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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repay $2.7 million of outstanding amounts under promissory notes with Kenek Brands Inc., with the remaining amounts for general corporate purposes. As of the date of this prospectus, there was approximately $2.8 million outstanding under promissory notes with Kenek Brands Inc. Such notes do not have a set interest rate or maturity date. The proceeds from the promissory notes were used for general corporate purposes. Jack Ross, our Chief Executive Officer, is the owner of Kenek Brands Inc. and its sole officer and director. See “Certain Relationships and Related Party Transactions” for more information. As of the date of this prospectus, we cannot predict with certainty all of the particular uses for the net proceeds to be received upon the closing of this offering or the amounts that we will actually spend on each allocation. As a result, our management will have broad discretion over how these proceeds are used.

Pending out use of the net proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation investments, including short-term, investment-grade, interest-bearing instruments and U.S. government securities.

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MARKET FOR OUR COMMON STOCK

As a result of amendments to Exchange Act Rule 15c2-11, because we do not presently make current information publicly available, our common stock was shifted from the OTC Markets Group, Inc. Pink tier to the OTC Expert Market on September 28, 2021, which means that there are no longer publicly-available quotations of our common stock. Prior to September 28, 2021, shares of our common stock were quoted on the OTC Pink under the symbol “SNYR.” Although our shares were quoted on the OTC Pink from July 2020 to September 2021, because trading on the OTC Pink was infrequent and limited in volume, the prices at which such transactions occurred may not necessarily reflect the price that would be paid for our common stock in a more liquid market. From April 2014 to July 2020, our common stock was quoted on the OTC Markets Group, Inc. OTCQB under the symbol “SNYR.” As of October 15, 2024, there were approximately 37 record holders of our common stock.

We have received approval to list our common stock on the Nasdaq Global Market under the symbol “SNYR.” However, we cannot assure you that a liquid trading market for our common stock will develop or be sustained after this offering. You may not be able to sell your shares quickly or at the market price if trading in our common stock is not active. See “Underwriting” for more information regarding our arrangements with the underwriters and the factors considered in setting the public offering price.

DIVIDEND POLICY

Since our inception, we have not paid any dividends on our common stock, and we currently expect that, for the foreseeable future, all earnings, if any, will be retained for use in the development and operation of our business. In the future, our Board may decide, at its discretion, whether dividends may be declared and paid to holders of our common stock.

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2024:

•        on an actual basis, giving effect to the 1-for-11.9 reverse stock split that was effected on September 11, 2024; and

•        on an as adjusted basis to give effect to the issuance and sale by us in this offering of 1,150,000 shares of our common stock at the public offering price of $9.00 per share, after deducting the underwriting discounts and commissions and estimated offering expenses that we expect to pay, and giving effect to the application of proceeds from this offering for the repayment of certain indebtedness as described in “Use of Proceeds.”

This table should be read in conjunction with, and is qualified in its entirety by reference to, “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes appearing elsewhere in this prospectus.

As of June 30, 2024

Actual As Adjusted

Cash and cash equivalents $	87,293 7,328,571

Capitalization:

Current debt:

Current portion of long-term notes payable, net of debt discount and debt issuance cost, related party $	2,000,000 2,000,000

Short term loans payable, related party, net of debt discount 1,181,222 —

Current portion of long term debt 5,887,602 5,887,602

Total current debt 9,068,824 7,887,602

Long-term debt:

Note payable, net of debt discount, related party 10,333,053 10,333,053

Loans payable 12,057,022 12,057,022

Total long-term debt 22,390,075 22,390,075

Stockholders’ deficit:

Common stock, $0.00001 par value; 300,000,000 shares authorized; 7,553,726 shares issued and outstanding, actual; and 8,703,726 shares issued and outstanding, as adjusted 76 87

Additional paid in capital 19,153,318 27,575,797

Accumulated other comprehensive income 84,906 84,906

Accumulated deficit (45,116,573	) (45,116,573	)

Total stockholders’ deficit (25,878,273	) (17,455,783	)

Total Capitalization $	5,580,626 12,821,894

Unless we indicate otherwise, all information in this Capitalization section:

•        assumes no exercise by the underwriters of their over-allotment option;

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

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

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DILUTION

If you invest in our common stock in this offering, your interest will be diluted to the extent of the difference between the public offering price per share of our common stock and the as adjusted net tangible book value per share of our common stock immediately after the closing of this offering.

Our historic net tangible book value of our common stock as of June 30, 2024 was approximately $(26.2 million), or $(3.47) per share, based on the number of shares of our common stock outstanding as of June 30, 2024. Historic net tangible book value per share represents our total tangible assets less our total liabilities, divided by the number of outstanding shares of common stock. The per share data gives effect to the 1-for-11.9 reverse stock split of our common stock, which was effected on September 11, 2024.

After giving effect to the receipt of the net proceeds from our sale of 1,150,000 shares of common stock in this offering at the public offering price of $9.00 per share, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, and giving effect to the application of proceeds from this offering for the repayment of certain indebtedness as described in “Use of Proceeds,” our as adjusted net tangible book value as of June 30, 2024 would have been $(17.8 million), or $(2.05) per share. This represents an immediate increase in as adjusted net tangible book value of $1.42 per share to our existing stockholders and an immediate dilution of $11.05 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:

Public offering price per share $	9.00

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 $	1.42

As adjusted net tangible book value per share as of June 30, 2024 after this offering (2.05	)

Dilution in net tangible book value per share to new investors in this offering $	11.05

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 $(1.84) per share, representing an immediate increase to existing stockholders of $1.63 per share, and immediate dilution to new investors in this offering of $10.84 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, before deducting underwriting discounts and commissions and estimated offering expenses payable by us in connection with this offering; and

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

Shares Purchased Total Consideration Average Price Per Share

Number Percent Amount Percent

Existing stockholders 7,553,726 87% $	19,153,394 65% $	2.54

New investors 1,150,000 13% 10,350,000 35% $	9.00

Total 8,703,726 100.0% $	29,503,394 100.0% $	3.39

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 85% and 62%, respectively, and the number of shares held and the percentage of total consideration paid by new investors would increase to 15% and 38%, respectively.

The foregoing calculations exclude: