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

Chunk 57 of 67
Word Count: 1479
Character Count: 9925

Document Content:

Net income 6,338,750 6,338,750 Balance as of December 31, 2023 7,553,726 $ 76 $ 19,148,707 $ (102,467 ) $ (46,352,289 ) $ (27,305,973 ) The accompanying notes are an integral part of these consolidated financial statements Table of Contents Synergy CHC Corp. Consolidated Statements of Cash Flows For the year ended December 31, 2023 For the year ended December 31, 2022 Cash Flows from Operating Activities Net income (loss) $ 6,338,750 $ (32,631,288 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Amortization of debt issuance cost 48,610 65,026 Depreciation and amortization 33,333 340,000 Gain on settlement of liabilities (4,635,986 ) — Impairment of intangible assets — 1,204,167 Foreign currency transaction (gain) loss (105,192 ) 287,096 Bad debts — 222,357 Remeasurement gain on translation of foreign subsidiary (1,517 ) (21,110 ) Non cash implied interest 29,401 31,817 Impairment of fixed assets — 9,778

Accrual of loan success fee and warrants converted to loan 83,250 3,000,000

Write-off of inventory 251,021 12,456,346

Changes in operating assets and liabilities:

Accounts receivable 1,378,620 1,773,144

Loan receivable, related party (51,245	) (392,536	)

Inventory 3,990,456 (7,464,832	)

Prepaid expenses (288,789	) 1,499,875

Prepaid expense, related party (369,427	) (131,894	)

Income taxes receivable 14,339 34,613

Income taxes payable 185,665 —

Contract liabilities 9,005 (12,096	)

Short term disputed payables — 8,433,363

Accounts payable and accrued liabilities (6,645,324	) 3,523,160

Accounts payable, related party 156,759 (658,425	)

Net cash used provided by (used in) operating activities 421,729 (8,431,439	)

Cash Flows from Investing Activities — —

Cash Flows from Financing Activities

Advances from related party 1,170,000 —

Repayments of advances to related party (1,170,000	) —

Repayment of notes payable, related party (145,500	) (62,500	)

Proceeds from notes payable 360,000 8,315,000

Proceeds from note payable, related party — 2,000,000

Repayment of notes payable (2,305,282	) (1,289,699	)

Net cash (used in) provided by financing activities (2,090,782	) 8,963,301

Effect of exchange rate on cash, cash equivalents and restricted cash (124,856	) 198,914

Net (decrease) increase in cash, cash equivalents and restricted cash (1,793,909	) 730,776

Cash, Cash Equivalents and restricted cash, beginning of year 2,526,443 1,795,667

Cash, Cash Equivalents and restricted cash, end of year $	732,534 $	2,526,443

Table of Contents

Synergy CHC Corp.
Consolidated Statements of Cash Flows — (Continued)

For the year ended December 31, 2023 For the year ended December 31, 2022

Supplemental Disclosure of Cash Flow Information:

Cash paid during the period for:

Interest $	4,174,895 $	1,271,470

Income taxes $	— $	—

Supplemental Disclosure of Non-cash Investing and Financing Activities:

Related party notes payable issued for the acquisition of intangible asset $	450,000 $	—

Related party royalties converted to related party notes payable $	536,730 $	—

Accounts payable converted to loan payable upon settlement $	5,802,445 $	—

Capitalization of accrued interest $	— $	2,607,106

The accompanying notes are an integral part of these consolidated financial statements

Table of Contents

SYNERGY CHC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Nature of the Business

Synergy CHC Corp. (“Synergy”, “we”, “us”, “our” or the “Company”) (formerly Synergy Strips Corp.) was incorporated on December 29, 2010 in Nevada under the name “Oro Capital Corporation.” On April 21, 2014, the Company changed its fiscal year end from July 31 to December 31. On April 28, 2014, the Company changed its name to “Synergy Strips Corp.”. On August 5, 2015, the Company changed its name to “Synergy CHC Corp.”

The Company is a consumer health care company that is in the process of building a portfolio of best-in-class consumer product brands. Synergy’s strategy is to grow its portfolio both organically and by further acquisition.

Effective January 1, 2019 the Company has merged the U.S. Subsidiaries (Neuragen Corp., Breakthrough Products Inc., Sneaky Vaunt Corp., and The Queen Pegasus Corp.) into the parent company.

Synergy is the sole owner of two subsidiaries: NomadChoice Pty Ltd. and Synergy CHC Inc. and the results have been consolidated in these statements.

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).

All amounts referred to in the notes to the consolidated financial statements are in United States Dollars ($) unless stated otherwise.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. At December 31, 2023 and 2022 significant estimates included are assumptions about collection of accounts receivable, current income taxes, deferred income taxes valuation allowance, useful life of intangible assets, impairment analysis of intangible assets, accrual of sales returns, and accrual of legal expense. The results of any changes in accounting estimates are reflected in the financial statements in the period in which the changes become evident. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period that they are determined to be necessary.

Cash and Cash Equivalents

The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of December 31, 2023, and 2022, the Company had no cash equivalents. The Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (FDIC) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. At December 31, 2023 and 2022, the uninsured balances amounted to $441,711 and $2,170,448, respectively.

Table of Contents

SYNERGY CHC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 — Summary of Significant Accounting Policies (cont.)

Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows.

December 31, 2023 December 31, 2022

Cash and cash equivalents $	632,534 $	1,926,443

Restricted cash 100,000 600,000

Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $	732,534 $	2,526,443

Amounts included in restricted cash represent the amount held for credit card collateral and professional retainer.

Intangible Assets

We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. All of our intangible assets are subject to amortization. Intangible assets are amortized on a straight line basis over the useful lives.

Long-lived Assets

Long-lived assets include equipment and intangible assets other than those with indefinite lives. We assess the carrying value of our long-lived asset groups when indicators of impairment exist and recognize an impairment loss when the carrying amount of a long-lived asset is not recoverable when compared to undiscounted cash flows expected to result from the use and eventual disposition of the asset.

Indicators of impairment include significant underperformance relative to historical or projected future operating results, significant changes in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry or economic trends. When indications of impairment arise for a particular asset or group of assets, we assess the future recoverability of the carrying value of the asset (or asset group) based on an undiscounted cash flow analysis. If carrying value exceeds projected, net, undiscounted cash flows, an additional analysis is performed to determine the fair value of the asset (or asset group), typically a discounted cash flow analysis, and an impairment charge is recorded for the excess of carrying value over fair value.

Revenue Recognition

The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s (“FASB”), Accounting Standards Codification (“ASC”) ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied.