SEC Filing Document

Company: Synergy CHC Corp.
Ticker: SNYR
CIK: 1562733
Filing Type: S-1/A
Document Type: S-1/A
Date Filed: 2024-09-16
Accession Number: 0001213900-24-079034
Exchange: Nasdaq
SIC Code: 2833
SIC Description: Medicinal Chemicals & Botanical Products
URL: https://www.sec.gov/Archives/edgar/data/1562733/000121390024079034/ea0208324-09.htm

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of June 30, 2024, would have been $(8.8 million), or $(0.92) per share. This represents an immediate increase in as adjusted net tangible book value of $2.55 per share to our existing stockholders and an immediate dilution of $10.92 per share to investors purchasing common stock in this offering. We calculate dilution per share to new investors by subtracting the historic net tangible book value per share from the public offering price paid by the new investor. The following table illustrates the dilution to new investors on a per share basis: Assumed public offering price per share $ 10.00 Historic net tangible book value (deficit) per share as of June 30, 2024 $ (3.47 ) Increase in net tangible book value per share attributable to new investors in this offering $ 2.55 As adjusted net tangible book value per share as of June 30, 2024 after this offering (0.92 )

Dilution in net tangible book value per share to new investors in this offering $	10.92

Each $1.00 increase (decrease) in the assumed public offering price of $10.00 per share would increase (decrease) our as adjusted net tangible book value per share after this offering by $0.19 per share and the dilution to new investors by $0.81 per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

If the underwriters’ option to purchase additional shares to cover over-allotments is exercised in full, the as adjusted net tangible book value per share after giving effect to this offering would be $(0.61) per share, representing an immediate increase to existing stockholders of $2.86 per share, and immediate dilution to new investors in this offering of $10.61 per share.

The following table summarizes, as of June 30, 2024, on the as adjusted basis described above:

•        the total consideration paid to us by our existing stockholders and by new investors purchasing common stock in this offering, assuming a public offering price of $10.00 per share (the midpoint of the range set forth on the cover page of this prospectus), before deducting underwriting discounts and commissions and estimated offering expenses payable by us in connection with this offering; and

•        the average price per share paid by existing stockholders and by new investors purchasing shares in this offering.

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Shares Purchased Total Consideration Average Price Per Share

Number Percent Amount Percent

Existing stockholders 7,553,726 79% $	19,153,394 49% $	2.54

New investors 2,000,000 21% 20,000,000 51% $	10.00

Total 9,553,726 100.0% $	39,153,394 100.0% $	4.10

A $1.00 increase (decrease) in the assumed public offering price of $10.00 per share would increase (decrease) total consideration paid by new investors by $1.86 million and increase (decrease) the total consideration paid to us by new investors by 11%, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

If the underwriters’ option to purchase additional shares to cover over-allotments is exercised in full, the number of shares held and the percentage of total consideration paid by the existing stockholders after this offering would be reduced to 77% and 45%, respectively, and the number of shares held and the percentage of total consideration paid by new investors would increase to 23% and 55%, respectively.

The foregoing calculations exclude:

•        336,136 shares of common stock issuable upon the exercise of outstanding options at a weighted exercise price of $7.29 per share; and

•        1,220,588 shares of common stock reserved for future issuance pursuant to our 2014 Equity Incentive Plan.

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MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our results of operations and financial condition should be read together with “Summary Historical Consolidated Financial and Other Data” and the financial statements and related notes included elsewhere in this prospectus. Such discussion and analysis reflects our historical results of operations and financial position and does not give effect to the completion of this offering. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” and elsewhere in this prospectus.

Overview

We are a provider of consumer health care, beauty, and lifestyle products. Our current brand portfolio consists of two core brands: FOCUSfactor, a clinically-tested brain health supplement (this study was performed independently and is not related to any FDA-approved IND application) that has been shown to improve memory, concentration and focus and Flat Tummy, a lifestyle brand that provides a suite of nutritional products to help women achieve their weight management goals.

Our management’s discussion and analysis of our financial condition and results of operations are only based on our current business and should be read in conjunction with our unaudited interim condensed consolidated financial statements and audited consolidated financial statements and accompanying notes thereto included elsewhere in this prospectus. Key factors affecting our results of operations include revenues, cost of revenue, operating expenses and income and taxation.

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.

Six Months Ended June 30, 2024 Six Months Ended June 30, 2023 Year Ended December 31, 2023 Year Ended December 31, 2022

(Unaudited) (Unaudited)

Net income (loss) $	1,235,716 $	2,463,257 $	6,338,750 $	(32,631,288	)

Interest income (761	) (789	) (1,616	) (569	)

Interest expense 1,855,508 1,720,561 4,236,149 6,450,365

Taxes 306,571 52,262 234,980 32,172

Depreciation and amortization 66,667 — 33,333 340,000

EBITDA $	3,463,701 $	4,235,291 $	10,841,596 $	(25,809,320	)

EBITDA is considered non-GAAP financial measures. 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.

Results of Operations for the Six Months Ended June 30, 2024 and June 30, 2023

During both the six months ended June 30, 2024 and 2023, we focused on developing our currently owned brands into new markets and by product extensions. Our objective is to grow our two targeted verticals (Nutraceuticals and RTDs) to provide a balanced and synergistic portfolio that drives consumer demand via multiple channels. Our Nutraceuticals vertical consists of FOCUSfactor, including RTDs, and Flat Tummy consumables.

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Revenue

For the six months ended June 30, 2024, we had revenue of $17,436,703 from sales of our products, as compared to revenue of $18,753,705 for the six months ended June 30, 2023. The revenue is comprised of the following categories:

June 30, 2024 June 30, 2023

Nutraceuticals $	17,436,703 $	18,739,201

Consumer Goods — 14,504

For the six months ended June 30, 2024, our Nutraceuticals revenue consisted of $14,787,546 from our FOCUSfactor brand and $2,649,157 from our Flat Tummy brand, as compared to $15,104,463 and $3,634,737, respectively, for the six months ended June 30, 2023.

We had a decrease in Nutraceuticals revenue in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 due to: (i) the launch of our FOCUSfactor vision product line to some of our major retailers, such as CVS, Walmart and Costco in 2023, and (ii) a delay in a significant shipment of FOCUSfactor supplements due to delayed receipt of key ingredients from a supplier in the second quarter of 2024, which pushed the shipment into the third quarter of 2024. This expansion included SKUs within our FOCUSfactor vision line as well as focus and energy Ready-to-Drink (RTD). The decrease was due primarily to sales volume increases in 2023, as prices for our products did not decrease year-over-year. We had a decrease in Consumer Goods revenue in 2024 as compared to 2023 due to no longer selling consumer goods products.

Cost of Revenue

For the six months ended June 30, 2024, our cost of revenue was $5,086,029. Our cost of revenue for the six months ended June 30, 2023, was $5,323,622. The decrease in cost of sales was primarily due to the decrease in revenue.

Gross Profit

Gross profit was $12,350,674, or 71% of revenue, for the six months ended June 30, 2024, as compared to gross profit of $13,430,083, or 72% of revenue, for the same period in 2023, a decrease of $1,079,409, or 8%. The decrease in gross profit is directly related to the decrease in net sales.

Operating Expenses

Selling and Marketing Expenses