically converted into the right to receive the Merger Consideration, which will consist of either (i) a number of shares of
HCWC Class A common stock, or (ii) pre-funded warrants to purchase HCWC common stock at a nominal exercise price, in lieu of such shares.
The
total Merger Consideration is based on a fixed Base Price of $425,000,000. The Exchange Ratio is calculated by dividing the Base Price
by the Applicable Share Price (defined as $0.27 per share of HCWC common stock, which was the market price prior to the reverse stock
split described below) and then dividing the result by the total number of Company Units outstanding (2,000 units). Based on the pre-reverse-split
Applicable Share Price of $0.27, the Merger Consideration would have resulted in the issuance of approximately 1.57 billion shares of
HCWC common stock (or Pre-Funded Warrants) to the members of Host Digital.
On
August 28, 2026, HCWC effected a 1-for-35 reverse stock split of its Class A common stock (see Note 13 — Subsequent Events). In
accordance with the Merger Agreement, the Merger Consideration will be equitably adjusted to reflect the reverse stock split. As a result,
the number of shares of HCWC common stock (or Pre-Funded Warrants) to be issued to the members of Host Digital upon closing is expected
to be approximately 44,973,545 shares, based on the post-reverse-split Applicable Share Price of $9.45 per share. Upon closing, the former
members of Host Digital are expected to own approximately 96% of the outstanding HCWC common stock.
Governance
and Post-Merger Operations
Immediately
following the Effective Time, the HCWC Board of Directors will be comprised of Robert Byrne, Omar Hussein, Guhan Kandasamy and
Shawn Matthews.
On
August 26, 2026, Host Digital and Shawn Matthews entered into an Agreement for Board Appointment (the “Board Appointment Agreement”)
in connection with Mr. Matthews’ expected appointment as Chairman of the Board upon consummation of the Merger. Under this agreement,
Mr. Matthews will receive compensation including: (i) an annual cash retainer of $300,000; (ii) an initial equity award with a grant
date target value of $7,500,000; (iii) an annual equity bonus with a target value of $7,500,000; and (iv) eligibility to earn additional
equity awards upon achievement of specified market capitalization milestones.
Director
Independence: Following the Merger, and as a result of the Board Appointment Agreement, the composition and independence of the Board
will be updated as follows:
● Independent
Directors: Messrs. Byrne, Hussein, and Kandasamy will be independent under the rules of NYSE
American.
● Non-Independent
Directors: Mr. Matthews will serve as Chairman of the Board (non-independent).
● The
Board will maintain a majority of independent directors as required by NYSE American rules,
and the composition of the Board committees will be evaluated and established to ensure compliance
with applicable rules.
Harmol
Samra will serve as Chief Executive Officer, and John Ollet (HCWC’s current Chief Financial Officer) will serve as Chief Financial
Officer. The combined company will change its name to a name selected by Host Digital, in its sole discretion, and its HCWC common stock
is expected to continue trading on the NYSE American under the ticker symbol “HOST.” Following the Merger, HCWC’s existing
grocery retail operations will continue to operate as a division of the combined company.
F-19
Accounting
Treatment
The
Merger will be accounted for as a reverse acquisition under U.S. generally accepted accounting principles (“GAAP”) in accordance
with Accounting Standards Codification Topic 805, Business Combinations. Host Digital has been identified as the accounting acquirer
because its former members will hold a majority of the voting rights in the combined entity, designate a majority of the board of directors,
and appoint senior management. HCWC is the accounting acquiree. Under the acquisition method of accounting, the assets and liabilities
of HCWC will be recorded at their estimated fair values as of the acquisition date. The assets and liabilities of Host Digital will be
carried over at their historical carrying values, as the combined entity is a continuation of Host Digital’s financial statements.
Conditions
to Closing
The
completion of the Merger is subject to certain conditions, including, but not limited to:
● Approval
of the Stock Issuance Proposal, the Authorized Shares Proposal, and the Name Change Proposal
by HCWC’s stockholders. (Satisfied — all proposals were approved by HCWC stockholders
at the special meeting held on August 27, 2026).
● Approval
of the Merger and the Merger Agreement by the requisite holders of the Company’s Common
Units and Preferred Units.
● The
continued listing of HCWC’s common stock on the NYSE American.
● Receipt
of certain tax opinions, including a Merger Tax Opinion and a Spin-Off Tax Opinion.
● Expiration
or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act.
● Other
customary closing conditions as set forth in the Merger Agreement.
Following
the satisfaction of the stockholder approval condition, the companies currently expect to complete the Merger during late September 2026.
There can be no assurance that the Merger will be completed. The accompanying condensed consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Tenant
Lease
On
August 7, 2026, subsequent to the balance sheet date, the Company secured a 15-year, take-or-pay lease as a lessor with one of the world’s
largest privately held cloud infrastructure companies for its data center facility in northeast Oklahoma. The lease is expected to be
supported by a backstop from a U.S.-based, investment-grade global technology company.
The
long-term, committed, take-or-pay agreement represents approximately $1.25 billion in contracted revenue over the 15-year base term and
covers 43 megawatts (“MW”) of critical IT load capacity at the Company’s currently energized facility. The lease includes
annual rent escalators and renewal options and represents approximately $3.2 billion in contracted revenue if all renewal options are
exercised over a 30-year total term. Delivery to the tenant is expected in the first quarter of 2027.
Note
2 – Going Concern
The
accompanying condensed consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. These condensed consolidated financial statements do
not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary
should the Company be unable to continue as a going concern.
F-20
The
Company has evaluated its ability to continue as a going concern for at least twelve months from the issuance of these condensed consolidated
financial statements. As of July 31, 2026, the Company had no cash and incurred a net loss of approximately $5.0 million for the six
months ended July 31, 2026. In addition, the Company had net cash used in operating activities of $0.5 million and had a working capital
deficit of approximately $27.5 million as of July 31, 2026. These conditions, among others, raise substantial doubt about the Company’s
ability to continue as a going concern within one year after the date that these condensed consolidated financial statements are issued.
Management’s
plans to address these conditions include the following:
● On
February 13, 2026, the Company issued 1,000 Preferred Units to Graham Macro Strategic Ltd.
and Graham Credit Opportunities Ltd. for total cash consideration of $33,500,000, which was
used to fund the T20 Mining Group LLC acquisition. The terms of the Preferred Units include
a mandatory redemption feature if a planned contribution of substantially all of the Company’s
assets to a publicly-traded company (“PubCo”) is not completed within a specified
period (see Note 12 - Members’ Deficit)
● On
May 27, 2026, the Company entered into a definitive Agreement and Plan of Merger with HCWC
and a wholly owned subsidiary of HCWC (the “Merger Agreement”). On August 27,
2026, HCWC stockholders approved all proposals required to complete the merger, satisfying
a key closing condition. The companies currently expect to complete the merger during late
September 2026, subject to the satisfaction or waiver of remaining closing conditions. Upon
closing, Host Digital will become a wholly owned subsidiary of HCWC, and former Host Digital
members are expected to own approximately 96% of HCWC’s outstanding Class A common
stock. The combined company expects to continue trading on the NYSE American under the ticker
symbol HOST, subject to exchange approval. The Merger is intended to provide access to public
capital markets.
● Subsequent
to the balance sheet date, on August 7, 2026, the Company secured a 15-year, take-or-pay
lease as a lessor with one of the world’s largest privately held cloud infrastructure
companies, representing approximately $1.25 billion in contracted revenue over the base term.
This lease strengthens the Company’s ability to obtain project financing and supports
management’s plans to address the going concern uncertainty (see Note 1 — Organization
and Nature of Operations).
● The
Company continues to pursue project-level financing for its initial data center facility
and is in negotiations with prospective tenants for a long-term lease.
There
can be no assurance that the Merger will be completed, that the Contribution to PubCo will occur, or that additional financing will be
available on acceptable terms, or at all. The Merger remains subject to the satisfaction or waiver of the remaining closing conditions.
The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of these
uncertainties.
F-21
Note
3 – Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and the Accounting Standards
Codification (“ASC”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”)
for financial information. The accompanying unaudited condensed consolidated financial statements include the accounts of Host Digital
Infrastructure LLC and its wholly owned subsidiaries, 10X East Tulsa LLC and T20 Mining Group LLC. All significant intercompany balances
and transactions have been eliminated in consolidation.
In
the opinion of our management, the unaudited condensed consolidated financial statements have been prepared on a basis consistent with
the audited consolidated financial statements and include all adjustments necessary for the fair presentation of the Company’s
financial condition, results of operations and cash flows for the interim period presented. Such adjustments are of a normal, recurring
nature. The results of operations and cash flows for the interim period presented may not necessarily be indicative of full-year results.
These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and
notes thereto for the year ended January 31, 2026 included in the definitive proxy statement on Schedule 14A filed by Healthy Choice
Wellness Corp. with the SEC on August 6, 2026.
Use
of Estimates
The
preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions
that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. As an early-stage company
that has limited operating history and limited revenue history, the Company’s estimates are based on limited historical information
and therefore involve a higher degree of judgment and uncertainty.
Significant
estimates include the fair value of net assets acquired in the T20 asset acquisition, including the Electric Service Agreement (“ESA”),
which was valued using a discounted cash flow model with an assumed discount rate of 11.9%; the fair value of crypto assets, which is
based on quoted market prices; the classification and measurement of leases, including the determination of incremental borrowing rates
and lease terms; the valuation allowance against deferred tax assets; the assessment of the Company’s ability to continue as a
going concern; and the recoverability of long-lived assets.
These
estimates are based on management’s best judgment using currently available information and assumptions believed to be reasonable
under the circumstances. However, due to the Company’s limited operating history and limited revenues, actual results could differ
materially from those estimates. Estimates are reviewed on an ongoing basis, and revisions are recognized in the period in which they
become known.
Revenue
Recognition
The
Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized when control
of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to
be entitled to in exchange for those goods or services.
The
Company’s continuing operations did not generate revenue during the periods presented.
Revenue
from cryptocurrency mining and hosting services is presented as part of discontinued operations (see Note 6 — Discontinued Operations).
The Company has no revenue from continuing operations and does not expect to generate material revenue until, at the earliest, the tenant
lease commences and the data center facility is placed in service (see Note 1 — Organization and Nature of Operations).
Cash
and Cash Equivalents
The
Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The
Company had no cash and cash equivalents as of July 31, 2026 and January 31, 2026.
F-22
Deferred
Costs
The
Company defers specific incremental costs directly attributable to its project financing activities and its at-the-market (“ATM”)
offering. Project finance costs consist of costs incurred in connection with obtaining project-level financing for the Company’s
data center facility. These costs are deferred in accordance with ASC 835-30, Interest — Imputation of Interest, and will
be a direct deduction from the carrying amount of the related debt liability and amortized over the term of the financing upon closing
of the project financing. ATM costs consist of specific incremental costs directly attributable to the Company’s ATM offering and
are deferred in accordance with SEC Staff Accounting Bulletin Topic 5.A, Expenses of Offering. These costs will be charged against
the gross proceeds of the offering when it is completed. If the project financing or the ATM offering is not completed, the related deferred
costs will be expensed in the period in which it becomes probable that the transaction will not be completed.
Long-Lived
Assets
The
Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable.
Recoverability
is assessed by comparing the carrying amount of the asset to the estimated undiscounted future cash flows expected to result from the
use and eventual disposition of the asset. If the carrying amount exceeds those cash flows, an impairment loss is recognized in an amount
equal to the excess of the carrying amount over the asset’s fair value.
Fair
value is determined using appropriate valuation techniques, which may include discounted cash flow analyses or market-based approaches.
Assets
to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.
Income
Taxes
Prior
to February 12, 2026, the Company was treated as a limited liability company (“LLC”) for legal purposes and generally is
not subject to federal and state income taxes, as its taxable income or loss is passed through to its members. Accordingly, no provision
for federal and state income taxes has been recorded in the accompanying condensed consolidated financial statements.
On
February 12, 2026, the Company filed an election on Internal Revenue Service (“IRS”) Form 8832 to change its U.S. federal
income tax classification to a C corporation, effective as of February 12, 2026. As a result, for all periods beginning on or after February
12, 2026, the Company is subject to federal and state corporate income taxes on its taxable income.
The
Company accounts for income taxes in accordance with ASC 740, Income Taxes, using the asset and liability method. Under this method,
deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred tax assets and liabilities
are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. A valuation allowance is provided if it is more likely than not that some portion or all of a deferred tax
asset will not be realized.
The
Company is subject to certain state and local taxes, including franchise and other similar taxes, which will be recorded as general and
administrative expenses in the accompanying condensed consolidated statements of operations.
The
Company accounts for uncertainty in income taxes in accordance with GAAP. The Company recognizes the effect of income tax positions only
if those positions are more likely than not to be sustained upon examination by taxing authorities. The Company did not have any significant
unrecognized tax benefits as of July 31, 2026.
The
Company calculates its interim income tax provision in accordance with ASC 740-270, Income Taxes – Interim Reporting. At
the end of each interim period, the Company estimates its annual effective tax rate and applies that rate to year-to-date ordinary income
to determine the income tax expense (or benefit) for the period. Discrete items, such as changes in tax rates or valuation allowances,
are recognized in the period in which they occur. As the Company incurred a loss for the three and six months ended July 31, 2026, and
has recorded a full valuation allowance against its net deferred tax assets, no income tax expense or benefit has been recorded for the
interim period.
The
Company’s tax returns for periods beginning on or after February 12, 2026 remain subject to examination by federal and state taxing
authorities. Prior to the change in tax status, the Company was a pass-through entity and generally not subject to entity-level income
tax examinations.
F-23
Earnings
Per Share
The
Company is a limited liability company (“LLC”) with 1,000 Common Units issued and outstanding as of July 31, 2026. The Common
Units are not traded in a public market, and the Company has not filed, nor is it in the process of filing, with any regulatory agency
in preparation for the sale of its Common Units in a public market. Accordingly, the Company is not required to present earnings per
share under ASC 260, Earnings Per Share (“ASC 260”), and no such presentation is provided.
