SEC Filing Document

Company: Synergy CHC Corp.
Ticker: SNYR
CIK: 1562733
Filing Type: S-1/A
Document Type: S-1/A
Date Filed: 2024-07-29
Accession Number: 0001013762-24-002165
Exchange: Nasdaq
SIC Code: 2833
SIC Description: Medicinal Chemicals & Botanical Products
URL: https://www.sec.gov/Archives/edgar/data/1562733/000101376224002165/ea0208324-02.htm

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Proposed Nasdaq Capital Market symbol SNYR Insider Participation Certain of our officers, directors and stockholders, including , and certain of their respective affiliates, have indicated an interest in participating in this offering at the public offering price. We anticipate that such persons will purchase in the aggregate approximately shares of common stock offered hereby. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters could determine to sell fewer shares to them than they indicated an interest in purchasing or sell no shares to them, and they could determine to purchase fewer shares than they indicated an interest in purchasing or purchase no shares in this offering. As of June 18, 2024, 89,889,074 shares of our common stock were outstanding. Unless we indicate otherwise or the context otherwise requires, all information in this prospectus: • assumes no exercise by the underwriters of their over-allotment option;

•        excludes 4,000,000 shares of common stock issuable upon the exercise of outstanding options at a weighted exercise price of $0.61 per share;

•        gives effect to a 1-for-            reverse stock split with respect to our common stock, which will occur prior to the effective date of the registration statement of which this prospectus is a part; and

•        excludes 14,525,000 shares of common stock reserved for future issuance pursuant to our 2024 Equity Incentive Plan.

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SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA

The following tables set forth our summary historical consolidated financial data as of, and for the periods ended on, the dates indicated.

The summary consolidated statements of operations data for the years ended December 31, 2023 and 2022 are derived from our audited consolidated financial statements and notes that are included elsewhere in this prospectus.

The summary condensed consolidated statements of operations data for the three months ended March 31, 2024 and 2023 and the summary consolidated balance sheet data as of March 31, 2024 are derived from our unaudited interim condensed consolidated financial statements and notes that are included elsewhere in this prospectus. We have prepared the unaudited condensed consolidated financial statements in accordance with generally accepted accounting principles (GAAP) and on the same basis as the audited consolidated financial statements. Our historical results are not necessarily indicative of our results in any future period and results from our interim period may not necessarily be indicative of the results of the entire year.

For the three months ended March 31, 2024 For the three months ended March 31, 2023 For the year ended December 31, 2023 For the year ended December 31, 2022

(Unaudited) (Unaudited)

Statement of operations data:

Revenue $	9,411,863 $	7,962,166 $	42,777,633 $	38,410,674

Cost of sales 2,637,139 2,084,964 10,697,323 25,112,988

Gross profit 6,774,724 5,877,202 32,080,310 13,297,686

Total operating expenses 4,966,395 4,728,498 21,273,564 39,468,116

Income (loss) from operations 1,808,329 1,148,704 10,806,746 (26,170,430	)

Total other expenses 1,100,610 831,194 4,233,016 6,428,686

Net income (loss) before income taxes 707,719 317,510 6,573,730 (32,599,116	)

Income tax expense (benefit) 127,189 (10,918	) 234,980 32,172

Net income (loss) after tax $	580,530 $	328,428 $	6,338,750 $	(32,631,288	)

Net income (loss) per share – basic and diluted $	0.01 $	0.00 $	0.07 $	(0.36	)

Weighted average common shares outstanding, basic and diluted 89,889,074 89,889,074 89,889,074 89,889,074

EBITDA $	1,850,645 $	1,153,540 $	10,841,596 $	(25,809,320)

Non-GAAP Financial Measures

We currently focus on EBITDA to evaluate our business relationships and our resulting operating performance and financial position. EBITDA is defined as net income plus interest expense, income tax expense, depreciation and amortization. We believe that EBITDA, viewed in addition to, and not in lieu of, our reported results in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), provides useful information to investors.

