UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from _________to _________
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
| | ||
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
| The |
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No
As of May 11, 2026, there were 15,079,956 shares
of common stock, par value $0.00001 per share, of the registrant issued and
TABLE OF CONTENTS
i
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements.
Synergy CHC Corp.
Condensed Interim Financial Statements
For the Three Months Ended March 31, 2026 and 2025
Unaudited
(Expressed in U.S. Dollars)
1
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL
REPORTING CONDENSED INTERIM FINANCIAL REPORTING
The accompanying unaudited condensed interim financial statements of Synergy CHC Corp. (“the Company”) have been prepared by management in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Management acknowledges responsibility for the preparation and presentation of the unaudited condensed interim financial statements, including responsibility for significant accounting estimates and the choice of accounting principles and methods that are appropriate to the Company’s circumstances.
2
Synergy CHC Corp.
Condensed Consolidated Balance Sheets
| March 31, 2026 | December 31, 2025 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | | |||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses (including related party amount of $ | ||||||||
| Inventory, net | ||||||||
| Total Current Assets | ||||||||
| Intangible assets, net | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities (including payable to shareholder of $ | $ | $ | ||||||
| Income taxes payable | ||||||||
| Contract liabilities | ||||||||
| Short term loans payable, net of debt discount, related party | ||||||||
| Current portion of notes payable, net of debt discount | ||||||||
| Total Current Liabilities | ||||||||
| Long-term Liabilities: | ||||||||
| Notes payable, net of debt discount | ||||||||
| Total long-term liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ Deficit: | ||||||||
| Common stock, $ | ||||||||
| Additional paid in capital | ||||||||
| Common stock to be issued | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Less: Treasury stock ( | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
3
Synergy CHC Corp.
Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income
| For the three months ended | For the three months ended | |||||||
| March 31, 2026 | March 31, 2025 | |||||||
| Revenue | ||||||||
| Product Sales | $ | $ | | |||||
| License Revenue | ||||||||
| Total Revenue | ||||||||
| Cost of Sales | ||||||||
| Gross Profit | ||||||||
| Operating expenses | ||||||||
| Selling and marketing | ||||||||
| General and administrative | ||||||||
| Depreciation and amortization | ||||||||
| Total operating expenses | ||||||||
| (Loss) Income from operations | ( | ) | ||||||
| Other (income) expenses | ||||||||
| Interest income | ( | ) | ( | ) | ||||
| Interest expense | ||||||||
| Remeasurement loss on translation of foreign subsidiary | ||||||||
| Total other expenses | ||||||||
| Net (loss) income before income taxes | ( | ) | ||||||
| Income tax benefit | ||||||||
| Net (loss) income after tax | $ | ( | ) | $ | ||||
| Net (loss) income per share – basic | $ | ( | ) | $ | ||||
| Net (loss) income per share – diluted | $ | ( | ) | $ | ||||
| Weighted average common shares outstanding | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
| Comprehensive (loss) income: | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Foreign currency translation adjustment | ( | ) | ||||||
| Comprehensive (loss) income | $ | ( | ) | $ | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
4
Synergy CHC Corp.
Unaudited Condensed Consolidated Statements of Stockholders’ Deficit
| Common stock | Additional Paid in | Accumulated Other Comprehensive Income | Treasury | Accumulated | Total Stockholders’ | |||||||||||||||||||||||
| Shares | Amount | Capital | (Loss) | stock | Deficit | Deficit | ||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||
| Foreign currency translation loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issuance of common stock for loan financing | ||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||
| Common stock | Additional Paid in | Common stock to be | Accumulated Other Comprehensive Income | Treasury | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||||
| Shares | Amount | Capital | issued | (Loss) | stock | Deficit | Deficit | |||||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Foreign currency translation income | ||||||||||||||||||||||||||||||||
| Fair value of vested stock options | ||||||||||||||||||||||||||||||||
| Common stock to be issued for accounts receivable advance financing | ||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance as of March 31, 2026 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
5
Synergy CHC Corp.