As
of July 31, 2026, the Company also had 1,000 Preferred Units outstanding. In accordance with ASC 260, if the Company were required to
present EPS, dividends on Preferred Units would be deducted from net income to arrive at income available to common unitholders, and
the Preferred Units may be considered participating securities requiring the application of the two-class method for the allocation of
earnings.
Segment
Information
Operating
segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief
operating decision maker, or decision-making group, in deciding how to allocate resources and assess performance. The Company views its
operations and manages its business in one segment.
Related
Party Transactions
The
Company identifies related-party transactions in accordance with ASC 850, Related Party Disclosures (“ASC 850”), which
requires disclosure of the nature of the relationship, the terms of the transaction, and any outstanding balances. A related party is
generally defined as (i) any person that holds 10% or more of the Company’s units and their immediate families, (ii) the Company’s
management, (iii) any entity that directly or indirectly controls, is controlled by, or is under common control with the Company, or
(iv) anyone who can significantly influence the financial and operating decisions of the Company.
A
transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.
Common types of related party transactions include, but are not limited to, sales, purchases, and transfers of real and personal property;
services received or furnished; borrowings, lending, and guarantees; and use of property and equipment by lease or otherwise. The Company
conducts business with its related parties in the ordinary course of business. Transactions involving related parties cannot be presumed
to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations
about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent
to those that prevail in arm’s-length transactions unless such representations can be substantiated.
Transactions
with related parties are subject to the disclosure requirements of ASC 850, even if they are not recognized in the financial statements.
Related party transactions eliminated in the preparation of condensed consolidated financial statements are not required to be disclosed.
Transactions with members, including promissory notes and other arrangements, are evaluated to ensure terms approximate those of comparable
market transactions (see Note 7 — Related Party Transactions).
Leases
The
Company accounts for leases in accordance with ASC Topic 842, Leases (“ASC 842”). The Company determines whether an
arrangement is, or contains, a lease at inception. For leases with an initial term greater than 12 months, the Company recognizes a right-of-use
(“ROU”) asset and a lease liability based on the present value of the future lease payments over the lease term. The Company
uses an estimated incremental borrowing rate to discount future lease payments, as the rates implicit in the leases are not readily determinable.
The Company has elected the practical expedient to not separate lease and non-lease components for its real estate leases. Lease expense
for operating leases is recognized on a straight-line basis over the lease term.
If
the Company becomes reasonably certain to exercise a purchase option, the lease liability is remeasured to include the present value
of the purchase option price, and the ROU asset is adjusted by the same amount. The lease is then reclassified as a finance lease from
the date of remeasurement.
F-24
When
a lease modification decreases the scope of a lease (including shortening the lease term), the Company remeasures the lease liability
using a revised discount rate determined at the modification date. The Company proportionally decreases the carrying amount of the right-of-use
asset to reflect the partial or full termination of the lease. Any difference between the reduction in the lease liability and the proportionate
reduction in the right-of-use asset is recognized as a gain or loss in the condensed consolidated statements of operations at
the modification date.
Recent
Accounting Pronouncements
On
December 14, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 amends ASC 740, Income Taxes,
to expand income tax disclosures and requires that we disclose (i) the income tax rate reconciliation using both percentages and reporting
currency amounts; (ii) specific categories within the income tax rate reconciliation; (iii) additional information for reconciling items
that meet a quantitative threshold; (iv) the composition of state and local income taxes by jurisdiction; and (v) the amount of income
taxes paid disaggregated by jurisdiction. The Company adopted ASU 2023-09 for the year ending January 31, 2027. The adoption of this
guidance did not have a material impact on the Company’s condensed consolidated financial statements, as the Company has recorded
a full valuation allowance against its deferred tax assets and has no material uncertain tax positions.
In
November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures
(Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires public business
entities to disclose, in the notes to the financial statements, additional disaggregated information about certain expense captions presented
on the face of the income statement, including amounts for specified categories such as purchases of inventory, employee compensation,
depreciation, intangible asset amortization, and depletion, as applicable. The amendments also require disclosure of selling expenses
and, in annual reporting periods, the entity’s definition of selling expenses. The amendments are effective for annual reporting
periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15,
2027. Early adoption is permitted. The amendments may be applied prospectively or retrospectively. The Company is currently evaluating
the impact of adopting ASU 2024-03 on its condensed consolidated financial statement disclosures.
In
December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”).
ASU 2025-11 amends Topic 270 to improve the navigability of interim reporting guidance, clarify the applicability of interim reporting
requirements, and provide additional guidance regarding the form and content of interim financial statements and related notes. The amendments
also add a disclosure principle requiring entities to disclose events and changes since the end of the most recent annual reporting period
that have had a material impact on the entity. The amendments are not intended to change the fundamental nature of interim reporting
or expand or reduce current interim disclosure requirements. For public business entities, ASU 2025-11 is effective for interim reporting
periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied
prospectively or retrospectively. The Company is currently evaluating the impact of adopting ASU 2025-11 on its interim condensed consolidated
financial statement disclosures.
Note
4 — Deferred Costs
Deferred
costs represent specific incremental costs incurred by the Company in connection with its financing activities that have not yet been
completed as of the balance sheet date. These costs are deferred and will be applied against the proceeds of the related transaction
when it is completed, or expensed if it becomes probable that the transaction will not be completed. As of July 31, 2026, deferred costs
totaled $811,394, consisting of $789,257 related to project finance work and $22,137 related to the Company’s ATM offering.
The
$789,257 project finance costs were incurred in connection with obtaining project-level financing for the Company’s data center
facility. These costs are deferred in accordance with ASC 835-30, Interest — Imputation of Interest, and will be reclassified
as a direct deduction from the carrying amount of the related debt liability and amortized over the term of the financing upon closing
of the project financing. If the project financing is not completed, the deferred costs will be expensed in the period in which it becomes
probable that the transaction will not be completed.
F-25
The
$22,137 ATM costs represent specific incremental costs directly attributable to the Company’s at-the-market offering. These costs
are deferred in accordance with SEC Staff Accounting Bulletin Topic 5.A, Expenses of Offering, and will be charged against the
gross proceeds of the offering when it is completed. If the offering is not completed, the deferred costs will be expensed in the period
in which it becomes probable that the transaction will not be completed.
The
Company evaluates the recoverability of deferred costs at each reporting period. As of July 31, 2026, no portion of the deferred costs
has been charged to expense.
Note
5 – Asset Acquisition – T20 Mining Group LLC
On
February 13, 2026, the Company acquired 100% of the equity interests of T20 Mining Group LLC for total consideration of approximately
$33.5 million. The acquisition was funded by the proceeds from the issuance of Preferred Units (see Note 12 - Members’ Deficit).
The Company accounted for the transaction as an asset acquisition under ASC 805-50 because the acquired assets and liabilities did not
meet the definition of a business under ASC 805, Business Combinations. Management determined that the acquired set lacked substantive
processes, including an organized workforce, active hosting arrangements, and integrated operational systems necessary to continue outputs
on a stand-alone basis. The hosting arrangements that previously supported mining operations expired subsequent to the acquisition date
and were not renewed by the Company.
Purchase
Price Allocation
The
total cost of the acquisition was $33,650,000, which consists of cash consideration paid to the sellers of $33,500,000 and capitalized
transaction costs of $150,000. The following table presents the allocation of the total cost to the identifiable assets acquired based
on their relative fair values:
Asset (Liability) Category
Fair Value
% of Total Purchase Price
Buildings
$ 285,315
0.85 %
Tools, machinery, and equipment
438,327
1.30 %
Intangible - electric service agreement
32,642,125
97.00 %
Operating lease ROU asset
1,399,000
4.16 %
Lease liability
(1,399,000 )
-4.16 %
Other non-essential net assets
284,233
0.85 %
Total purchase price allocation
$ 33,650,000
100.00 %
The
$150,000 is added to the total fair value of the acquired assets and the allocated cost represents the capitalization of direct transaction
costs (primarily legal fees) incurred in connection with the acquisition, in accordance with ASC 805-50.
Reconciliation
of Acquisition Cost to Cost at Disposal
The
following table reconciles the total acquisition cost of $33,650,000 to the assets transferred to 10X Digital DropCo LLC (“DropCo”)
and the assets retained by the Company:
Amount
Total acquisition cost
$ 33,650,000
Assets transferred to DropCo (see Note 5):
Buildings (after depreciation and impairment)
248,000
Tools, machinery, and equipment (after impairment)
381,000
Net non-essential net assets
214,233
Total non-essential net assets transferred to DropCo
$ 843,233
Less: Assets transferred to DropCo
(843,233 )
Less: Q1 2026 activities (net loss from discontinued operations)
(164,642 )
ESA Retained in Host Digital
$ 32,642,125
F-26
Intangible
Asset – Electric Service Agreement (Indefinite Life)
The
ESA is a long-term contract with a utility provider that secures power capacity for the Company’s planned data center operations.
The fair value of the ESA was determined using an income approach (with-and-without method) and is classified within Level 3 of the fair
value hierarchy due to the use of significant unobservable inputs. The significant unobservable input used in the valuation was a discount
rate of 11.9%, which represents the Company’s weighted-average cost of capital. The ESA has been determined to have an indefinite
life because the contractual term is renewable without significant cost or modification, and the Company expects to renew it indefinitely.
Accordingly, the ESA is not amortized. Instead, it will be tested for impairment annually (or more frequently if events or changes in
circumstances indicate that its carrying amount may not be recoverable) in accordance with ASC 350, Intangibles — Goodwill and
Other.
Fixed
Assets
The
fair value of the fixed assets acquired from T20 was determined using a cost approach. The valuation considered replacement cost less
physical depreciation and obsolescence; the mining equipment was valued at its estimated salvage value. All fixed assets acquired from
T20 (buildings, site improvements, and mining-related equipment) were held by the Company from the acquisition date (February 13, 2026)
until February 26, 2026, when they were transferred to another legal entity under common ownership, DropCo.
During
the holding period from February 13, 2026 through February 26, 2026, the Company recognized depreciation of $11,696 on these assets to
record the decline in service potential over the 14-day period from acquisition to transfer.
Prior
to the transfer, the Company concluded that the decision to dispose of the assets shortly after acquisition was an impairment indicator
under ASC 360-10-35-21(f). Accordingly, the Company performed a recoverability test and determined that the carrying amount of the mining
equipment was not recoverable. The building was written down to its estimated fair value of $248,000, resulting in an impairment loss
of $25,619. The equipment was written down to its estimated fair value of $381,000, resulting in an impairment loss of $57,327. The total
impairment loss of $82,946 is included in discontinued operations (see Note 6 — Discontinued Operations).
As
the transfer was to a commonly controlled entity without consideration, it was accounted for as a non-reciprocal transfer. In accordance
with ASC 805-50-30-5, the assets were transferred at their carrying amount (after impairment), and no gain or loss was recognized in
the statements of operations (see Note 5 — Discontinued Operations).
Operating
Lease – Parking Lot
As
part of the T20 acquisition, the Company assumed an operating lease for a parking lot facility (Fourth Amendment to Lease dated May 19,
2025). The lease has no purchase option and continues through June 30, 2034. The right-of-use asset and corresponding lease liability
were recorded at $1,399,000 as of February 13, 2026. The Company uses an incremental borrowing rate of 10.45% for this lease. See Note
9 – Leases for further information.
Other
Non-Essential Net Assets
Other
non-essential net assets of $284,233 consist of various working capital items and liabilities acquired as part of the T20 transaction
that management has determined are not essential to the Company’s core data center infrastructure operations. These items are not
directly related to the Company’s primary strategic focus on developing and operating institutional-quality data centers supporting
AI and HPC workloads. The Company determined these items to be non-essential based on their nature as short-term working capital items
and their lack of strategic importance to the Company’s long-term data center strategy. These items primarily consist of cash of
$810,860, accounts receivable of $735,427, accrued revenue of $300,723, crypto wallet of $116,619, prepaid insurance of $795, electric
security deposit of $1,039,355, accounts payable of $959,551, accrued expenses of $510,640, loan payable (electric deposit) of $1,039,355,
and hosting deposit of $210,000.
F-27
Transaction
Costs
Direct
transaction costs (legal, valuation, and due diligence fees) incurred in connection with the acquisition were approximately $150,000.
Under ASC 805-50, these costs were capitalized as part of the cost of the assets acquired. The total cost of the acquisition of $33,650,000
reflected in the purchase price allocation above consists of cash consideration to the sellers of $33,500,000 and capitalized transaction
costs of $150,000.
Note
6 – Discontinued Operations
On
February 13, 2026, the Company acquired 100% of the equity interests of T20 Mining Group LLC as part of an asset acquisition (see Note
5– Asset Acquisition – T20 Mining Group LLC). The acquisition included certain assets and liabilities related to cryptocurrency
mining operations. Shortly thereafter, on February 26, 2026, the Company transferred the mining-related assets to 10X Digital DropCo
LLC (“DropCo”), a legal entity under common ownership, through a non-reciprocal transfer without receipt of any consideration.
The
transfer was made pursuant to an Intercompany Asset Transfer and Use Agreement and a Bill of Sale and Assignment and Assumption Agreement,
effective as of February 26, 2026. Under these agreements, the Company transferred certain assets acquired from T20 to DropCo, and DropCo
granted the Company a license to use certain assets owned or controlled by DropCo as are reasonably necessary for the Company to draw,
receive, and utilize electrical power pursuant to its Electric Service Agreement and related arrangements. The transfer reflects management’s
decision to separate non-essential mining-related assets from the Company’s core data center infrastructure operations.
The
Company determined that the mining operations acquired from T20 constituted a component of the entity, as the operations and cash flows
of the mining activity were clearly distinguishable from the Company’s core data center infrastructure operations. The Company
further determined that the disposal of the mining component represented a strategic shift that has a major effect on the Company’s
operations and financial results, as the mining activity accounted for substantially all of the Company’s revenue during the period
and the Company is exiting the cryptocurrency mining business to focus on its core data center operations. Accordingly, the mining component
is presented as a discontinued operation in accordance with ASC 205-20.
