SEC Filing Document

Company: Synergy CHC Corp.
Ticker: SNYR
CIK: 1562733
Filing Type: 424B4
Document Type: 424B4
Date Filed: 2024-10-23
Accession Number: 0001213900-24-089987
Exchange: Nasdaq
SIC Code: 2833
SIC Description: Medicinal Chemicals & Botanical Products
URL: https://www.sec.gov/Archives/edgar/data/1562733/000121390024089987/ea0208324-14.htm

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customers accounted for approximately 83% of the Company’s net revenue. Substantially all of the Company’s business is with companies in the United States. Accounts payable As of both June 30, 2024 and December 31, 2023, two vendors accounted for 37% and 64%, respectively, of the Company’s accounts payable. Major suppliers For the six months ended June 30, 2024, one supplier accounted for approximately 21% of the Company’s purchases. For the six months ended June 30, 2023, two suppliers accounted for approximately 14% of the Company’s purchases. Substantially all of the Company’s business is with suppliers in the United States. Note 7 — Inventory Inventory consists of finished goods, components and raw materials. The Company’s inventory is stated at the lower of cost (FIFO cost basis) or net realizable value. The carrying value of inventory consisted of the following: June 30, 2024 December 31, 2023 Finished goods $ 1,781,341 $ 3,584,343

Components 93,949 93,949

Inventory in transit — 2,948

Raw materials 45,000 45,000

Total inventory $	1,920,290 $	3,726,240

As of January 22, 2015, inventory was pledged to Knight under the Loan Agreement (see note 12). As of June 30, 2024 and December 31, 2023, $0 and $2,948, respectively, of the Company’s inventory was in transit. During the six months ended June 30, 2024 and 2023, the Company had no inventory write-offs.

Table of Contents

SYNERGY CHC CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 8 — Intangible Assets

June 30, 2024 December 31, 2023

License Fee $	450,000 $	450,000

Less accumulated amortization (100,000	) (33,333	)

Intangible assets, net $	350,000 $	416,667

Amortization expense for the six months ended June 30, 2024 and 2023 was $66,667 and $0, respectively.

The estimated aggregate amortization expense over each of the next five years is as follows:

2024 (remaining) $	66,666

Note 9 — Related Party Transactions

The Company paid consulting fees through June 2024 to a company owned by Mr. Jack Ross, Chief Executive Officer of the Company. The Company expensed $0 and $388,360, respectively during the six months ended June 30, 2024 and 2023 as consulting fees. The Company advanced $326,683 in the manner of a prepaid consulting fees during the six months ended June 30, 2024 and applied $328,003 of that advance to a short term loan. The prepaid balance as of June 30, 2024 and December 31, 2023 was $500,000 and $501,321, respectively. During 2024, the Company was advanced $1,400,000 and $149,500 Canadian Dollars (US Dollars $109,225) in the form of a short term note. The balance owed as of June 30, 2024 and December 31, 2023 is $1,181,222 and $0, respectively.

On June 26, 2015, the Company entered into a Security Agreement with Knight Therapeutics, Inc., a related party (owner of greater than 10% shares of the Company), through its wholly owned subsidiary Neuragen Corp., for the purchase of Knight Therapeutics, Inc.’s assets. At March 31, 2024 and December 31, 2023, the Company owed Knight $275,000 and $287,500 in relation to this agreement (see Note 11). The Company recorded present value of future payments of $199,640 and $204,941 as of March 31, 2024 and December 31, 2023, respectively. At June 30, 2024 this Security Agreement was consolidated into one loan under the sixth amendment.

The Company entered into transactions with a related party controlled by the CEO during prior years. The transactions were a pass through and allocation of expenses and reimbursements. As of June 30, 2024 and December 31, 2023 the Company was owed $4,424,547 and $4,459,996, respectively.

The Company entered into a transaction with a related party controlled by the CEO during the year ended December 31, 2023. The transaction was in the form of a short term loan. The Company received $10,000 Canadian dollars (US Dollars $7,561). This amount was owed to the related party as of December 31, 2023 and was repaid during February 2024.