Unaudited Condensed Consolidated Statements of Cash Flows
| For the three months ended | For the three months ended | |||||||
| March 31, 2026 | March 31, 2025 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
| Amortization of debt discount and debt issuance cost | ||||||||
| Depreciation and amortization | ||||||||
| Stock based compensation | ||||||||
| Foreign currency transaction loss (gain) | ( | ) | ||||||
| Remeasurement loss (gain) on translation of foreign subsidiary | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Other receivables | ||||||||
| Loan receivable, related party | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Prepaid expense, related party | ( | ) | ( | ) | ||||
| Income taxes payable | ( | ) | ( | ) | ||||
| Contract liabilities | ( | ) | ( | ) | ||||
| Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
| Accounts payable, related party | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Cash Flows from Financing Activities | ||||||||
| Advances from related party | ||||||||
| Repayment of notes payable, related party | ( | ) | - | |||||
| Proceeds from notes payable | ||||||||
| Payment of loan financing fees | ( | ) | ||||||
| Repayment of notes payable | ( | ) | ( | ) | ||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Effect of exchange rate on cash, cash equivalents and restricted cash | ( | ) | ||||||
| Net decrease in cash, cash equivalents and restricted cash | ( | ) | ( | ) | ||||
| Cash and restricted cash, beginning of year | ||||||||
| Cash and restricted cash, end of period | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Supplemental Disclosure of Noncash Investing and Financing Activities: | ||||||||
| Issuance of common stock for accounts receivable advance financing | $ | $ | ||||||
| Loan financing fees, accrued | $ | $ | ||||||
| Capitalized interest on senior debt | $ | $ | ||||||
| Common stock to be issued for accounts receivable advance financing | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
6
Synergy CHC Corp.
NOTES TO UNAUDITED CONDENSED 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
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 acquisitions.
Synergy is the sole owner of four subsidiaries: NomadChoice Pty Ltd., Hand MD Corp., Synergy CHC Inc. and Synergy CHC Mexico, and the results have been consolidated in these statements.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements as of March 31, 2026 and for the three months ended March 31, 2026 and 2025 are unaudited. The accompanying condensed consolidated financial statements have been prepared in conformity with US GAAP. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2026. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2025 and footnotes thereto, included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 1, 2026.
All amounts referred to in the notes to the condensed consolidated financial statements are in United States Dollars ($) unless stated otherwise.
The condensed 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 condensed 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. 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, estimates used in the fair value calculation of stock based compensation, assumptions used in Black-Scholes-Merton, or BSM, valuation methods, such as expected volatility, risk-free interest rate and expected dividend rate, 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 March 31, 2026 and December 31, 2025, the Company had
cash equivalents. The Company maintains its cash 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 $
Restricted Cash
The following table provides a reconciliation of cash 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.
| March 31, 2026 | December 31, 2025 | |||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash and restricted cash shown in the statement of cash flows | $ | $ | ||||||
7
Amounts included in restricted cash represent amounts held for credit card collateral.
Intangible Assets
The Company evaluates the recoverability of intangible assets periodically and takes into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. All of the 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 intangible assets other than those with indefinite lives. The Company assesses the carrying value of its long-lived asset groups when indicators of impairment exist and recognizes 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 the Company’s use of the assets or in its 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, the Company assesses 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”) 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.
The Company recognizes revenue upon shipment from its fulfillment centers. Certain of the Company’s distributors may also perform a separate function as a co-packer on the Company’s behalf. In such cases, ownership of and title to the Company’s products that are co-packed on the Company’s behalf by those co-packers who are also distributors, passes to such distributors when the Company is notified by them that they have taken transfer or possession of the relevant portion of the Company’s finished goods. Freight billed to customers is presented as revenues, and the related freight costs are presented in selling and marketing expense. Cancelled orders are refunded if not already dispatched, refunds are only paid if stock is damaged in transit, discounts are only offered with specific promotions and orders will be refilled if lost in transit. The Company recognizes revenue for its digital products in the month the download by the customer occurs.
All product sales were initiated based upon the retailer’s purchase orders at a fixed transaction price and revenues recognized when the products were shipped to the Company’s customers.
The Company accounts for its intellectual property (IP) license revenue, which provides the Company’s customer with rights to use the Company’s IP, in accordance with ASC 606. A license may be perpetual or time limited in its application. In accordance with ASC 606, the Company will continue to recognize revenue from IP license at the time of delivery when the customer accepts control of the IP, as the IP is functional without professional services, updates and technical support. The Company has concluded that its IP license is distinct as the customer can benefit from the functional IP on its own. Therefore, the Company has determined the right to use its IP was satisfied at a point in time (on the date the rights to the IP were granted).
Contract Assets
The Company does not have any contract assets such as work-in-process. All trade receivables on the Company’s condensed consolidated balance sheet are from contracts with customers.
