SEC Filing Document

Company: Synergy CHC Corp.
Ticker: SNYR
CIK: 1562733
Filing Type: S-1/A
Document Type: S-1/A
Date Filed: 2024-10-10
Accession Number: 0001213900-24-086889
Exchange: Nasdaq
SIC Code: 2833
SIC Description: Medicinal Chemicals & Botanical Products
URL: https://www.sec.gov/Archives/edgar/data/1562733/000121390024086889/ea0208324-11.htm

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shares with an aggregate fair market value that would satisfy the withholding amount due. The plan administrator may also require any tax withholding obligation of the Company or its subsidiaries to be satisfied, in whole or in part, by an arrangement whereby a certain number of shares issued pursuant to any award are immediately sold and proceeds from such sale are remitted to the Company or its subsidiaries in an amount that would satisfy the withholding amount due. The 2024 Plan generally does not allow for the transfer or assignment of awards, other than by will or by the laws of descent and distribution or pursuant to a domestic relations order; however, the plan administrator may permit the transfer of non-qualified stock options by gift to an immediate family member, to trusts for the benefit of family members, or to partnerships in which such family members are the only partners.

The plan administrator may amend or discontinue the 2024 Plan and the plan administrator may amend or cancel outstanding awards for purposes of satisfying changes in law or any other lawful purpose, but no such action may materially and adversely affect rights under an award without the holder’s consent. Certain amendments to the 2024 Plan will require the approval of the Company’s stockholders. Generally, without shareholder approval, (i) no amendment or modification of the 2024 Plan may reduce the exercise price of any stock option or the strike price of any stock appreciation right, (ii) the plan administrator may not cancel any outstanding stock option or stock appreciation right where the fair market value of the common stock underlying such stock option or stock appreciation right is less than its exercise price and replace it with a new option or stock appreciation right, another award or cash and (iii) the plan administrator may not take any other action that is considered a “repricing” for purposes of the shareholder approval rules of the applicable securities exchange.

All stock awards granted under the 2024 Plan will be subject to recoupment in accordance with any clawback policy that Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In addition, the Board may impose such other clawback, recovery or recoupment provisions in a stock award agreement as the Board determines necessary or appropriate. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company.

No awards may be granted under the 2024 Plan after the date that is ten years from the Plan Effective Date. No awards under the 2024 Plan have been made prior to the date of this prospectus.

Clawback Policy

We intend to adopt a clawback policy that is compliant with the Nasdaq rules, as required by the Dodd-Frank Act, to be effective upon the closing of this offering, the form of which is filed as an exhibit to the registration statement of which this prospectus is a part.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Following is a description of transactions since January 1, 2021, including currently proposed transactions to which we have been or are to be a party in which the amount involved exceeded or will exceed $120,000, and in which any of our directors (including nominees), executive officers or beneficial holders of more than 5% of our capital stock, or any immediate family members of and any entities affiliated with any such person, had or will have a direct or indirect material interest.

We may encounter business arrangements or transactions with businesses and other organizations in which one of our directors or executive officers, significant stockholders or their immediate families is a participant and the amount exceeds $120,000. We refer to these transactions as related party transactions. Related party transactions have the potential to create actual or perceived conflicts of interest between us and our directors, officers and significant stockholders or their immediate family members. All services listed below are provided at cost.

On April 2, 2014, we entered into a Sales and Marketing Consultant and Distribution Agreement with Kenek Brands, Inc. (“Kenek”), a company owned by Jack Ross, our Chief Executive Officer. For the years ended December 31, 2023, 2022 and 2021, we expensed consulting fees of $500,000, $738,483 and $1,287,296, respectively. For the year ended December 31, 2023, we paid eight months of a vehicle allowance of $2,500 per month. For the year ended December 31, 2022, we paid fifteen months of a vehicle allowance of $2,500 per month. We advanced $501,321 and $131,894 in the manner of a prepaid bonus in the years ended December 31, 2023 and 2022, respectively. We advanced $326,683 during the six months ended June 30, 2024. During the six months ended June 30, 2024 we were advanced $1,400,000 and $149,500 Canadian Dollars (US Dollars $109,225) in the form of a short-term note. During the six months ended June 30, 2024 we applied advances of $328,003 to the note balance. The balance owing at June 30, 2024 was $1,181,222. As of the date of this prospectus, the balance was $2,760,159, of which we expect to repay approximately $2,700,000 from the proceeds of this offering. During 2023, we were advanced $1,170,000 in the form of a short-term note. We repaid this during 2023 with interest of $210,000.

On June 26, 2015, we entered into a Security Agreement with Knight Therapeutics, Inc. (“Knight Therapeutics”) (an affiliate of an owner of greater than 10% of our outstanding common stock) through its wholly owned subsidiary Neuragen Corp., for the purchase of the assets of Knight Therapeutics, Inc. At March 31, 2024, December 31, 2023, December 31, 2022 and December 31, 2021, we owed $275,000, $287,500, $325,000 and $387,000, respectively, in relation to this agreement. We recorded present value of future payments of $199,640, $204,941, $213,040 and $243,723 as of March 31, 2024, December 31, 2023, December 31, 2022 and December 31, 2021, respectively. This agreement was consolidated into the Amended and Restated Loan Agreement with Knight in June 2024.

Pursuant to our Amended and Restated Loan Agreement with Knight, as amended by the Sixth Amendment dated June 6, 2024, amounts owing under the loan bear interest at a rate of 12% per year. At December 31, 2023, 2022 and 2021, we owed Knight $12,335,452, $12,426,997 and $6,743,723, respectively, on this loan, net of debt issuance cost. Since January 1, 2021, the highest aggregate principal amount outstanding under this loan was $12,335,452 during the year ended December 31, 2023. During the years ended December 31, 2023, 2022 and 2021, $145,500, $62,500 and $37,500 of principal was paid, respectively. During the years ended December 31, 2023, 2022 and 2021, $1,693,642, $1,319,295 and $1,365,534 of interest was expensed, respectively. During 2024, through June 30, 2024, $84,500 of principal and $1,110,261 of interest was paid.

On December 23, 2016, we entered into an agreement with Knight Therapeutics, Inc. for the distribution rights of FOCUSfactor in Canada. In conjunction with this agreement, we are required to pay Knight Therapeutics 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. On and after February 15, 2021, the agreement automatically renews for additional one-year terms unless either party gives notice of nonrenewal at least 180 days prior to the end of the then-current term. During the year ended December 31, 2023, we expensed $133,502 Canadian dollars ($98,939 U.S. Dollars). During the year ended December 31, 2022, we expensed $114,363 Canadian dollars (US Dollars $87,920). During the year ended December 31, 2021, we expensed $123,023 Canadian dollars (US Dollars $98,174). As of December 31, 2023, 2022 and 2021, the total outstanding balance was $549,229, $415,728 and $301,364 Canadian dollars, respectively. In U.S. Dollars, the total outstanding balance was $415,272, $306,932 and $237,716 as of December 31, 2023, 2022 and 2021, respectively. As of June 30, 2024, the total outstanding balance was $549,229 Canadian dollars ($403,936 U.S. Dollars). The outstanding distribution fees have been added to the related party notes payable.

On December 23, 2016, we entered into an agreement with Knight Therapeutics, Inc. for the distribution rights of Hand MD in Canada. In conjunction with this agreement, we are required to pay Knight Therapeutics a distribution fee equal to 60% of gross sales for sales achieved through a direct sales channel until the sales in the calendar year equal the

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