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023 Year Ended December 31, 2023 Year Ended December 31, 2022

(Unaudited) (Unaudited)

Net income (loss) $	580,530 $	328,428 $	6,338,750 $	(32,631,288	)

Interest income (387	) (382	) (1,616	) (569	)

Interest expense 1,109,980 836,412 4,236,149 6,450,365

Taxes 127,189 (10,918	) 234,980 32,172

Depreciation and amortization 33,334 — 33,333 340,000

EBITDA $	1,850,645 $	1,153,540 $	10,841,596 $	(25,809,320	)

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EBITDA is considered a non-GAAP financial measure. EBITDA represents earnings before interest, taxes, depreciation and amortization. Our definition of EBITDA might not be comparable to similarly titled measures reported by other companies.

March 31, 2024 December 31, 2023 December 31, 2022

(Unaudited)

Balance sheet data:

Current assets $	11,746,352 $	11,822,849 $	18,541,733

Total assets 12,129,685 12,239,516 18,541,733

Current liabilities 11,831,017 14,021,882 30,262,522

Total liabilities 38,723,491 39,545,489 52,061,600

Total stockholders’ deficit (26,593,806	) (27,305,973	) (33,519,867	)

Total liabilities and stockholders’ deficit $	12,129,685 $	12,239,516 $	18,541,733

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RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the following risks and all of the other information contained in this prospectus before deciding whether to invest in our common stock. If any of the following risks are realized, our business, financial condition and results of operations could be materially and adversely affected. In that event, the trading price of our common stock could decline and you could lose all or part of your investment in our common stock. Additional risks of which we are not presently aware or that we currently believe are immaterial may also harm our business and results of operations. Some statements in this prospectus, including such statements in the following risk factors, constitute forward-looking statements. See the section entitled “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to Our Business, Strategy and Industry

We operate in a highly competitive industry and our failure to compete effectively could materially and adversely affect our sales and growth prospects.

The U.S. nutritional supplements retail industry is a large and highly fragmented industry with few barriers to entry. We compete against other domestic and international manufacturers, specialty retailers, mass merchants, multi-level marketing organizations, mail-order and direct-to-consumer companies, and e-commerce companies. This market is highly sensitive to the introduction of new products, which may rapidly capture a significant share of the market. As certain products become more mainstream, with broader distribution, we may experience increased competition for those products. Increased competition from companies that distribute through retail, e-commerce or wholesale channels could have a material adverse effect on our financial condition and results of operations. Certain of our competitors may have significantly greater financial, technical and marketing resources than we do, and may be able to adapt to changes in consumer preferences more quickly, devote greater resources to the marketing and sale of their products, or generate greater brand recognition. In addition, our competitors may be more effective and efficient in introducing new products. Furthermore, if we fail to maximize the efficiency of our ship direct to customers strategies, or fail to provide our customers with an attractive omni-channel experience, our business and results of operations could be materially and adversely affected. We may not be able to compete effectively, and any of the factors listed above may cause price reductions, reduced margins and losses of our market share.

Our failure to appropriately respond to changing consumer preferences and demand for new products or product enhancements could significantly harm our relationship with customers and our product sales, as well as our financial condition and operating results.

Our business is subject to changing consumer trends and preferences, including rapid and frequent changes in demand for products, new product introductions and enhancements. Our failure to accurately predict these trends could negatively impact consumer opinion of our products, which in turn could harm our customer relationships and cause the loss of sales. The success of our new product offerings and enhancements depends upon a number of factors, including our ability to:

•        accurately anticipate consumer needs;

•        innovate and develop new products or product enhancements that meet these needs;

•        successfully commercialize new products or product enhancements in a timely manner;

•        price our products competitively;

•        manufacture and deliver our products in sufficient volumes and in a timely manner; and

•        differentiate our product offerings from those of our competitors.

If we do not introduce new products or make enhancements to meet the changing needs of our customers in a timely manner, some of our products could be rendered obsolete, which could negatively impact our revenues, financial condition, and operating results.

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We depend on a small number of large retailers for a significant portion of our sales. Our sales growth is dependent upon maintaining our relationships with existing customers, and the loss of any one such customer could materially adversely affect our business and financial performance.