8
Contract Costs
Costs incurred to obtain a contract are capitalized if the Company expects to recover those costs. As a practical expedient, costs to obtain a contract that are short term in nature are expensed as incurred. The Company does not have any contract costs capitalized as of March 31, 2026 and December 31, 2025.
Contract Liabilities
The Company’s contract liabilities consist
of advance customer payments. Contract liability results from transactions in which the Company has been paid for products by customers,
but for which all revenue recognition criteria have not yet been met.
| March 31, 2026 | December 31, 2025 | |||||||
| Beginning balance | $ | $ | ||||||
| Additions | ||||||||
| Recognized as revenue | ( | ) | ( | ) | ||||
| Ending balance | $ | $ | ||||||
Accounts receivable
Accounts receivable are generally unsecured. The
Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management’s evaluation
of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that
likelihood of collection is remote. Any future recoveries are applied against the allowance for doubtful accounts. As of March 31, 2026
and December 31, 2025, the allowance for doubtful accounts was $
Advertising Expense
The Company expenses marketing, promotions and advertising costs as incurred. Such costs are included in selling and marketing expense in the accompanying condensed consolidated statements of operations.
Research and Development
Costs incurred in connection with the development of new products and processing methods are charged to general and administrative expenses as incurred.
Income Taxes
The Company utilizes FASB ASC 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.
The Company generated a deferred tax asset through
net operating loss carry-forward. However, a valuation allowance of
NomadChoice Pty Ltd, the Company’s wholly-owned subsidiary is subject to income taxes in Australia, the jurisdictions in which it operates. Significant judgment is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The company recognizes liabilities for anticipated tax audit issues based on the Company’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.
9
Synergy CHC Inc., a wholly-owned foreign subsidiary, is subject to income taxes in Canada, the jurisdictions in which it operates. Significant judgment is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The company recognizes liabilities for anticipated tax audit issues based on the Company’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.
Synergy CHC Mexico is a wholly-owned foreign subsidiary, and is subject to income taxes in Mexico, the jurisdiction in which it operates. Significant judgment is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The company recognizes liabilities for anticipated tax audit issues based on the Company’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.
Net Earnings (Loss) Per Common Share
The Company computes earnings per share under
ASC subtopic 260-10, Earnings Per Share. Basic earnings (loss) per share is computed by dividing the net income (loss) (the numerator)
by the weighted average number of shares of common stock outstanding (the denominator) during the reporting periods. Diluted earnings
per share is computed by increasing the denominator by the weighted average number of additional shares that could have been outstanding
from securities convertible into common stock (using the “treasury stock” method), unless their effect on net income per share
is anti-dilutive. As of March 31, 2026 and 2025, options to purchase
The following is a reconciliation of the number of shares used in the calculation of basic and diluted (loss) earnings per share for the three months ended March 31, 2026 and 2025:
| For the three months ended | ||||||||
| March 31, 2026 | March 31, 2025 | |||||||
| Net (loss) income after tax | $ | ( | ) | $ | ||||
| Weighted average common shares outstanding | ||||||||
| Incremental shares from the assumed exercise of dilutive stock options | ||||||||
| Dilutive potential common shares | ||||||||
| Net (loss) earnings per share: | ||||||||
| Basic | $ | ( | ) | $ | ||||
| Diluted | $ | ( | ) | $ | ||||
The following securities were not included in the computation of diluted net (loss) earnings per share as their effect would have been antidilutive, or are non-exercisable:
| For the three months ended | ||||||||
| March 31, 2026 | March 31, 2025 | |||||||
| Options to purchase common stock | ||||||||
| Warrants to purchase common stock | ||||||||
Fair Value Measurements
The Company measures and discloses the fair value of assets and liabilities required to be carried at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value, and enhances fair value measurement disclosure.
10
ASC 825 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes three levels of inputs that may be used to measure fair value:
| Level 1 - | Quoted prices for identical assets or liabilities in active markets to which the Company has access at the measurement date. |
| Level 2 - | Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly. |
| Level 3 - | Unobservable inputs for the asset or liability. |
The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Our financial instruments consisted primarily of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities and short term and long-term loans payable. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.
As of both March 31, 2026 and December 31, 2025, the Company has determined that there were no assets or liabilities measured at fair value on a recurring basis.
Inventory
Inventory consists of raw materials, components and finished goods. The Company’s inventory is stated at the lower of cost (FIFO cost basis) or net realizable value. Finished goods include the cost of labor to assemble the items.