As
disclosed in Note 5– Asset Acquisition – T20 Mining Group LLC, in a transfer of assets between entities under common control,
the assets were transferred to DropCo at their carrying amount (after depreciation and impairment), and no gain or loss was recognized,
in accordance with ASC 805-50-30-5, which requires that assets transferred between entities under common control be measured at their
carrying amounts. ASC 845-10-30-10 further provides that nonmonetary assets distributed to owners in a spinoff are measured at their
recorded amount (after reduction for impairment). Additionally, ASC 360-10-45-15 requires that long-lived assets to be distributed to
owners in a spinoff continue to be classified as held and used until the distribution date, which supports the carrying amount measurement
basis.
For
the three months ended April 30, 2026, the loss from discontinued operations consisted of revenue from mining and hosting services of
$487,819, cost of sales of $487,819, resulting in gross profit of $0, depreciation expense of $11,696, loss on crypto asset remeasurement
of $70,000, and impairment loss on fixed assets of $82,946, resulting in a net loss from discontinued operations of $164,642. Revenue
from the discontinued mining operation represents amounts earned from providing mining and hosting services to external customers. Cost
of sales primarily represents utility costs incurred in connection with mining operations. During the holding period, the Company recognized
depreciation of approximately $11,696 on these assets (see Note 5 — Asset Acquisition – T20 Mining Group LLC).
F-28
The
net loss from discontinued operations of $164,642 is presented on the face of the statements of operations as a separate line
item below “Net loss from continuing operations.” The cash flows from discontinued operations are disclosed separately in
the statement of cash flows. There were no discontinued operations activities during the three months ended July 31, 2026. For the three
months ended April 30, 2026, the loss from discontinued operations consisted of the following major classes of line items:
Three Months Ended April 30, 2026
Revenue from mining and hosting services
$ 487,819
Cost of sales
(487,819 )
Depreciation expense
(11,696 )
Loss on crypto asset remeasurement
(70,000 )
Impairment loss on fixed assets
(82,946 )
Net loss from discontinued operations, net of tax
$ (164,642 )
Note
7 – Related Party Transactions
The
Company has identified the following material related party relationships and transactions:
● Loan
Payable – 10X LLC - The Company has an outstanding loan from 10X LLC, an entity wholly owned by Hans Thomas, a member and Manager
of the Company. The loan is evidenced by an Amended Loan Agreement dated July 31, 2026, which formalizes and consolidates all prior advances
made by 10X LLC to the Company. The loan bears interest at 8% per annum and matures on January 31, 2027. The principal balance as of
January 31, 2026 was $1,372,067. During the six months ended July 31, 2026, the Company made a voluntary prepayment of $500,000 on February
13, 2026, and received a new advance of $375,000 on April 30, 2026 and $605,181 on July 31, 2026 to fund a portion of the T20 asset acquisition
and operations. As of July 31, 2026, the outstanding principal balance was $1,852,248. The loan is classified as a current liability
due to its maturity within one year. For the three and six months ended July 31, 2026, the Company recognized interest expense of approximately
$25,000 and $45,000, respectively (see Note 8 — Debt).
● Transfer
of Net Assets to DropCo (Commonly Controlled Entity) - On February 26, 2026, the Company
transferred net assets with a carrying amount of $843,233 to DropCo, a commonly controlled
entity, without consideration. The transfer was accounted for as a distribution to owners
with no gain or loss recognized. (see Note 5 — Discontinued Operations).
● Lease
Guarantee - The lease for the Company’s primary facility (see Note 9 — Leases)
is held by 10X East Tulsa LLC, a wholly owned subsidiary of the Company, as tenant. The tenant’s
obligations under the lease are guaranteed by 10X Capital Partners Fund, LP, an entity controlled
by a key member of the Company. In accordance with ASC 850, Related Party Disclosures,
this related-party transaction has been disclosed. As of July 31, 2026, management has determined
that it is not probable that the Company will be required to make any payments under this
guarantee. Consequently, no liability has been recorded. Had it been probable, a liability
would have been recognized.
● Board
Appointment Agreement — Shawn Matthews (Subsequent Event) - On August 26, 2026, subsequent
to the balance sheet date, the Company entered into an Agreement for Board Appointment (the
“Board Appointment Agreement”) with Shawn Matthews in connection with his expected
appointment as Chairman of the Board upon consummation of the Merger with HCWC. Under the
Board Appointment Agreement, Mr. Matthews will receive: (i) an annual cash retainer of $300,000;
(ii) an initial equity award with a grant date target value of $7,500,000; (iii) an annual
equity bonus with a target value of $7,500,000; and (iv) eligibility to earn additional equity
awards upon achievement of specified market capitalization milestones. HCWC is not a party
to the Board Appointment Agreement; however, HCWC expects to provide Mr. Matthews with the
compensation set forth in the agreement following the consummation of the Merger. The Board
Appointment Agreement is a related party transaction because Mr. Matthews will serve as Chairman
of the Board of the combined company upon Merger closing. The agreement was entered into
subsequent to the balance sheet date and is disclosed as a non-recognized subsequent event
in accordance with ASC 855 (see Note 1 — Organization and Nature of Operations).
● Conflicts
of Interest - The Company’s management is aware of its responsibility to ensure that
all related-party transactions are conducted on terms that are fair and reasonable to the
Company. In accordance with its operating agreement, certain related-party transactions may
require approval by disinterested members or the board of managers.
F-29
Note
8 – Debt
Related
Party Loan – 10X LLC
The
Company has an outstanding loan from 10X LLC, an entity that is a related party due to common ownership with a member of the Company.
The loan was originally evidenced by a loan agreement with a principal balance of $1,372,067 as of January 31, 2026. On July 31, 2026,
the Company entered into an Amended Loan Agreement (the “Loan Agreement”), which formalizes and consolidates all prior advances
made by 10X LLC to the Company. As of July 31, 2026, the principal amount outstanding under the Loan Agreement was $1,852,248.
The
loan bears interest at 8% per annum, calculated on a 365-day basis for the actual number of days elapsed. Interest is payable at maturity.
The
loan matures on January 31, 2027. Because the maturity date is within twelve months of the balance sheet date (July 31, 2026), the outstanding
principal and accrued interest are classified as a current liability on the condensed consolidated balance sheet.
Loan
Activity During the Period
The
outstanding balance of the related party loan at January 31, 2026 was $1,372,067. During the six months ended July 31, 2026, the Company
made a voluntary prepayment of $500,000 on February 13, 2026, and received a new advance of $375,000 on April 30, 2026 and $605,181 on
July 31, 2026 from 10X LLC to fund a portion of the T20 operations. As a result, the outstanding balance at July 31, 2026 was $1,852,248.
Interest
Expense for Related Party Loan
For
the three and six months ended July 31, 2026, the Company recognized interest expense on this loan of approximately $25,000 and $45,000,
respectively.
Note
9 – Leases
The
Company leases operating facilities under non-cancelable lease agreements. Lease commencement occurs on the date the Company obtains
control of the leased property.
Property
Lease (Data Center Facility) – Finance Lease
Original
Operating Lease
On
November 25, 2025, the Company, through its wholly owned subsidiary 10X East Tulsa LLC, entered into a commercial real estate lease for
a data center facility in Tulsa, Oklahoma (the “Property Lease”). The Property Lease commenced on January 1, 2026, and originally
had a five-year non-cancelable term (January 1, 2026 – December 31, 2030). The Property Lease contained a purchase option allowing
the tenant to acquire the building for $23,500,000, exercisable with six months’ advance notice and closing required by October
1, 2026.
At
commencement, management determined that exercise of the purchase option was not reasonably certain because the decision remained contingent
on future operational developments (e.g., completion of the T20 Mining Group LLC acquisition, securing the power agreement, and tenant
leasing prospects). Accordingly, the Property Lease was initially classified as an operating lease under ASC 842.
F-30
Exercise
of Purchase Option and Reclassification to Finance Lease
On
March 26, 2026, the Company exercised a purchase option contained in the Property Lease to acquire the Property for a fixed price of
$23.5 million. In accordance with ASC 842, the exercise of the purchase option triggered a reassessment of the lease classification and
a remeasurement of the lease liability. Since the purchase option is reasonably certain to be exercised, the Property Lease was reclassified
as a finance lease effective March 26, 2026.
At
the remeasurement date, the lease liability was recalculated to include the present value of the $23.5 million purchase option, discounted
at the Company’s incremental borrowing rate of 15.75%. The right-of-use (ROU) asset was increased by the same amount as the increase
in the lease liability. The purchase of the Property is expected to close on or before October 1, 2026. As of July 31, 2026, the purchase
had not yet closed; therefore, the building is not recorded as owned property and remains classified as a finance lease ROU asset on
the condensed consolidated balance sheet. Upon closing, the building will be reclassified to property, plant and equipment.
Purchase
and Sale Agreement
On
June 23, 2026, the Company, through its wholly owned subsidiary 10X East Tulsa LLC, entered into a Purchase and Sale Agreement (the “PSA”)
with 5555 Property Developers, LLC to acquire the Property, which includes both the data center facility (subject to the Property Lease)
and the parking lot (subject to the Parking Lot Lease). The total purchase price under the PSA is $27,650,000 plus an amount equal to
the aggregate of all payments that would otherwise become due and payable under the Property Lease from and after the Closing Date through
the expiration of the term of the Property Lease. The closing is scheduled to occur on or before October 1, 2026, subject to the Company’s
right to extend the Closing Date for up to two successive 30-day periods.
As
of July 31, 2026, the purchase had not yet closed; therefore, the building is not recorded as owned property and remains classified as
a finance lease ROU asset on the condensed consolidated balance sheet. Upon closing of the PSA, the finance lease will be terminated
and the building will be reclassified to property, plant and equipment.
Parking
Lot Lease – Operating Lease (Acquired in T20 Transaction)
Acquisition
In
connection with the T20 Mining Group LLC asset acquisition (see Note 5 - Asset Acquisition – T20 Mining Group LLC), the Company
acquired a lease for a parking lot facility (Fourth Amendment to Lease dated May 19, 2025). The lease has no purchase option and no transfer
of ownership. It is classified as an operating lease. The lease term runs through June 30, 2034, with monthly payments escalating annually
as specified in the Fourth Amendment.
As
of the acquisition date (February 13, 2026), the Company recorded an ROU asset and corresponding lease liability at the present value
of remaining lease payments, which was determined to be $1,399,000. The discount rate used was 10.45% (the Company’s incremental
borrowing rate for this lease). The lease is being amortized on a straight-line basis over the remaining lease term.
Commitment
On
June 23, 2026, the Company entered into a Purchase and Sale Agreement (the “PSA”) to acquire the underlying property, which
includes the parking lot. The closing of the PSA is scheduled for October 1, 2026. Upon the closing of the PSA, the existing parking
lot lease will be terminated.
As
of July 31, 2026, the closing of the PSA has not yet occurred, and therefore the lease remains in effect with no modifications or termination
recognized during the period. The Company continues to amortize the ROU assets in accordance with its original amortization schedule.
Upon the anticipated closing in October 2026, the Company will derecognize the remaining ROU asset and lease liability and recognize
a gain or loss on lease termination in the period in which the closing occurs.
F-31
The
following table summarizes the Company’s leases:
Balance Sheet Classification
July 31, 2026
January 31, 2026
Operating lease right-of-use assets
$ 1,347,182
$ 1,906,639
Finance lease right-of-use assets
21,871,038
-
Total right-of-use assets
$ 23,218,220
$ 1,906,639
Operating lease liability, current
$ 80,911
$ 22,246
Finance lease liability, current
22,872,121
-
Operating lease liability, net of current
1,296,650
1,353,997
Finance lease liability, net of current
-
-
Total lease liabilities
$ 24,249,682
$ 1,376,243
The
amortization of the right-of-use assets of approximately $338,000 for the six months ended July 31, 2026 and was included in operating
cash flows. The amortization of the right-of-use assets for three months ended July 31, 2026 was approximately $159,000.
The
following table provides a summary of other information related to the leases at July 31, 2026 and January 31, 2026:
Other Information
July 31, 2026
January 31, 2026
Weighted-average remaining lease term for operating leases
7.8 years
4.92 years
Weighted-average discount rate for operating leases
10.45 %
15.75 %
Weighted-average remaining lease term for finance leases
0.2 years
0 years
Weighted-average discount rate for finance leases
15.75 %
-%
The
components of lease expenses for the three and six months ended July 31, 2026 was as follows:
Three Months Ended
July 31, 2026
Six Months Ended
July 31, 2026
Operating lease cost
$ 113,098
$ 226,548
Finance lease cost - amortization of right-of-use assets
141,713
236,188
Finance lease cost - interest on lease liabilities
884,480
1,212,209
Total lease expense
$ 1,139,291
$ 1,674,945
The
following table reconciles undiscounted cash flows to the present value of lease liabilities as of July 31, 2026:
Maturity of Lease Liabilities by Fiscal Year
Operating Leases
Finance Leases
2026 (remaining six months)
$ 109,148
$ 23,500,000
2027
224,662
-
2028
235,895
-
2029
247,690
-
2030
260,074
-
Thereafter
988,863
-
Total gross operating lease payments
$ 2,066,332
$ 23,500,000
Less: Imputed interest
(688,771 )
(627,879 )
Present value of future minimum lease payments
$ 1,377,561
$ 22,872,121
The
following table reconciles undiscounted cash flows to the present value of lease liabilities as of January 31, 2026:
Operating Leases
Twelve months ending:
January 31, 2027
$ 42,537
January 31, 2028
511,725
January 31, 2029
527,076
January 31, 2030
542,889
January 31, 2031
511,298
Total gross operating lease payments
2,135,525
Less: imputed interest
(759,282 )
Present value of future minimum lease payments
$ 1,376,243
The
following table presents supplemental cash flow information for the six-month period ended July 31, 2026:
2026
Cash paid for operating lease liability
$ (87,491 )
Cash paid for finance lease liability
$ -
F-32
Note
10 – Segment Information
ASC 280, Segment Reporting, establishes standards for companies to report in their financial statement information about operating
segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for
which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker,
or group, in deciding how to allocate resources and assess performance.
The
Company operates in a single reportable segment: the development, ownership, and operation of institutional-quality data centers supporting
AI and HPC workloads. The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer, who reviews
the operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. The
CODM evaluates the Company’s performance primarily based on the consolidated net loss, as reported in the condensed consolidated
statements of operations, supplemented by certain significant expense details reflected in the table below.
There
have been no changes in the determination of our single operating segment or the measurement of segment loss during the period.
The
following table presents the Company’s segment information for the three and six months ended July 31, 2026 and 2025, which is
derived from the information regularly provided to the CODM:
For Three Months
July 31, 2026
For the period from
July 8, 2025
(Inception) through
July 31, 2025
For Six Months
July 31, 2026
For the period from
July 8, 2025
(Inception) through
July 31, 2025
Operating expenses:
Legal fee
$ 2,054,385
$ -
$ 2,544,871
$ -
Contractor and consulting fee
246,436
-
351,481
-
Auditing fee
213,855
-
213,855
-
Occupancy expense
20,900
-
41,801
-
Lease expense
113,098
-
226,548
-
Amortization expense — ROU asset
141,713
-
236,188
-
Other miscellaneous fee
3,210
-
3,210
-
Total operating expenses
2,793,597
-
3,617,954
-
Interest expense
909,626
-
1,256,800
-
Net loss from continuing operations before income taxes
$ (3,703,223 )
$ -
$ (4,874,754 )
$ -
Income tax benefit
-
-
-
-
Net loss from continuing operations
$ (3,703,223 )
$ -
$ (4,874,754 )
$ -
Net loss from discontinued operations, net of tax
-
-
(164,642 )
-
Net loss
$ (3,703,223 )
$ -
$ (5,039,396 )
$ -
The
Company’s segment assets are measured on the same basis as consolidated total assets. As of July 31, 2026, segment assets were
$56,908,285.
The
Company operates primarily in the United States and all of its long-lived assets are located in the United States. Revenue from external
customers will be derived primarily from customers located in the United States.
F-33
Note
11 – Commitments and Contingencies
Preferred
Units — Mandatory Redemption Feature
As
discussed in Note 12 — Members’ Deficit, the Company issued 1,000 Preferred Units to Graham Macro Strategic Ltd. and Graham
Credit Opportunities Ltd. for total cash consideration of $33,500,000. Pursuant to the Unit Purchase Agreement, the Company is required
to contribute substantially all of its assets to a publicly traded company (the “Contribution”) within a specified period
following the issuance of the Preferred Units, subject to extension for SEC and Nasdaq review delays. If the Contribution is not completed
within the Contribution Period, each Investor has the right to require the Company to redeem all of its Preferred Units for cash at a
price equal to 150% of its original capital contribution (i.e., $50,250,000 in the aggregate). The redemption obligation is senior to
all other equity interests of the Company.
The
Merger with HCWC is intended to satisfy the Contribution requirement. However, there can be no assurance that the Merger will be completed
or that the Contribution will occur within the required timeframe. See Note 12 — Members’ Deficit for additional information.
Merger
Agreement
On
May 27, 2026, the Company entered into a Merger Agreement with HCWC, a Delaware corporation whose Class A common stock is listed on the
NYSE American, and a wholly owned subsidiary of HCWC. Pursuant to the Merger Agreement, HCWC’s wholly owned subsidiary will merge
with and into Host Digital, with Host Digital surviving as a wholly owned subsidiary of HCWC.
On
August 27, 2026, HCWC stockholders approved all proposals required to complete the merger, satisfying a key closing condition. The companies
currently expect to complete the merger during late September 2026, subject to the satisfaction or waiver of remaining closing conditions.
The Merger remains subject to the satisfaction or waiver of the remaining closing conditions. There can be no assurance that the Merger
will be completed. See Note 1 — Organization and Nature of Operations for additional information.
Purchase
and Sale Agreement
On
June 23, 2026, the Company, through its wholly owned subsidiary 10X East Tulsa LLC, entered into a Purchase and Sale Agreement (the “PSA”)
with 5555 Property Developers, LLC to acquire approximately 14.10 acres of land and the improvements thereon (the “Property”)
located in Tulsa, Oklahoma. The Property includes both the data center facility (subject to the Property Lease) and the parking lot (subject
to the Parking Lot Lease).
The
total purchase price under the PSA is $27,650,000 plus an amount equal to the aggregate of all payments that would otherwise become due
and payable under the Property Lease from and after the Closing Date through the expiration of the term of the Property Lease. The PSA
does not allocate the purchase price between the Property and the parking lot; such allocation will be performed at closing based on
the relative fair values of the respective assets.
The
closing is scheduled to occur on or before October 1, 2026, subject to the Company’s right to extend the Closing Date for up to
two successive 30-day periods. There can be no assurance that the acquisition will be completed on the terms currently contemplated,
or at all. See Note 1 — Organization and Nature of Operations for further discussion.
Tenant
Lease (Subsequent Event)
On
August 7, 2026, subsequent to the balance sheet date, the Company secured a 15-year, take-or-pay lease as a lessor with one of
the world’s largest privately held cloud infrastructure companies for its data center facility in northeast Oklahoma. The lease
is expected to be supported by a backstop from a U.S.-based, investment-grade global technology company.
F-34
The
long-term, committed, take-or-pay agreement represents approximately $1.25 billion in contracted revenue over the 15-year base term and
covers 43 MW of critical IT load capacity at the Company’s currently energized facility. The lease includes annual rent escalators
and renewal options and represents approximately $3.2 billion in contracted revenue if all renewal options are exercised over a 30-year
total term. Delivery to the tenant is expected in the first quarter of 2027.
This
lease strengthens the Company’s ability to obtain project financing for the acquisition of the Property and supports management’s
plans to address the going concern uncertainty (see Note 2 — Going Concern).
Lease
Guarantee
The
lease for the Company’s primary facility (see Note 9 — Leases) is guaranteed by 10X Capital Partners Fund, LP, an entity
controlled by a key member of the Company. The guarantee is unconditional and covers all obligations of the tenant under the lease, including
the payment of rent and other charges. As of July 31, 2026, management has determined that it is not probable that the guarantor will
be required to make any payments under this guarantee. Accordingly, no liability has been recorded. If the guarantee were to be called,
the maximum potential amount of future payments would be the remaining lease payments under the original lease term (which, however,
will be superseded by the purchase option closing). The Company believes the likelihood of any material payment is remote.
Indemnification
Obligations
In
the ordinary course of business, the Company may enter into agreements that contain indemnification provisions, including indemnifications
of directors, officers, and employees under the Company’s operating agreement. The Company may also indemnify counterparties in
certain contracts, such as service providers or customers, for losses arising from the Company’s breach of contract, negligence,
or intellectual property infringement. As of July 31, 2026, the Company is not aware of any pending or threatened claims that would require
material payment under any indemnification provision, and no liability has been accrued.
Legal
Proceedings
From
time to time, the Company may be involved in legal proceedings or claims arising in the ordinary course of business. As of July 31, 2026,
there are no pending or threatened legal proceedings against the Company that management believes would have a material adverse effect
on the Company’s financial position, results of operations, or cash flows.
Contractual
Commitments for Power and Other Services
The
Company, through its subsidiaries, has entered into two Electric Service Agreements with Public Service Company of Oklahoma to secure
power capacity for its data center facility — a 20 MW agreement dated July 25, 2023, and a 25 MW agreement dated June 26, 2024.
Each ESA included an initial 12-month term with minimum monthly billing requirements of $86,614 and $161,300 per month, respectively.
As of July 31, 2026, both initial terms have expired, and the ESAs continue on a year-to-year basis with billing based on metered quantities
and no minimum billing requirement. The Company’s only remaining enforceable minimum payment commitment under the ESAs is approximately
$248,000, representing the 30-day termination notice period for each contract. The Company expects to pass through a substantial portion
of its ongoing utility costs to future tenants under long-term lease arrangements, but such pass-through is not guaranteed.
F-35
Note
12 – Members’ Deficit
Common
Units
The
Company’s authorized Common Units consist of 1,000 units, of which 1,000 were issued and outstanding as of July 31, 2026. Holders
of Common Units are entitled to one vote per unit and participate in distributions as set forth in the Company’s Amended and Restated
Limited Liability Company Agreement (the “LLC Agreement”). As of July 31, 2026, the Common Units were held by Hans Thomas
(45%), Harmol Samra (45%), and Alexander Monje (10%). No capital contributions have been made by the holders of Common Units.
Preferred
Units
On
February 13, 2026, the Company issued 1,000 Preferred Units to Graham Macro Strategic Ltd. and Graham Credit Opportunities Ltd. (collectively,
the “Investors”) for total cash consideration of $33,500,000. The proceeds were used to fund the T20 Mining Group LLC asset
acquisition (see Note 5 - Asset Acquisition – T20 Mining Group LLC). The Preferred Units have the following characteristics:
● Liquidation
Preference: The Preferred Units rank senior to Common Units with respect to distributions
and payments upon any voluntary or involuntary liquidation, dissolution, or winding up of
the Company. The liquidation preference is equal to the greater of (i) the original investment
amount ($33,500,000) and (ii) the amount the Investors would have received had the Preferred
Units been converted into Common Units immediately prior to such liquidation.
● Dividends:
The Preferred Units do not bear a stated dividend rate nor any preferential dividends. However,
they participate in any distributions declared on Common Units on an as-converted basis.
● Conversion:
The Preferred Units are not automatically convertible. A conversion ratio of 1:1 is used
solely for purposes of calculating as-converted entitlements and does not confer voting rights.
● Voting
Rights: Except for certain consent rights described in the LLC Agreement (e.g., approval
of mergers, asset sales, debt incurrence, and other major transactions), the Preferred Units
carry no voting rights.
Mandatory
Redemption Feature
Pursuant
to the Unit Purchase Agreement, the Company is required to contribute substantially all of its assets to a publicly traded company (“Contribution”)
within a specified period following the issuance of the Preferred Units (the “Contribution Period”), subject to extension
for SEC and Nasdaq review delays. If the Contribution is not completed within the Contribution Period, each Investor has the right to
require the Company to redeem all of its Preferred Units for cash at a price equal to 150% of its original capital contribution (i.e.,
$50,250,000 in the aggregate). The redemption obligation is senior to all other equity interests of the Company.
The
Contribution Period was originally scheduled to expire on May 14, 2026, subject to a possible 60-day extension for delays primarily attributable
to SEC review. As of July 31, 2026, the Contribution had not been completed. However, the Company and the Investors mutually agreed to
extend the Contribution Period beyond July 31, 2026 to allow the Company to complete the Contribution through the proposed merger with
HCWC. Because the Contribution Period had been extended by mutual agreement, the mandatory redemption feature was not exercisable by
the Investors as of July 31, 2026. Accordingly, the Preferred Units remained classified as temporary equity on the condensed consolidated
balance sheet as of July 31, 2026, and no reclassification to a liability was recorded.
The
Merger with HCWC is intended to satisfy the Contribution requirement. On August 27, 2026, HCWC stockholders approved all proposals required
to complete the merger, including the Stock Issuance Proposal, the Authorized Shares Proposal, and the Name Change Proposal. The companies
currently expect to complete the merger during late September 2026, subject to the satisfaction or waiver of remaining closing conditions.
There can be no assurance that the Merger will be completed or that the Contribution will occur within the required timeframe.
F-36
Temporary
Equity Classification
Because
the mandatory redemption feature is not solely within the Company’s control (the Contribution is subject to regulatory approvals
and other conditions), the Preferred Units are required to be classified as temporary equity (mezzanine equity) under ASC 480, Distinguishing
Liabilities from Equity and related SEC guidance. As of July 31, 2026, the Preferred Units are presented outside of permanent equity
on the condensed consolidated balance sheet with a carrying amount of $33,500,000.
The
Contribution must be completed within 90 days of February 13, 2026 (the issuance date of the Preferred Units), subject to a possible
60-day extension for delays primarily attributable to SEC reviews. Management evaluates the probability of the Contribution’s completion
at each reporting period. If it becomes probable that the Contribution will not be completed, the Preferred Units would be reclassified
as a liability at their then-fair value (including the 150% redemption premium). As of July 31, 2026, no such reclassification has occurred.
Accumulated
Deficit
The
Company has incurred net losses since inception. As of July 31, 2026, accumulated deficit was approximately $5.6 million.
Note
13– Subsequent Events
Management
has evaluated events and transactions occurring after July 31, 2026, through the date these financial statements were issued, and has
identified the following material subsequent events requiring disclosure.
Merger
with Healthy Choice Wellness Corp.
On
August 27, 2026, HCWC stockholders approved all proposals required to complete the previously announced merger with HCWC, satisfying
a key closing condition. HCWC filed the final voting results from the special stockholders meeting with the SEC on Form 8-K on August
27, 2026.
Subject
to the satisfaction or waiver of the remaining closing conditions, the companies currently expect to complete the merger during late
September 2026. At closing, Host Digital will become a wholly owned subsidiary of HCWC, and former Host Digital members are expected
to own approximately 96% of HCWC’s outstanding Class A common stock. The combined company expects to continue trading on the NYSE
American under the ticker symbol “HOST,” subject to exchange approval.
Reverse
Stock Split
On
August 27, 2026, HCWC stockholders approved an amendment to HCWC’s certificate of incorporation authorizing the Board of Directors,
in its discretion, to effect a reverse stock split of HCWC’s Class A common stock at a ratio of up to and including 1-for-100.
The Board subsequently approved a 1-for-35 reverse stock split (the “Reverse Stock Split”).
The
Reverse Stock Split became effective on August 28, 2026 at 11:59 p.m., Eastern Time. HCWC’s Class A common stock began trading
on a split-adjusted basis on the NYSE American under the symbol “HCWC” on Monday, August 31, 2026. The Reverse Stock Split
is being effected in connection with the Merger and is intended to help the combined company satisfy the NYSE American’s minimum
share price requirement of $4.00 for initial listing.
At
the Effective Time of the Reverse Stock Split, every thirty-five shares of HCWC’s issued and outstanding Class A common stock were
automatically converted into one issued and outstanding share of Class A common stock, without any change in the par value per share.
No fractional shares were issued; stockholders who would otherwise be entitled to receive a fractional share had that fractional interest
rounded up to the next whole share.
Tenant
Lease
On
August 7, 2026 (subsequent to the balance sheet date), Host Digital secured a 15-year, take-or-pay lease as a lessor with one of the
world’s largest privately held cloud infrastructure companies. The lease is expected to be supported by a backstop from a U.S.-based,
investment-grade global technology company.
The
long-term, committed, take-or-pay agreement represents approximately $1.25 billion in contracted revenue over the 15-year base term and
covers 43 MW of critical IT load capacity at Host Digital’s currently energized data center facility in northeast Oklahoma. The
lease includes annual rent escalators and renewal options and represents approximately $3.2 billion in contracted revenue if all renewal
options are exercised over a 30-year total term. Delivery to the tenant is expected in the first quarter of 2027.
This
lease strengthens the Company’s ability to obtain project financing for the acquisition of the Property and supports management’s
plans to address the going concern uncertainty (see Note 1 — Organization and Nature of Operations and Note 2 — Going Concern).
F-37
UNAUDITED
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
The
following unaudited pro forma condensed combined financial information presents the combination of the financial statements of Host Digital
Inc. (f/k/a Healthy Choice Wellness Corp.) (“Parent” or “HCWC”) and Host Digital Infrastructure LLC (“Host
Digital”) after giving effect to the merger (the “Merger”) described in this Current Report on Form 8-K. On
May 27, 2026, Parent, Healthy Choice Wellness II Corp., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger
Sub”), and Host Digital entered into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the
Merger Agreement, on September 17, 2026, Merger Sub merged with and into Host Digital, with Host Digital surviving
the Merger as a wholly owned subsidiary of Parent (the “Surviving Entity”). As a result of the Merger, the separate corporate
existence of Merger Sub ceased, and Host DI continues as a Delaware limited liability company and a wholly owned subsidiary of Parent.
In
connection with the Merger, all of the Common Units and Preferred Units of Host Digital (collectively, the “Company Units”)
outstanding immediately prior to the effective time of the Merger (the “Effective Time”) were converted into the right to
receive (i) shares of Class A common stock, par value $0.001 per share, of Parent (“Parent Common Stock”) determined in accordance
with the Exchange Ratio (as set forth in the Merger Agreement), or (ii) at the election of the holder, pre-funded warrants (“Pre-Funded
Warrants”) to purchase Parent Common Stock at an exercise price of $0.001 per share, in lieu of such shares (collectively, the
“Merger Consideration”). The Exchange Ratio was based on a Base Price of $425,000,000 (as set forth in the Merger Agreement)
divided by the Applicable Share Price (subject to a collar), and then divided by 2,000 (the total number of Company Units outstanding
prior to the Effective Time). The Merger Consideration was allocated among the holders of Company Units as set forth in the Allocation
Certificate described in the Merger Agreement. The parties intend that the Merger qualify as a transaction described in Section 351(a)
of the Code.
The
Merger was accounted for as a reverse acquisition under U.S. generally accepted accounting principles (“GAAP”) in accordance
with Accounting Standards Codification Topic 805, Business Combinations. Host Digital was identified as the accounting acquirer
because its former members hold a majority of the voting rights in the combined entity, designate a majority of the board of directors,
and appoint senior management. Parent was the accounting acquiree. Under the acquisition method of accounting, the assets and liabilities
of Parent were be recorded at their estimated fair values as of the acquisition date, and any excess of the purchase price over the fair
value of the net assets acquired will be recorded as goodwill.
The
consolidated financial statements of the combined company after the Merger represent a continuation of the financial statements of Host
Digital (the accounting acquirer), except for its capital structure. Host Digital’s historical equity is eliminated
and replaced with the legal capital structure of Parent (the legal acquirer). The number of shares of Parent Common Stock issued to Host
Digital’s former members is used to restate Host DI’s historical equity for all periods presented, with any difference
between the par value of the new shares and the historical par value of Host Digital’s equity recorded as an adjustment
to additional paid-in capital. This restatement is required under reverse acquisition accounting (ASC 805-40) and is not a standalone
recapitalization. The assets and liabilities of Host Digital are carried over at their historical carrying values, as the combined
entity is a continuation of Host Digital’s financial statements.
The
unaudited pro forma condensed combined balance sheet as of June 30, 2026 combines the historical balance sheet of Parent as of that date
with the historical balance sheet of Host Digital as of July 31, 2026 (the closest practicable date to align to June 30, 2026),
as if the Merger had occurred on June 30, 2026.
The
unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2026 and for the year ended December
31, 2025 combine the historical results of Parent and Host Digital for those periods as if the Merger had occurred on January
1, 2025. Parent’s historical results for the year ended December 31, 2025 are derived from its audited consolidated financial
statements incorporated by reference into this proxy statement. Host Digital’s historical results for the Period from July
8, 2025 (inception) through January 31, 2026 are derived from its audited financial statements and have been aligned to the twelve months
ended December 31, 2025 using interim stub-period adjustments. The pro forma statement of operations for the six months ended June 30,
2026 reflects the combined results of Parent and Host Digital for the period ended June 30, 2026, as required by Regulation S-X
Rule 11-02(c)(2)(i). Although Host Digital’s balance sheet is as of July 31, 2026, the 30-day difference between the balance
sheet date (July 31) and the income statement period end (June 30) is less than one fiscal quarter and is permitted under Rule 11-02(c)(3).
Host Digital’s historical results for the six months ended July 31, 2026 have been evaluated for materiality and are not
considered material to the pro forma statement of operations for the six months ended June 30, 2026.
The
Merger is presented in the unaudited pro forma condensed combined financial information; however, the Parent’s accounting analysis
for certain aspects of the Merger is incomplete as of the date of this filing. The unaudited pro forma combined financial information
does not give effect to any synergies, operating efficiencies, tax savings or cost savings that may be associated with the Merger. Because
the accounting for these items remains incomplete, the final pro forma adjustments may differ materially from those presented in this
Current Report on Form 8-K. Parent will update the pro forma financial information in subsequent filings as the analyses are completed.
See Note 2 – In-process Accounting Analysis. The pro forma information is provided for illustrative purposes only and does not
purport to represent what the actual consolidated results of operations or financial condition of the combined company would have been
had the Merger occurred on the dates assumed, nor is it necessarily indicative of future consolidated results of operations or financial
condition.
The
unaudited pro forma condensed combined financial information should be read in conjunction with the historical financial statements of
Parent and Host Digital, the notes thereto, and the other information contained in this Current Report on Form 8-K.
F-38
HEALTHY
CHOICE WELLNESS CORP.
UNAUDITED
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS
OF JUNE 30, 2026
HCWC Historical (Actual from 10-Q)
(6/30/26)
Host Digital Historical (7/31/26)
Pro Forma Adjustments
Notes
Pro Forma Combined
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$ 893,825
$ -
$ -
$ 893,825
Accounts receivable, net
253,253
-
-
253,253
Inventories
4,016,277
-
-
4,016,277
Prepaid expenses and vendor deposits
247,754
236,546
-
484,300
Deferred costs
1,221,474
811,394
(2,032,868 )
A
-
Due from related party
180,084
-
-
180,084
Other current assets
132,912
-
-
132,912
TOTAL CURRENT ASSETS
6,945,579
1,047,940
(2,032,868 )
5,960,651
Property, plant, and equipment, net
1,786,837
-
29,785,526
B
31,572,363
Intangible assets - electric service agreement
-
32,642,125
-
32,642,125
Intangible assets, net
3,708,809
-
-
3,708,809
Goodwill
2,212,000
-
422,788,000
C
425,000,000
Right-of-use assets – operating lease
10,085,408
1,347,182
(1,347,182 )
B
10,085,408
Right-of-use assets – finance lease
132,958
21,871,038
(21,871,038 )
B
132,958
Investment in other entity - related party
2,242,769
-
-
2,242,769
Other assets
624,877
-
-
624,877
TOTAL ASSETS
$ 27,739,237
$ 56,908,285
$ 427,322,438
$ 511,969,960
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses
$ 9,053,036
$ 3,707,689
$ 666,852
A
$ 13,427,577
Contract liabilities
35,101
-
-
35,101
Current portion of loans payable
1,107,329
-
-
1,107,329
Operating lease liability, current
3,341,179
80,911
(80,911 )
B
3,341,179
Finance lease liability, current
28,433
22,872,121
(22,872,121 )
B
28,433
Due to related party
-
-
-
-
Loan Payable - Related Party
-
1,852,248
-
1,852,248
Other liabilities
14,833
-
29,785,526
B
29,800,359
TOTAL CURRENT LIABILITIES
13,579,911
28,512,969
7,499,346
49,592,226
Loans payable, net of current portion
3,621,387
-
-
3,621,387
Operating lease liability, net of current
6,869,472
1,296,650
(1,296,650 )
B
6,869,472
Finance lease liability, net of current
107,972
-
-
107,972
Other long-term liabilities
56,327
-
-
56,327
TOTAL LIABILITIES
24,235,069
$ 29,809,619
6,202,696
60,247,384
COMMITMENTS AND CONTINGENCIES
Redeemable Preferred Units (Temporary Equity)
-
33,500,000
(33,500,000 )
D
-
STOCKHOLDERS’ EQUITY
Class A common stock, $0.001 par value per share, 1,900,000,000 shares authorized; 854,068 and
571,164 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively.
854
-
45,316
E
46,170
Class B common stock, $0.001 par value per share, 60,000,000 shares authorized and 0 shares issued
and outstanding as of June 30, 2026 and December 31, 2025, respectively.
-
-
-
-
Series A convertible preferred stock, $0.001 par value per share, 40,000,000 shares authorized,
5,250 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively
5
-
-
5
Common units (1,000 units and 0 units issued and outstanding as of April 30, 2026 and
January 31, 2026, no par value; no capital contributions)
-
-
-
D
-
Additional paid-in capital/Members’ capital
14,913,955
(843,233 )
456,421,816
A/D/F
457,234,502
Additional paid-in capital adjustment
-
(13,258,036 )
C/B/G
-
Accumulated deficit
(11,410,646 )
(5,558,101 )
11,410,646
H
(5,558,101 )
TOTAL STOCKHOLDERS’ EQUITY
3,504,168
(6,401,334 )
454,619,742
451,722,576
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$ 27,739,237
$ 56,908,285
$ 427,322,438
$ 511,969,960
F-39
(A)
Transaction
costs of approximately $5,500,000 are reflected in the pro forma adjustment as a $2,032,868 elimination of deferred costs and corresponding
reduction of additional paid-in capital (offering-related costs deferred under SAB Topic 5.A), and a $666,852 increase to accrued
expenses and corresponding increase to accumulated deficit (acquisition-related costs expensed under ASC 805-10-25-23). The $2,800,280
of acquisition-related costs already incurred, expensed or accrued by Host Digital and HCWC in their historical financial statements
are included in the historical accumulated deficit and require no additional pro forma adjustment. Refer to Note 4 — Transaction
Costs for further detail.
(B)
The
adjustment reflects the acquisition of the Project Facility and the parking lot, which is recorded as an increase to property, plant
and equipment of $29,785,526, representing the Purchase Price under the Purchase and Sale Agreement dated June 23, 2026. The Purchase
Price consists of (i) a base purchase price of $27,650,000 and (ii) $2,135,526 representing the aggregate of all payments that would
otherwise become due and payable under the Existing Lease from and after the Closing Date through the expiration of the term of the
Existing Lease. The existing finance lease right-of-use asset of $21,871,038 and corresponding finance lease liability of $22,872,121
are eliminated, as the finance lease for the data center facility is replaced by the acquisition of the underlying asset, resulting
in a gain on lease termination of $1,001,083. The adjustment also eliminates the operating lease right-of-use asset of $1,347,182
and the corresponding operating lease liability of $1,377,561 (current portion of $80,911 and long-term portion of $1,296,650) for
the parking lot, as the parking lot is included in the acquired property, resulting in a gain on lease termination of $30,379. The
aggregate net gain on lease terminations of $1,031,462 is recorded as a reduction to accumulated deficit. A corresponding liability
for the unpaid purchase price of $29,785,526 is recorded as other liability.
(C)
The
$422,788,000 of goodwill reflected in the pro forma condensed combined balance sheet consists of (i) the preliminary recording of
the $425,000,000 Base Price as goodwill, reduced by (ii) the elimination of HCWC’s historical goodwill of $2,212,000, which
is not carried forward under reverse acquisition accounting. Refer to Note 5 – Goodwill for further detail.
(D)
The
adjustment eliminates Host Digital’s preferred units ($33,500,000, classified as mezzanine equity) and common units (no par
value, no capital contributions), as all outstanding Company Units are converted into HCWC Common Stock in connection with the Merger.
The elimination of the Preferred Units assumes the successful closing of the Merger. If the Merger does not close, the Preferred
Units would remain outstanding as temporary equity, subject to the mandatory redemption feature described in Host Digital’s
historical financial statements. The issuance of HCWC Common Stock is recorded in adjustment (E).
(E)
The
adjustment reflects the aggregate par value of $45,316 (at $0.001 per share) for all new shares of HCWC Common Stock issued in connection
with the Merger, after giving effect to the 1-for-35 reverse stock split effected on August 28, 2026. This includes approximately
44,973,545 shares issued to Host Digital’s unitholders as Merger Consideration (based on a Base Price of $425,000,000 divided by
the Applicable Share Price of $0.27, as adjusted for the reverse stock split) and approximately 342,857 bonus shares issued to HCWC’s
directors, officers and employees (representing the 12,000,000 pre-split bonus shares as adjusted for the reverse stock split). The
corresponding excess over par value is recorded in adjustment (F).
