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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Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/ s / RBSM LLP

We have served as the Company’s auditor since 2014.

New York, NY

June 26, 2024

Table of Contents

Synergy CHC Corp.
Consolidated Balance Sheets

December 31, 2023 December 31, 2022

Assets

Current Assets

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

Restricted cash 100,000 600,000

Accounts receivable, net 2,106,094 3,484,714

Loan receivable (related party) 4,459,996 4,408,751

Prepaid expenses (including related party amount of $501,321 and $131,894, respectively) 797,985 139,769

Income taxes receivable — 14,339

Inventory, net 3,726,240 7,967,717

Total Current Assets 11,822,849 18,541,733

Intangible assets, net 416,667 —

Total Assets $	12,239,516 $	18,541,733

Liabilities and Stockholders’ Deficit

Current Liabilities:

Accounts payable and accrued liabilities (including related party payable of $26,885 and $418,197, respectively) $	11,727,490 $	20,797,509

Short term disputed payables — 8,433,363

Income taxes payable 185,665 —

Contract liabilities 14,202 5,197

Short term loans payable, net of debt discount 2,094,525 1,005,385

Current portion of long-term notes payable, net of debt discount and debt issuance cost, related party — 21,068

Total Current Liabilities 14,021,882 30,262,522

Long-term Liabilities:

Notes payable, net of debt discount, related parties 12,426,997 11,463,656

Notes payable 13,096,610 10,335,422

Total long-term liabilities 25,523,607 21,799,078

Total Liabilities 39,545,489 52,061,600

Commitments and contingencies

Stockholders’ Deficit:

Common stock, $0.00001 par value; 300,000,000 shares authorized; 89,889,074 and 89,889,074, shares issued and outstanding, respectively 899 899

Additional paid in capital 19,147,884 19,147,884

Accumulated other comprehensive (loss) income (102,467	) 22,389

Accumulated deficit (46,352,289	) (52,691,039	)

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

Total Liabilities and Stockholders’ Deficit $	12,239,516 $	18,541,733

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

Table of Contents

Synergy CHC Corp.
Consolidated Statements of Operations and Other Comprehensive Income (Loss)

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

Revenue $	42,777,633 $	38,410,674

Cost of Sales 10,697,323 25,112,988

Gross Profit 32,080,310 13,297,686

Operating expenses

Selling and marketing 15,188,528 28,504,524

General and administrative 6,051,703 9,197,068

Reserve for bad debts — 222,357

Impairment of assets — 1,204,167

Depreciation and amortization 33,333 340,000

Total operating expenses 21,273,564 39,468,116

Income (loss) from operations 10,806,746 (26,170,430	)

Other (income) expenses

Interest income (1,616	) (569	)

Interest expense 4,236,149 6,450,365

Remeasurement gain on translation of foreign subsidiary (1,517	) (21,110	)

Total other expenses 4,233,016 6,428,686

Net income (loss) before income taxes 6,573,730 (32,599,116	)

Income tax expense 234,980 32,172

Net income (loss) after tax $	6,338,750 $	(32,631,288	)

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

Weighted average common shares outstanding

Basic and Diluted 89,889,074 89,889,074

Comprehensive income (loss):

Net income (loss) $	6,338,750 $	(32,631,288	)

Foreign currency translation adjustment (124,856	) 198,914

Comprehensive income (loss) $	6,213,894 $	(32,432,374	)

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

Table of Contents

Synergy CHC Corp.
Consolidated Statements of Stockholders’ Deficit

Common stock Additional Paid in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Deficit

Shares Amount

Balance as of December 31, 2021 89,889,074 $	899 $	19,147,884 $	(176,525	) $	(20,059,751	) $	(1,087,493	)

Foreign currency translation gain 198,914 198,914

Net loss (32,631,288	) (32,631,288	)

Balance as of December 31, 2022 89,889,074 $	899 $	19,147,884 $	22,389 $	(52,691,039	) $	(33,519,867	)

Foreign currency translation loss (124,856	) (124,856	)

Net income 6,338,750 6,338,750

Balance as of December 31, 2023 89,889,074 $	899 $	19,147,884 $	(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

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

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.