Foreign Currency Translation
The functional currency of one of the Company’s foreign subsidiaries (NomadChoice Pty Ltd.) is the U.S. Dollar. The Company’s foreign subsidiary maintains its records using local currency (Australian Dollar). All monetary assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at quarter end exchange rates, non-monetary assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at transaction day exchange rates.
Income and expense items related to non-monetary items were translated at exchange rates prevailing during the transaction date and other incomes and expenses were translated using average exchange rate for the period. The resulting translation adjustments, net of income taxes, were recorded in statements of operations as Remeasurement gain or loss on translation of foreign subsidiary.
The functional currency of one of the Company’s foreign subsidiaries (Synergy CHC Inc.) is the Canadian Dollar (CAD). The Company’s foreign subsidiary maintains its records using local currency (CAD). All assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at period end exchange rates and stockholders’ equity is translated at the historical rates. Income and expense items were translated using average exchange rate for the period. The resulting translation adjustments, net of income taxes, are reported as other comprehensive income and accumulated other comprehensive income in the stockholder’s equity in accordance with ASC 220 – Comprehensive Income.
The functional currency of the Company’s other foreign subsidiary (Synergy CHC Mexico) is the Mexican Peso (MXN). The Company’s foreign subsidiary maintains its records using local currency (MXN). All assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at period end exchange rates and stockholders’ equity is translated at the historical rates. Income and expense items were translated using average exchange rate for the period. The resulting translation adjustments, net of income taxes, are reported as other comprehensive income and accumulated other comprehensive income in the stockholder’s equity in accordance with ASC 220 – Comprehensive Income.
11
The exchange rates used to translate amounts in AUD, CAD and MXN into USD for the purposes of preparing the condensed consolidated financial statements were as follows:
Balance sheet:
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Period-end AUD: USD exchange rate | $ | $ | | |||||
| Period-end CAD: USD exchange rate | $ | $ | ||||||
| Period-end MXN: USD exchange rate | $ | $ | ||||||
Income statement:
| March 31, | March 31, | |||||||
| 2026 | 2025 | |||||||
| Average three months AUD: USD exchange rate | $ | $ | ||||||
| Average three months CAD: USD exchange rate | $ | $ | ||||||
| Average three months MXN: USD exchange rate | $ | $ | ||||||
Translation gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are translated into either Australian Dollars, Canadian Dollars or Mexican Pesos, as the case may be, at the rate on the date of the transaction and included in the results of operations as incurred.
Concentrations of Credit Risk
In the normal course of business, the Company provides credit terms to its customers; however, collateral is not required. Accordingly, the Company performs credit evaluations of its customers and maintains allowances for possible losses which, when realized, were within the range of management’s expectations. From time to time, a higher concentration of credit risk exists on outstanding accounts receivable for a select number of customers due to individual buying patterns.
Warehousing costs
Warehouse costs include all third-party warehouse rent fees and are charged to selling and marketing expenses as incurred. Any additional costs relating to assembly or special pack-outs of the Company’s products are charged to cost of sales.
Product display costs
All displays manufactured and purchased by the Company are for placement of product in retail stores. This also includes all costs for display execution and setup and retail services are charged to cost of sales and expensed as incurred.
Cost of Sales
Cost of sales includes the purchase cost of products sold, all costs associated with getting the products into the retail stores including buying and transportation costs and the hosting of the Company’s online Application.
Debt Issuance Costs
Debt issuance costs consist primarily of arrangement fees, professional fees and legal fees. These costs are netted off with the related loan and are being amortized to interest expense over the term of the related debt facilities.
Shipping Costs
Shipping and handling costs billed to customers are recorded in sales. Shipping costs incurred by the company are recorded in selling and marketing expenses.
Related parties
Parties are considered to be related to the Company if the parties that, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
12
Segment Reporting
Presentation of Financial Statements – Going Concern
Going Concern Evaluation
In connection with preparing unaudited condensed consolidated financial statements for the three months ended March 31, 2026, management evaluated whether there were conditions and events, considered in the aggregate, that raised substantial doubt about the Company’s ability to continue as a going concern within one year from the date that the unaudited condensed consolidated financial statements are issued.
The Company considered the following:
| ● | At March 31, 2026, the Company had an accumulated deficit of $ |
| ● | At March 31, 2026, the Company had a decrease in net revenue of $ |
| ● | At March 31, 2026, the Company had a decrease in net income of $ |
| ● | At March 31, 2026, the Company had a working capital deficit of $ |
| ● | During the three months ended March 31, 2026, the Company used $ |
Ordinarily, conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern relate to the entity’s ability to meet its obligations as they become due.