On August 9, 2017, the Company entered into a Loan Agreement with Knight Therapeutics (Barbados) Inc., a related party (owner of greater than 10% shares of the Company), for a working capital loan. At both March 31, 2024 and December 31, 2023, the Company owed Knight $5,000,000 on this loan, net of debt issuance cost (see Note 11). During the year ended December 31, 2020 a loan success fee of $1,000,000 was earned by Knight payable in August 2022 (see Note 11). At both March 31, 2024 and December 31, 2023, the Company owed Knight $1,000,000 on the loan success fee (see Note 11). At June 30, 2024 this Loan Agreement was consolidated into one loan under the sixth amendment.

Table of Contents

SYNERGY CHC CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 9 — Related Party Transactions (cont.)

On May 8, 2020, the Company entered into a Third Amendment Agreement with Knight Therapeutics (Barbados) Inc., a related party, for working capital loan. At March 31, 2024 and December 31, 2023, the Company owed Knight $320,000 and $392,000, respectively on this loan (see Note 11). At June 30, 2024 this Third Amendment Agreement was consolidated into one loan under the sixth amendment.

On July 7, 2022, the Company entered into a Fourth Amendment Agreement with Knight Therapeutics (Barbados) Inc., a related party, for an additional $2,000,000 loan (the “Second Additional Loan”). At both March 31, 2024 and December 31, 2023, the Company owed Knight $2,000,000 on this loan (see Note 11). During the year ended December 31, 2023 a loan success fee of $83,250 was earned by Knight and is payable as of both March 31, 2024 and December 31, 2023 (see Note 11). At June 30, 2024 this Fourth Amendment Agreement was consolidated into one loan under the sixth amendment.

On September 30, 2023, the Company entered into a Fifth Amendment Agreement (the “Fifth Amendment”) to the Loan Agreement with Knight, pursuant to which Knight agreed to extend the maturity date of the Loan to March 31, 2024. The Company will pay Knight a closing fee of $1,000,000 in connection with the Fifth Amendment. This has been accrued for during the year ended December 31, 2022 since this was earned upon renegotiation of the loan during 2022 (see Note 11). At June 30, 2024 this Fifth Amendment Agreement was consolidated into one loan under the sixth amendment.

The Company recognized interest expense of $1,110,261 and $833,027 during the six month periods ended June 30, 2024 and 2023, respectively. Accrued interest was $1,760,076 as of both March 31, 2024 and December 31, 2023. Accrued interest was capitalized and included in the loan balance as of March 31, 2024 and December 31, 2023. At June 30, 2024 the accrued interest was consolidated into one loan under the sixth amendment.

On September 30, 2023, the Company entered into a Fifth Amendment Agreement with Knight Therapeutics (Barbados) Inc., a related party, to modify prior Agreements. This modification extends the maturity dates of loans to March 31, 2024 (see Note 11).

During June 2024, the Company entered into Sixth Amended Agreement with Knight Therapeutics Inc., a related party, to modify prior Agreements. This modification consolidates outstanding loans and extends the maturity dates of loans to March 31, 2026 (see Note 11).

On December 23, 2016, the Company entered into an agreement with Knight Therapeutics for the distribution rights of FOCUSFactor in Canada. In conjunction with this agreement, the Company is required to pay Knight a distribution fee equal to 30% of gross sales for sales achieved through a direct sales channel and 5% of gross sales for sales achieved through retail sales. The minimum due to Knight under this agreement is $100,000 Canadian dollars. During the year ended December 31, 2023, the Company expensed $133,502 Canadian dollars (US Dollars $98,939). As of both March 31, 2024 and December 31, 2023, the total outstanding balance was $549,229 Canadian dollars. In US Dollars, the total outstanding balance was $403,936 and $415,272 as of March 31, 2024 and December 31, 2023, respectively. At June 30, 2024 these distribution fees have been consolidated into one loan under the sixth amendment.