(F)
The
adjustment of $456,421,816 to additional paid-in capital consists of (i) $424,954,684 representing the excess fair value over par
value of new shares issued in the Merger, after giving effect to the 1-for-35 reverse stock split effected on August 28, 2026 (including
approximately 44,973,545 shares issued to Host Digital’s unitholders and approximately 342,857 bonus shares issued to HCWC’s directors,
officers and employees), (ii) $33,500,000 representing the conversion of Host Digital’s preferred units into HCWC Common Stock, and
(iii) a $2,032,868 reduction for deferred offering costs under SAB Topic 5.A.
(G)
The
($13,258,036) reflects the adjustment that eliminates HCWC’s historical additional paid-in capital as part of the reverse acquisition
accounting. HCWC’s old equity structure is replaced by new equity issued to Host Digital’s members. The adjustment also includes
removing $2,212,000 HCWC goodwill upon merger, and additional accrual for acquisition related legal fee of $666,852. The adjustment
has been reduced by the net gain on lease terminations of $1,031,462, which consists of a $30,379 gain on the parking lot operating
lease termination and a $1,001,083 gain on the property finance lease termination, both of which are included in Ticker B. Refer
to Ticker B for further detail regarding the lease terminations and the acquisition of the Project Facility and parking lot.
(H)
The
$11,410,646 reflects the adjustment that eliminates HCWC’s accumulated deficit because the combined company will carry forward
the retained earnings (or accumulated deficit) of the accounting acquirer, not HCWC’s.
F-40
HEALTHY
CHOICE WELLNESS CORP.
UNAUDITED
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR
THE SIX MONTHS ENDED JUNE 30, 2026
HCWC Historical (Actual from 10-Q)
Host Digital Historical (Six Months
Ended July 31, 2026)
Pro Forma Adjustments
Notes
Pro Forma Combined
SALES, NET
$ 34,854,867
$ -
$ -
$ 34,854,867
COST OF SALES
21,510,364
-
-
21,510,364
-
GROSS PROFIT
13,344,503
-
-
13,344,503
OPERATING EXPENSES
17,600,683
3,617,954
(645,624 )
I
20,573,013
LOSS FROM OPERATIONS
(4,256,180 )
(3,617,954 )
645,624
(7,228,510 )
OTHER INCOME (EXPENSE)
-
Loss on debt extinguishment
(435,441 )
-
-
(435,441 )
Other (expense) income, net
(1,886 )
-
-
(1,886 )
Interest expense, net
(343,119 )
(1,256,800 )
1,212,209
J
(387,710 )
Loss from equity investment
(83,389 )
-
-
(83,389 )
Impairment loss on equity method investment
(1,623,922 )
-
1,623,922
K
-
TOTAL OTHER INCOME (EXPENSE), NET
(2,487,757 )
(1,256,800 )
2,836,131
(908,426 )
LOSS BEFORE TAXES
(6,743,937 )
(4,874,754 )
3,481,755
(8,136,936 )
INCOME TAX BENEFIT
-
-
-
-
NET LOSS FROM CONTINUING OPERATIONS
$ (6,743,937 )
$ (4,874,754 )
$ 3,481,755
$ (8,136,936 )
TOTAL NET LOSS PER SHARE-BASIC AND DILUTED
$ (9.71 )
$ -
$ 0.08
$ (0.18 )
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES
694,355
-
45,316,402
L
46,010,757
(I)
The
($645,624) adjustment eliminates $226,548 of parking lot and property lease expenses, $236,188
of property finance ROU amortization, and $537,375 of HCWC stock-based compensation, and
adds $354,487 of depreciation expense on the acquired property and parking lot. Refer to
Ticker B for further detail regarding the acquisition of the Project Facility and parking
lot.
(J)
The
$1,212,209 adjustment removes finance lease interest from interest expense as the related finance lease was terminated upon acquisition
of the Project Facility.
(K)
The
$1,623,922 positive adjustment eliminates HCWC’s historical impairment loss on its investment in a related party (HCMC).
(L)
Reflects
the issuance of (i) approximately 44,973,545 shares of HCWC Common Stock to Host Digital’s unitholders as Merger Consideration
and (ii) approximately 342,857 bonus shares to HCWC’s officers, directors and employees upon a change of control, in each case
as adjusted for the 1-for-35 reverse stock split effected on August 28, 2026.
F-41
HEALTHY
CHOICE WELLNESS CORP.
UNAUDITED
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR
THE YEAR ENDED DECEMBER 31, 2025
HCWC Historical (Actual from 10-K)
Host Digital Historical (for period
from July 8, 2025 (inception) through January 31, 2026)
Pro Forma Adjustments
Notes
Pro Forma Combined
SALES, NET
$ 78,205,678
$ -
$ -
$ 78,205,678
COST OF SALES
47,548,514
-
-
47,548,514
-
GROSS PROFIT
30,657,164
-
-
30,657,164
OPERATING EXPENSES
33,141,280
510,392
1,278,326
M
34,929,998
LOSS FROM OPERATIONS
(2,484,116 )
(510,392 )
(1,278,326 )
(4,272,834 )
OTHER INCOME (EXPENSE)
-
Loss on debt extinguishment
(441,130 )
-
-
(441,130 )
Other income, net
2,315
-
2,315
Interest expense, net
(1,012,871 )
(8,313 )
-
(1,021,184 )
TOTAL OTHER INCOME (EXPENSE), NET
(1,451,686 )
(8,313 )
-
(1,459,999 )
LOSS BEFORE TAXES
(3,935,802 )
(518,705 )
(1,278,326 )
(5,732,833 )
INCOME TAX BENEFIT
-
-
NET LOSS
$ (3,935,802 )
$ (518,705 )
$ (1,278,326 )
$ (5,732,833 )
BASIC AND DILUTED NET LOSS PER SHARE
$ (8.31 )
$ -
$ (0.03 )
$ (0.13 )
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES
473,468
-
45,316,402
L
45,789,870
(M)
The
$1,278,326 adjustment eliminates $97,500 of HCWC stock-based compensation, adds $708,974 of depreciation expense on the acquired
property and parking lot, and adds $666,852 of acquisition-related costs expensed under ASC 805-10-25-23. Refer to Ticker B for further
detail regarding the acquisition of the Project Facility and parking lot.
(L)
Reflects
the issuance of (i) approximately 44,973,545 shares of HCWC Common Stock to Host Digital’s unitholders as Merger Consideration and
(ii) approximately 342,857 bonus shares to HCWC’s officers, directors and employees upon a change of control, in each case as adjusted
for the 1-for-35 reverse stock split effected on August 28, 2026.
F-42
Selected
Per Share Data (Unaudited)
The
following tables present historical and pro forma earnings per share, book value per share, and dividends per share in accordance with
Items 14(b)(9) and (b)(10) of Schedule 14A under the Securities Exchange Act of 1934. All per-share amounts and share counts have been
retroactively adjusted to reflect the 1-for-35 reverse stock split effected on August 28, 2026.
Year Ended
December 31, 2025
Six Months Ended
June 30, 2026
Earnings Per Share
Historical HCWC basic and diluted net loss per share
$ (8.31 )
$ (9.71 )
Pro forma combined basic and diluted net loss per share
$ (0.13 )
$ (0.18 )
Year Ended
December 31, 2025
Six Months Ended
June 30, 2026
Book Value Per Share
Historical HCWC book value per share (as of period end)
$ 12.79
$ 4.10
Pro forma combined book value per share (as of June 30, 2026)
$ -
$ 9.78
Year
Ended
December 31, 2025
Six
Months Ended
June 30, 2026
Dividends
Per Share
Historical
HCWC dividends per share
$
-
$
-
Pro
forma combined dividends per share
$
-
$
-
F-43
NOTES
TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Note
1 – Basis of Pro Forma Presentation
The
unaudited pro forma condensed combined financial information is based on the historical consolidated financial statements of Healthy
Choice Wellness Corp. (“HCWC”) and the historical financial statements of Host Digital Infrastructure LLC (“Host Digital”)
as adjusted to give effect to the transaction accounting adjustments in accordance with U.S. generally accepted accounting principles
(“GAAP”) to reflect the merger (the “Merger”) contemplated by the Agreement and Plan of Merger, dated as of May
27, 2026 (the “Merger Agreement”), by and among HCWC, Healthy Choice Wellness II Corp., a Delaware corporation and wholly
owned subsidiary of HCWC (“Merger Sub”), and Host Digital.
The
Merger is considered a reverse acquisition under GAAP because the former members of Host Digital will hold a majority of the voting rights
in the combined entity, will designate a majority of the board of directors, and will appoint senior management. As a result, Host Digital
is identified as the accounting acquirer and HCWC as the accounting acquiree. The accompanying unaudited pro forma condensed combined
financial statements have been prepared in accordance with Article 11 of Regulation S-X and based on the historical financial information
of HCWC and Host Digital, after giving effect to the Merger and the adjustments described herein. The historical consolidated financial
information has been adjusted to give effect to pro forma events that are (i) directly attributable to the Merger and (ii) factually
supportable. Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been
condensed or omitted, as permitted by such rules and regulations.
In
connection with the Merger, HCWC effected a 1-for-35 reverse stock split of its Class A Common Stock, par value $0.001 per share, which
became effective at 11:59 p.m., Eastern Time, on August 28, 2026. The reverse stock split did not change the number of authorized shares
of HCWC’s capital stock or the par value per share of the Class A Common Stock. All share counts and per-share amounts in the accompanying
unaudited pro forma condensed combined financial information have been retroactively adjusted to reflect the reverse stock split as if
it had occurred at the beginning of the earliest period presented. Because the reverse stock split was effected after the June 30, 2026
balance sheet date but before the issuance of these pro forma financial statements, the retroactive adjustment is required under SAB
Topic 4.C and ASC 260-10-55.
In
connection with the Merger, HCWC also amended its certificate of incorporation to increase the number of authorized shares of HCWC capital
stock from 600,000,000 to 2,000,000,000, consisting of (i) 1,960,000,000 shares of common stock, of which 1,900,000,000 are designated
Class A common stock and 60,000,000 are designated Class B common stock, and (ii) 40,000,000 shares of preferred stock, of which 13,250
are designated Series A Convertible Preferred Stock. The authorized shares amendment became effective concurrently with the reverse stock
split on August 28, 2026. The increase in authorized shares is reflected in the pro forma balance sheet caption and does not affect the
dollar amounts of the pro forma equity balances.
The
unaudited pro forma condensed combined statements of operations give effect to the Merger as if it had occurred on January 1, 2025. Accordingly,
the pro forma weighted-average shares outstanding include (i) HCWC’s historical weighted average shares, (ii) the approximately 44,973,545
shares of HCWC Common Stock issued to Host Digital’s unitholders as Merger Consideration, and (iii) the approximately 342,857 bonus shares
issued to HCWC’s directors, officers and employees, in each case as adjusted for the 1-for-35 reverse stock split. The pro forma combined
weighted-average shares outstanding were 46,010,757 for the six months ended June 30, 2026 and 45,789,870 for the year ended December
31, 2025. See Note 6 — Earnings Per Share for further detail.
The
unaudited pro forma condensed combined balance sheet as of June 30, 2026 gives effect to the Merger as if it had occurred on June 30,
2026, the end of the most recent period for which a balance sheet is required. The unaudited pro forma condensed combined statements
of operations for the six months ended June 30, 2026 and for the year ended December 31, 2025 give effect to the Merger as if it had
occurred on January 1, 2025.
The
pro forma adjustments are presented for informational purposes only and are described in the accompanying notes based on information
and assumptions currently available at the time of the filing of this Current Report on Form 8-K. The unaudited pro forma condensed combined
financial information is not necessarily indicative of what the combined company’s results of operations or financial condition would
have been had the Merger been completed on the dates indicated above. In addition, it is not necessarily indicative of the combined company’s
future results of operations or financial condition and does not reflect all actions that have been or may be taken by the combined company
following the Merger.
The
accompanying unaudited pro forma condensed combined financial statements are based on HCWC’s audited consolidated financial statements
for the year ended December 31, 2025, HCWC’s unaudited condensed consolidated financial statements for the six months ended June 30,
2026, and Host Digital’s audited financial statements for the period from July 8, 2025 (inception) through January 31, 2026 and its unaudited
interim financial information for the six months ended July 31, 2026. The unaudited pro forma condensed combined balance sheet as of
June 30, 2026 gives effect to the Merger as if it had occurred on June 30, 2026. The unaudited pro forma condensed combined statements
of operations for the six months ended June 30, 2026 and for the year ended December 31, 2025 give effect to the Merger as if it had
occurred on January 1, 2025.
Host
Digital’s historical balance sheet is presented as of July 31, 2026, and its historical statement of operations is presented for the
six months ended July 31, 2026. The 31-day difference between Host Digital’s balance sheet date (July 31, 2026) and HCWC’s balance sheet
date (June 30, 2026) is less than one fiscal quarter and is permitted under Regulation S-X Rule 11-02(c)(3). Host Digital’s historical
results for the six months ended July 31, 2026 have been evaluated for materiality and are not considered material to the pro forma statement
of operations for the six months ended June 30, 2026.
The
unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2026 excludes the historical results
of Host Digital’s discontinued operations related to its cryptocurrency mining component. On February 13, 2026, Host Digital acquired
T20 Mining Group LLC and subsequently, on February 26, 2026, transferred the mining-related assets to 10X Digital DropCo LLC, a commonly
controlled entity, without consideration. Host Digital determined that the mining operations constituted a component of the entity and
that the disposal represented a strategic shift that has a major effect on its operations and financial results. Accordingly, the mining
component is presented as a discontinued operation in accordance with ASC 205-20.
Host
Digital’s historical financial statements for the six months ended July 31, 2026 include a net loss from discontinued operations of $164,642
related to its former cryptocurrency mining operations. In accordance with Article 11 of Regulation S-X, the unaudited pro forma condensed
combined statement of operations is presented through income (loss) from continuing operations. Accordingly, Host Digital’s discontinued
operations are not included in the unaudited pro forma condensed combined statement of operations.
F-44
Note
2 – In-process Accounting Analysis
The
Merger is presented in the unaudited pro forma condensed combined financial information; however, the Company’s accounting analysis
for certain aspects of the Merger is incomplete as of the date of this filing. The unaudited pro forma combined financial information
does not give effect to any synergies, operating efficiencies, tax savings or cost savings that may be associated with the Merger. The
Company has discussed the implications of certain items where the accounting is incomplete, as follows:
●
Purchase
price allocation (goodwill and intangible assets) – The preliminary allocation of the purchase price to HCWC’s identifiable
assets and liabilities is based on estimated fair values. A final valuation of HCWC’s assets (including property, plant and
equipment, intangible assets, and any contingent liabilities) has not yet been completed. The final allocation may differ materially
from the preliminary adjustments presented. The Company expects to complete the purchase price allocation before the filing of its
annual report on Form 10-K for the year ending December 31, 2026.
●
Fair
value of Pre-Funded Warrants – The Pre-Funded Warrants are classified as equity, and for pro forma purposes their fair value
is estimated as the Applicable Share Price minus the nominal exercise price of $0.001 per share. The actual Applicable Share Price
will not be determined until shortly before the Closing Date, as defined in the Merger Agreement, based on the volume weighted average
price of HCWC Common Stock over a specified period, subject to a collar. The final fair value of the Pre-Funded Warrants may differ
from the estimate used in these pro forma financial statements. The Company expects to determine the final fair value at the Closing
Date.
●
Transaction
costs – The Company estimates direct and incremental transaction costs associated with the Merger to be approximately $5,500,000.
The Merger is expected to result in significant legal, advisory, accounting, filing, and other transaction costs. The actual amount
of such costs may differ materially from the estimates used in these pro forma financial statements. The Company expects to determine
the actual transaction costs incurred for the year ended December 31, 2026, before the filing of its annual report on Form 10-K for
that year.
●
Common
shares outstanding vs. EPS shares – The pro forma balance sheet reflects approximately 46.2 million common shares outstanding
following the Merger, after giving effect to the 1-for-35 reverse stock split effected on August 28, 2026. The pro forma earnings
per share calculation uses weighted average shares of 46,010,757 for the six months ended June 30, 2026 and 45,789,870 for the year
ended December 31, 2025. These weighted average share counts include (i) HCWC’s historical weighted average shares, (ii) the approximately
44,973,545 shares issued to Host Digital’s unitholders as Merger Consideration, and (iii) the approximately 342,857 bonus shares
issued to HCWC’s directors, officers and employees, in each case as adjusted for the reverse stock split. The final number of shares
to be used for post-merger EPS will be determined after the closing of the Merger and will be reflected in future filings.
Because
the accounting for these items remains incomplete, the final pro forma adjustments may differ materially from those presented in this
Current Report on Form 8-K. The Company will update the pro forma financial information in subsequent filings as the analyses are completed.
Note
3 – Pro Forma Adjustments
Article
11 of Regulation S-X allows for the presentation of reasonably estimable synergies (or dis-synergies) and other transaction effects that
have occurred or are reasonably expected to occur (“Management’s Adjustments”). The Company has elected not to present
Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the unaudited pro forma condensed combined
financial information.
The
unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Transactions and has been
prepared for informational purposes only.
F-45
The
pro forma Transaction Accounting Adjustments for the Transaction, based on preliminary estimates that could change materially as additional
information is obtained, are as follows:
(A)
Transaction
costs of approximately $5,500,000 are reflected in the pro forma adjustment as a $2,032,868
elimination of deferred costs and corresponding reduction of additional paid-in capital (offering-related
costs deferred under SAB Topic 5.A), and a $666,852 increase to accrued expenses and corresponding
increase to accumulated deficit (acquisition-related costs expensed under ASC 805-10-25-23).
The $2,800,280 of acquisition-related costs already incurred, expensed or accrued by Host
Digital and HCWC in their historical financial statements are included in the historical
accumulated deficit and require no additional pro forma adjustment. Refer to Note 4 —
Transaction Costs for further detail.
(B)
The
adjustment reflects the acquisition of the Project Facility and the parking lot, which is
recorded as an increase to property, plant and equipment of $29,785,526, representing the
Purchase Price under the Purchase and Sale Agreement dated June 23, 2026. The Purchase Price
consists of (i) a base purchase price of $27,650,000 and (ii) $2,135,526 representing the
aggregate of all payments that would otherwise become due and payable under the Existing
Lease from and after the Closing Date through the expiration of the term of the Existing
Lease. The existing finance lease right-of-use asset of $21,871,038 and corresponding finance
lease liability of $22,872,121 are eliminated, as the finance lease for the data center facility
is replaced by the acquisition of the underlying asset, resulting in a gain on lease termination
of $1,001,083. The adjustment also eliminates the operating lease right-of-use asset of $1,347,182
and the corresponding operating lease liability of $1,377,561 (current portion of $80,911
and long-term portion of $1,296,650) for the parking lot, as the parking lot is included
in the acquired property, resulting in a gain on lease termination of $30,379. The aggregate
net gain on lease terminations of $1,031,462 is recorded as a reduction to accumulated deficit.
A corresponding liability for the unpaid purchase price of $29,785,526 is recorded as other
liability.
(C)
The
$422,788,000 of goodwill reflected in the pro forma condensed combined balance sheet consists
of (i) the preliminary recording of the $425,000,000 Base Price as goodwill, reduced by (ii)
the elimination of HCWC’s historical goodwill of $2,212,000, which is not carried forward
under reverse acquisition accounting. Refer to Note 5 – Goodwill for further detail.
(D)
The
adjustment eliminates Host Digital’s preferred units ($33,500,000, classified as mezzanine
equity) and common units (no par value, no capital contributions), as all outstanding Company
Units are converted into HCWC Common Stock in connection with the Merger. The elimination
of the Preferred Units assumes the successful closing of the Merger. If the Merger does not
close, the Preferred Units would remain outstanding as temporary equity, subject to the mandatory
redemption feature described in Host Digital’s historical financial statements. The
issuance of HCWC Common Stock is recorded in adjustment (E).
(E)
The
adjustment reflects the aggregate par value of $45,316 (at $0.001 per share) for all new
shares of HCWC Common Stock issued in connection with the Merger, after giving effect to
the 1-for-35 reverse stock split effected on August 28, 2026. This includes approximately
44,973,545 shares issued to Host Digital’s unitholders as Merger Consideration (based on
a Base Price of $425,000,000 divided by the Applicable Share Price of $0.27, as adjusted
for the reverse stock split) and approximately 342,857 bonus shares issued to HCWC’s directors,
officers and employees (representing the 12,000,000 pre-split bonus shares as adjusted for
the reverse stock split). The corresponding excess over par value is recorded in adjustment
(F)
(F)
The
adjustment of $456,421,816 to additional paid-in capital consists of (i) $424,954,684 representing
the excess fair value over par value of new shares issued in the Merger, after giving effect
to the 1-for-35 reverse stock split effected on August 28, 2026 (including approximately
44,973,545 shares issued to Host Digital’s unitholders and approximately 342,857 bonus shares
issued to HCWC’s directors, officers and employees), (ii) $33,500,000 representing the conversion
of Host Digital’s preferred units into HCWC Common Stock, and (iii) a $2,032,868 reduction
for deferred offering costs under SAB Topic 5.A.
(G)
The
$(13,258,036) reflects the adjustment that eliminates HCWC’s historical additional paid-in capital as part of the reverse acquisition
accounting. HCWC’s old equity structure is replaced by new equity issued to Host Digital’s members. The adjustment is composed of
the following:
a.
Elimination
of HCWC’s historical additional paid-in capital as part of the reverse acquisition accounting.
b.
Removal
of $2,212,000 of HCWC goodwill upon the Merger.
c.
Additional
accrual for acquisition-related legal fees of $666,852.
d.
Reduction
for the net gain on lease terminations of $1,031,462, which consists of a $30,379 gain on the parking lot operating lease termination
and a $1,001,083 gain on the property finance lease termination. Both lease termination gains are included in Ticker B. Refer to
Ticker B for further detail regarding the lease terminations and the acquisition of the Project Facility and parking lot.
F-46
(H)
The
$11,410,646 reflects the adjustment that eliminates HCWC’s accumulated deficit because the
combined company will carry forward the retained earnings (or accumulated deficit) of the
accounting acquirer, not HCWC’s.
(I)
The
$(645,624) adjustment eliminates $226,548 of parking lot and property lease expenses, $236,188
of property finance ROU amortization, and $537,375 of HCWC stock-based compensation, and
adds $354,487 of depreciation expense on the acquired property and parking lot. Refer to
Ticker B for further detail regarding the acquisition of the Project Facility and parking
lot.
(J)
The
$1,212,209 adjustment removes finance lease interest from interest expense as the related
finance lease was terminated upon acquisition of the Project Facility.
(K)
The
$1,623,922 positive adjustment eliminates HCWC’s historical impairment loss on its
investment in a related party (HCMC).
(L)
Reflects
the issuance of (i) approximately 44,973,545 shares of HCWC Common Stock to Host Digital’s unitholders as Merger Consideration and
(ii) approximately 342,857 bonus shares to HCWC’s officers, directors and employees upon a change of control, in each case as adjusted
for the 1-for-35 reverse stock split effected on August 28, 2026.
(M)
The
$1,278,326 adjustment eliminates $97,500 of HCWC stock-based compensation, adds $708,974
of depreciation expense on the acquired property and parking lot, and adds $666,852 of acquisition-related
costs expensed under ASC 805-10-25-23. Refer to Ticker B for further detail regarding the
acquisition of the Project Facility and parking lot.
Note
4 – Transaction Costs
Under
ASC 805-10-25-23, acquisition-related costs incurred by the acquirer to effect a business combination are generally expensed as incurred.
However, costs incurred to issue debt or equity securities to effect a business combination are not subject to that requirement; instead,
they are recognized under other applicable U.S. GAAP. For equity issuance costs, SAB Topic 5.A (codified in ASC 340-10-S99-1) states
that specific incremental costs directly attributable to a proposed or actual offering of equity securities may be deferred and charged
against the gross proceeds of the offering, typically as a reduction of additional paid-in capital. Because the Merger is accounted for
as a reverse acquisition under ASC 805-40 and Host Digital is the accounting acquirer, the equity securities issued in connection with
the Merger are considered securities of the accounting acquirer.
The
Company estimates that direct and incremental transaction costs associated with the Merger will be approximately $5,500,000. These costs
include legal, accounting, advisory, financial printing, and other regulatory filing expenses. Of this total, $2,800,280 of acquisition-related
costs have already been incurred, expensed or accrued by HCWC and Host Digital in their historical financial statements and are included
in the historical accumulated deficit; accordingly, no additional pro forma adjustment is required for such amounts. The remaining $2,699,720
of estimated transaction costs are reflected in the pro forma adjustments as follows: $2,032,868 represents deferred offering costs capitalized
by HCWC and Host Digital as of the balance sheet date that will be reclassified to equity upon the closing of the Merger and the related
financing (SAB Topic 5.A), and $666,852 represents additional Merger-related costs incurred but unpaid as of the balance sheet date (acquisition-related
costs expensed under ASC 805-10-25-23).
F-47
Treatment
of acquisition-related costs
ASC
805-10-25-23 requires that acquisition-related costs — including finder’s fees, advisory, legal, accounting, valuation and other
professional or consulting fees, general administrative costs, and costs of maintaining an internal acquisitions department — be
expensed in the periods in which the costs are incurred and the services are received. In a business combination, such costs are considered
separate transactions for services received and are not part of the consideration transferred to the acquiree. Of the total estimated
transaction costs, $2,800,280 of acquisition-related costs have already been incurred, expensed or accrued by HCWC and Host Digital in
their historical financial statements and are included in the historical accumulated deficit; accordingly, no additional pro forma adjustment
is required for such amounts. The remaining $666,852 of acquisition-related costs incurred but unpaid as of the balance sheet date is
recognized in the pro forma adjustments as an increase to accrued expenses and a corresponding increase to accumulated deficit.
Treatment
of offering-related costs
SAB
Topic 5.A (codified in ASC 340-10-S99-1) states that specific incremental costs directly attributable to a proposed or actual offering
of securities may be deferred and charged against the gross proceeds of the offering. Costs that may qualify for deferral include registration
fees, filing fees, listing fees, specific legal and accounting costs, and transfer agent and registrar fees. The Company has allocated
$2,032,868 to offering-related costs, consisting of SEC filing fees, NYSE American listing fees, transfer agent fees, specific legal
and accounting costs for preparing offering documents, financial printing for the securities, and other direct costs of issuing the shares
and pre-funded warrants. These costs are deferred and recorded as a reduction of additional paid-in capital, with no effect on net income.
Pro
forma adjustments
In
the unaudited pro forma condensed combined balance sheet, the following transaction-cost adjustments are presented in the “Pro
Forma Adjustments” column:
●
Elimination
of deferred costs: $(2,032,868) — removes HCWC’s and Host Digital’s historical deferred offering costs capitalized as of June
30, 2026 and July 31, 2026, respectively.
●
Reduction
of additional paid-in capital (APIC): $(2,032,868) — defers offering-related costs against equity upon closing (SAB Topic 5.A).
●
Increase
to accrued expenses: $666,852 — reflects additional transaction costs incurred but not yet paid as of the balance sheet date.
●
Increase
to accumulated deficit: $666,852 — expensing of acquisition-related costs (ASC 805-10-25-23).
In
the pro forma income statement for the year ended December 31, 2025, the $666,852 of acquisition-related costs is included within operating
expenses, increasing net loss by $666,852. Under the pro forma assumption that the Merger occurred on January 1, 2025, the acquisition-related
expense is fully reflected in the year ended December 31, 2025 and is not repeated in the six months ended June 30, 2026. The offering-related
costs have no effect on either pro forma income statement
The
Company has elected not to present Management’s Adjustments under Article 11 of Regulation S-X; therefore, only Transaction Accounting
Adjustments are included. The actual transaction costs may differ materially from the estimates used in the pro forma financial statements.