The Company evaluated its ability to meet its obligations as they become due within one year from the date that the unaudited condensed consolidated financial statements are issued by considering the following:
| ● | The Company entered into a second amendment with its current lender which adjusts various covenants and payment terms. |
| ● | The Company laid off 13 employees in order to right size its overhead expenses. |
| ● | The Company has established an at-the-market (“ATM”) equity
offering program pursuant to which it may issue and sell shares of its common stock from time to time, subject to market conditions and
other factors. Subsequent to March 31, 2026 the Company has drawn down $ |
| ● | The Company has entered into an equity purchase agreement (“ELOC”), pursuant to which it may issue and sell shares of its common stock from time to time, subject to market conditions and other factors (see Note 16). |
Management concluded that the above factors alleviate doubts about the Company’s ability to generate enough cash from operations and other available sources to satisfy its obligations for the next twelve months from the issuance date.
Recent Accounting Pronouncements
In October 2023, the FASB issued ASU No. 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative” (“ASU 2023-06”). ASU 2023-06 amends U.S. GAAP to reflect updates and simplifications to certain disclosure and presentation requirements referred to FASB by the SEC. The targeted amendments incorporate 14 of the 27 disclosures referred by the SEC into codification. Each amendment in ASU 2023-06 is effective on either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. The Company is currently evaluating the impact this update will have on its Condensed Consolidated Financial Statements.
13
In July 2025, the FASB issued ASU No. 2025-05, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets” (“ASU 2025-05”). ASU 2025-05 provides a practical expedient to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The amendments are effective for the fiscal years beginning after December 15, 2025 and interim periods within those annual reporting periods, with early adoption permitted. The adoption of ASU No. 2025-05 has not affected the Company’s Condensed Consolidated Financial Statements.
Note 3 – Income Taxes
The Company utilizes FASB ASC 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.
Deferred income taxes arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or noncurrent depending on the periods in which the temporary differences are expected to reverse. The Company does not have any uncertain tax positions.
For U.S. purposes, the Company has not completed its evaluation of net operating loss (NOL) utilization limitations under Internal Revenue Code, as amended (the “Code”) Section 382/383, change of ownership rules. If the Company has had a change in ownership, the NOLs would be limited or eliminated, as to the amount that could be utilized each year, based on the Code. NOLs attributable to Breakthrough Products, Inc., which are the majority of the Company’s domestic NOLs are Separate Return Limitation Year (SRLY) NOLs. Such losses may generally not be available for use (limited or eliminated).
The Company has not filed its State & Local Income/Franchise tax returns in states it is required to file, as such returns and liability remain open. The Company does not expect this to be a significant liability.
The table below summarizes the differences between the U.S. statutory federal rate and the Company’s estimated effective tax rate for the three months ended March 31, 2026 and 2025:
| March 31, 2026 ($) | March 31, 2026 | March 31, 2025 ($) | March 31, 2025 | |||||||||||||
| U.S. Statutory Rate | $ | ( | ) | ( | )% | $ | % | |||||||||
| AU/CA/MXN rates in excess of the US rate | ( | ) | ( | )% | ( | ) | ( | % | ||||||||
| Increase (decrease) in valuation allowance | % | ( | ) | ( | )% | |||||||||||
| Permanent differences | % | % | ||||||||||||||
| Prior period true up | ( | ) | ( | )% | % | |||||||||||
| Total provision for income taxes | $ | ( | ) | ( | )% | $ | ( | ) | ( | )% | ||||||
The Company has deferred tax assets, which have been fully reserved, as follows as of March 31, 2026 and December 31, 2025:
| March 31, 2026 | December 31, 2025 | |||||||
| Net operating Losses | $ | $ | ||||||
| Obsolete inventory | ||||||||
| Nonstatutory stock options | ||||||||
| Other | ||||||||
| Impairment of intangible asset | ||||||||
| Amortization | ||||||||
| Bad debt reserve | ||||||||
| Other | ||||||||
| Deferred tax asset | ||||||||