Note
5 – Goodwill
In
connection with the reverse acquisition, HCWC’s historical goodwill of $2,212,000 has been eliminated in the pro forma condensed
combined balance sheet. Under reverse acquisition accounting (ASC 805-40), Host Digital is the accounting acquirer and HCWC is the accounting
acquiree. The consolidated financial statements are a continuation of Host Digital’s financial statements; therefore, HCWC’s
pre-acquisition goodwill is not carried forward. ASC 805-30 requires that the acquiree’s historical goodwill be eliminated and
replaced by newly measured goodwill.
The
total consideration of $425,000,000 has been preliminarily recorded as goodwill because the purchase price allocation is not yet complete.
This preliminary amount will be allocated to HCWC’s identifiable assets and liabilities based on their fair values as of the acquisition
date. Any excess of the consideration over the fair value of net identifiable assets acquired will remain as goodwill. The final purchase
price allocation, including the determination of any intangible assets and residual goodwill, will be completed after the closing of
the Merger based on a third-party valuation and may differ materially from the preliminary presentation.
F-48
Note
6 – Earnings Per Share (EPS)
Basic
net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares
of common stock outstanding during the period. Diluted net loss per share is the same as basic net loss per share for the periods presented
because all potential common shares are anti-dilutive. See the “Selected Per Share Data” section for the presentation of
historical and pro forma per-share amounts.
The
Pre-Funded Warrants issued in connection with the Merger have a nominal exercise price of $0.001 per share. Although the exercise price
is de minimis, for pro forma purposes the Pre-Funded Warrants are not included in the weighted-average common shares outstanding used
to calculate basic net loss per share because they represent a separate class of equity instruments. The pro forma weighted-average shares
outstanding presented below consist solely of common shares, including (i) the approximately 44,973,545 shares issued to Host Digital’s
unitholders as Merger Consideration and (ii) the approximately 342,857 bonus shares issued to HCWC’s directors, officers and employees
(representing the 12,000,000 pre-split bonus shares as adjusted for the 1-for-35 reverse stock split).
The
Pre-Funded Warrants are considered participating securities because they are entitled to receive dividends or other distributions to
the same extent as holders of common stock. Under the two-class method required by Accounting Standards Codification (ASC) 260, Earnings
Per Share, in periods of net loss, no loss is allocated to the warrant holders because they do not have a contractual obligation to share
in the Company’s losses. Consequently, the entire net loss is attributable to common stockholders.
For
the six months ended June 30, 2026 and the year ended December 31, 2025, the pro forma weighted-average shares outstanding were 46,010,757
and 45,789,870, respectively, after giving effect to the 1-for-35 reverse stock split effected on August 28, 2026, and assuming the Merger
occurred on January 1, 2025. The pro forma weighted-average shares outstanding consist of (i) HCWC’s historical weighted average shares,
(ii) approximately 44,973,545 shares issued to Host Digital’s unitholders as Merger Consideration, and (iii) approximately 342,857 bonus
shares issued to HCWC’s directors, officers and employees.
Note
7 - Income Taxes
The
unaudited pro forma condensed combined financial statements do not reflect any income tax adjustments related to the Merger other than
the carryover of the historical tax bases of the assets and liabilities of Host Digital (the accounting acquirer) and HCWC (the accounting
acquiree) under Section 351(a) of the Code. HCWC and Host Digital have each recorded full valuation allowances against their deferred
tax assets, including NOL carryforwards, as it is more likely than not that such assets will not be realized. As a result, no income
tax benefit has been recognized for the net losses of either entity in the pro forma statements of operations. The NOL carryforwards
of both entities may be subject to annual limitations under Section 382 of the Code following the Merger, the amount of which has not
yet been determined.
F-49
EX-99.4
EX-99.4
Filename: ex99-4.htm · Sequence: 15
Exhibit 99.4
HOST
DIGITAL INC.
POLICY
ON RECOUPMENT OF INCENTIVE COMPENSATION
Introduction
The
Board of Directors (the “Board”) of Host Digital Inc. (the “Company”) has adopted
this Policy on Recoupment of Incentive Compensation (this “Policy”), which provides for the recoupment of compensation
in certain circumstances in the event of a restatement of financial results by the Company. This Policy shall be interpreted to comply
with the requirements of U.S. Securities and Exchange Commission rules and Section 811 of the NYSE American Company Guide implementing
Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”)
and, to the extent this Policy is in any manner deemed inconsistent with such rules, this Policy shall be treated as retroactively amended
to be compliant with such rules.
Administration
This
Policy shall be administered by the Compensation Committee. Any determinations made by the Compensation Committee shall be final and
binding on all affected individuals. The Compensation Committee is authorized to interpret and construe this Policy and to make all determinations
necessary, appropriate, or advisable for the administration of this Policy, in all cases consistent with the Dodd-Frank Act. The Board
or the Compensation Committee may amend this Policy from time to time in its discretion.
Covered
Executive Officers
This
Policy applies to any current or former “executive officer,” within the meaning of Rule 10D-1 under the Securities Exchange
Act of 1934, as amended, of the Company or a subsidiary of the Company (each such individual, an “Executive”).
This Policy shall be binding and enforceable against all Executives and their beneficiaries, executors, administrators, and other legal
representatives.
Recoupment
Upon Financial Restatement
If
the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting
requirement under securities laws, including any required accounting restatement to correct an error in previously issued financial statements
that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected
in the current period or left uncorrected in the current period (a “Financial Restatement”), the Compensation
Committee shall cause the Company to recoup from each Executive, as promptly as reasonably possible, any erroneously awarded Incentive-Based
Compensation, as defined below.
No-Fault
Recovery
Recoupment
under this Policy shall be required regardless of whether the Executive or any other person was at fault or responsible for accounting
errors that contributed to the need for the Financial Restatement or engaged in any misconduct.
Compensation
Subject to Recovery; Enforcement
This
Policy applies to all compensation granted, earned, or vested based wholly or in part upon the attainment of any financial reporting
measure determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements,
and any measure that is derived wholly or in part from such measures, whether or not presented within the Company’s financial statements
or included in a filing with the U.S. Securities and Exchange Commission, including stock price and total shareholder return (“TSR”).
Such compensation includes, but is not limited to, performance-based cash and stock, stock option, or other equity or equity-based awards
paid or granted to the Executive (“Incentive-Based Compensation”). Compensation that is granted, vests or is
earned based solely upon the occurrence of non-financial events is not subject to this Policy, such as base salary, restricted stock,
options subject only to time-based vesting, and bonuses awarded solely at the discretion of the Board or Compensation Committee and not
based on the attainment of any financial measure.
In
the event of a Financial Restatement, the amount to be recovered will be the excess of (i) the Incentive-Based Compensation received
by the Executive during the Recovery Period (as defined below), based on the erroneous data and calculated without regard to any taxes
paid or withheld, over (ii) the Incentive-Based Compensation that would have been received by the Executive had it been calculated based
on the restated financial information, as determined by the Compensation Committee. For purposes of this Policy, “Recovery
Period” means the three completed fiscal years immediately preceding the date on which the Company is required to prepare
the Financial Restatement, as determined in accordance with the last sentence of this paragraph, or any transition period that results
from a change in the Company’s fiscal year (as set forth in Section 811(c)(1)(i)(D) of the NYSE American Company Guide). The date
on which the Company is required to prepare a Financial Restatement is the earlier to occur of (A) the date the Board or a Board committee
(or authorized officers of the Company if Board action is not required) concludes, or reasonably should have concluded, that the Company
is required to prepare a Financial Restatement or (B) the date a court, regulator, or other legally authorized body directs the Company
to prepare a Financial Restatement.
For
Incentive-Based Compensation based on stock price or TSR, where the amount of erroneously awarded compensation is not subject to mathematical
recalculation directly from the information in the Financial Restatement, the Compensation Committee shall determine the amount to be
recovered based on a reasonable estimate of the effect of the Financial Restatement on the stock price or TSR upon which the Incentive-Based
Compensation was received, and the Company shall document the determination of that reasonable estimate and provide it to the NYSE American.
Incentive-Based
Compensation is considered to have been received by an Executive in the fiscal year during which the applicable financial reporting measure
was attained or purportedly attained, even if the payment or grant of such Incentive-Based Compensation occurs after the end of such
period.
The
Company may use any legal or equitable remedies that are available to the Company to recoup any erroneously awarded Incentive-Based Compensation,
including but not limited to collecting from an Executive cash payments or shares of Company common stock or forfeiting any amounts that
the Company owes to the Executive. Executives shall be solely responsible for any tax consequences to them that result from the recoupment
or recovery of any amount pursuant to this Policy, and the Company shall have no obligation to administer the Policy in a manner that
avoids or minimizes any such tax consequences.
No
Indemnification
The
Company shall not indemnify any Executive or pay or reimburse the premium for any insurance policy to cover any losses incurred by such
Executive under this Policy or any claims relating to the Company’s enforcement of rights under this Policy.
HOST DIGITAL INC. – POLICY ON RECOUPMENT OF INCENTIVE COMPENSATION 2
Exceptions
The
compensation recouped under this Policy shall not include Incentive-Based Compensation received by an Executive (i) prior to beginning
service as an Executive or (ii) at any time if the Executive did not serve as an Executive at any time during the performance period
applicable to the Incentive-Based Compensation in question. The Compensation Committee (or a majority of independent directors serving
on the Board) may determine not to seek recovery from an Executive in whole or in part to the extent it determines in its sole discretion
that such recovery would be impracticable because (A) the direct expense paid to a third party to assist in enforcing recovery would
exceed the recoverable amount (after having made a reasonable attempt to recover the erroneously awarded Incentive-Based Compensation
and providing corresponding documentation of such attempt to the NYSE American), (B) recovery would violate any home country law that
was adopted prior to November 28, 2022, as determined by an opinion of counsel licensed in the applicable jurisdiction that is acceptable
to and provided to the NYSE American, or (C) recovery would likely cause the Company’s 401(k) plan or any other tax-qualified retirement
plan to fail to meet the requirements of Section 401(a)(13) or Section 411(a) of the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
Other
Remedies Not Precluded
The
exercise by the Compensation Committee of any rights pursuant to this Policy shall be without prejudice to any other rights or remedies
that the Company, the Board, or the Compensation Committee may have with respect to any Executive subject to this Policy, whether arising
under applicable law or regulation (including Section 304 of the Sarbanes-Oxley Act of 2002) or pursuant to the terms of any other policy
of the Company or any equity award, cash incentive award, or employment or other agreement applicable to an Executive. Notwithstanding
the foregoing, there will be no duplication of recovery of the same Incentive-Based Compensation under this Policy and pursuant to any
other such rights or remedies.
Acknowledgment
The
Compensation Committee may require any Executive to sign and return to the Company the acknowledgement form attached hereto as Exhibit
A, pursuant to which such Executive shall agree to be bound by the terms of, and comply with, this Policy. For the avoidance of doubt,
each Executive shall be fully bound by, and must comply with, the Policy, whether or not such Executive has executed and returned such
acknowledgment form to the Company.
Effective
Date and Applicability
This
Policy has been adopted by the Board, effective as of September 17, 2026 (the “Effective Date”), and
shall apply to any Incentive-Based Compensation that is received by an Executive on or after September 17, 2026.
HOST DIGITAL INC. – POLICY ON RECOUPMENT OF INCENTIVE COMPENSATION 3
EXHIBIT
A
HOST
DIGITAL INC.
POLICY
ON RECOUPMENT OF INCENTIVE COMPENSATION
ACKNOWLEDGEMENT
FORM
Capitalized
terms used but not otherwise defined in this Acknowledgement Form (this “Acknowledgement Form”) have the meanings
ascribed to such terms in the Policy.
By
signing this Acknowledgement Form, the undersigned acknowledges, confirms and agrees that the undersigned: (i) has received and reviewed
a copy of the Policy; (ii) is and will continue to be subject to the Policy, both during and after the undersigned’s employment
with the Company; and (iii) will abide by the terms of the Policy, including, without limitation, by reasonably promptly returning any
recoverable compensation to the Company as required by the Policy, as determined by the Compensation Committee in its sole discretion.
Sign:
Name:
[Employee]
Date:
GRAPHIC
GRAPHIC
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v3.26.3
Cover
Sep. 17, 2026
Cover [Abstract]
Document Type
8-K
Amendment Flag
false
Document Period End Date
Sep. 17, 2026
Current Fiscal Year End Date
--12-31
Entity File Number
001-42274
Entity Registrant Name
HEALTHY CHOICE WELLNESS CORP.
Entity Central Index Key
0001948864
Entity Tax Identification Number
88-4128927
Entity Incorporation, State or Country Code
DE
Entity Address, Address Line One
3800
North 28th Way
Entity Address, Address Line Two
Unit# 1
Entity Address, City or Town
Hollywood
Entity Address, State or Province
FL
Entity Address, Postal Zip Code
33020
City Area Code
(305)
Local Phone Number
600-5004
Written Communications
false
Soliciting Material
false
Pre-commencement Tender Offer
false
Pre-commencement Issuer Tender Offer
false
Title of 12(b) Security
Class
A common stock
Trading Symbol
HOST
Security Exchange Name
NYSEAMER
Entity Emerging Growth Company
true
Elected Not To Use the Extended Transition Period
false
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Boolean flag that is true when the XBRL content amends previously-filed or accepted submission.
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Cover page.
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- Definition
End date of current fiscal year in the format --MM-DD.
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For the EDGAR submission types of Form 8-K: the date of the report, the date of the earliest event reported; for the EDGAR submission types of Form N-1A: the filing date; for all other submission types: the end of the reporting or transition period. The format of the date is YYYY-MM-DD.
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The type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word 'Other'.
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Address Line 1 such as Attn, Building Name, Street Name
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Address Line 2 such as Street or Suite number
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Name of the City or Town
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Code for the postal or zip code
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Name of the state or province.
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A unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK.
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Indicate if an emerging growth company has elected not to use the extended transition period for complying with any new or revised financial accounting standards.
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Commission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
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Two-character EDGAR code representing the state or country of incorporation.
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The exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC.
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The Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS.
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Local phone number for entity.
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Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act.
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Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act.
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Title of a 12(b) registered security.
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Name of the Exchange on which a security is registered.
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Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act.
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Trading symbol of an instrument as listed on an exchange.
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Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act.
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