| Valuation allowance for deferred tax assets | ( | ) | ( | ) | ||||
| Net deferred tax assets | $ | $ | ||||||
14
The Company had tax benefit of $
Income tax provision (benefit) consists of the following for the three months ended March 31, 2026 and 2025:
| For the Three Months Ended March 31, | ||||||||
| Income tax provision (benefit): | 2026 | 2025 | ||||||
| Current | ||||||||
| Federal | $ | $ | ||||||
| State | ||||||||
| Foreign | ( | ) | ( | ) | ||||
| Total Current | ( | ) | ( | ) | ||||
| Deferred | ||||||||
| Federal | ||||||||
| State | ||||||||
| Foreign | ||||||||
| Total Deferred | ||||||||
| Total income tax benefit | $ | ( | ) | $ | ( | ) | ||
The table below summarizes the (loss) income before taxes for domestic and foreign jurisdictions:
| March 31, 2026 | March 31, 2025 | |||||||
| Domestic (U.S.) | $ | ( | ) | $ | ||||
| Foreign | ( | ) | ( | ) | ||||
| Total | $ | ( | ) | $ | ||||
The table below summarizes the income tax expense for the three months ended March 31, 2026 and 2025:
| March 31, 2026 | March 31, 2025 | |||||||
| Federal | $ | $ | ||||||
| State | ||||||||
| Foreign | ( | ) | ( | ) | ||||
| Total | $ | ( | ) | $ | ( | ) | ||
The Company also has net operating loss carryforwards
of approximately $
Note 4 – Accounts Receivable
Accounts receivable, net of allowances for doubtful accounts, consisted of the following:
| March 31, 2026 | December 31, 2025 | |||||||
| Trade accounts receivable | $ | $ | | |||||
| Less allowances | ( | ) | ( | ) | ||||
| Total accounts receivable, net | $ | $ | ||||||
15
During the three months ended March 31, 2026 and
2025, the Company charged $
Note 5 – Prepaid Expenses
At March 31, 2026 and December 31, 2025, prepaid expenses consisted of the following:
| March 31, 2026 | December 31, 2025 | |||||||
| Advances for inventory | $ | $ | | |||||
| Insurance | ||||||||
| Accounting | ||||||||
| Contract employee, related party | ||||||||
| Rent, related party | ||||||||
| Legal expenses | ||||||||
| Conferences | ||||||||
| Professional fees | ||||||||
| IT expenses | ||||||||
| Payroll | ||||||||
| Miscellaneous | ||||||||
| Total | $ | $ | ||||||
Note 6 – Concentration of Credit Risk
Cash and 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 $
Accounts receivable
As of March 31, 2026 and December 31, 2025, three
customers and one customer accounted for
Major customers
For the three months ended March 31, 2026, three
customers accounted for approximately
Accounts payable
As of March 31, 2026 and December 31, 2025, two
vendors accounted for
Major suppliers
For the three months ended March 31, 2026, one
supplier accounted for approximately
16
Note 7 – Inventory
Inventory consists of finished goods, components and raw materials. The Company’s inventory is stated at the lower of cost (FIFO cost basis) or net realizable value.
The carrying value of inventory consisted of the following:
| March 31, 2026 | December 31, 2025 | |||||||
| Finished goods | $ | $ | ||||||
| Components | ||||||||
| Ingredients | ||||||||
| Total inventory | $ | $ | ||||||
During the three months ended March 31, 2026 and 2025, the Company had inventory write-offs.
Note 8 – Intangible Assets
| March 31, 2026 | December 31, 2025 | |||||||
| License Fee | $ | $ | ||||||
| Less accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
Amortization for both the three months ended March
31, 2026 and 2025 was $
The estimated aggregate amortization expense over each of the next five years is as follows:
| 2026 (remaining) | $ | |||
| 2027 |
Note 9 – Related Party Transactions
The Company paid consulting fees through March
2026 to a company owned by Mr. Jack Ross, Chief Executive Officer of the Company. The Company advanced $
The Company paid rent through March 2026 to a
company owned by Mr. Jack Ross, Chief Executive Officer of the Company. The Company expensed $
On December 23, 2016, the Company entered into
an agreement with Knight Therapeutics (“Knight”), a shareholder of the Company, for the distribution rights of FOCUSfactor
in Canada. In conjunction with this agreement, the Company is required to pay Knight a distribution fee equal to
The Company expensed royalty of $
17
Note 10 – Accounts Payable and Accrued Liabilities
As of March 31, 2026 and December 31, 2025, accounts payable and accrued liabilities consisted of the following:
| March 31, 2026 | December 31, 2025 | |||||||
| Accrued payroll | $ | $ | ||||||
| Legal fees | ||||||||
| Commissions | ||||||||
| Manufacturers | ||||||||
| Promotions | ||||||||
| Accounting Fees | ||||||||
| Freight | ||||||||
| Royalties, shareholder | ||||||||
| Warehousing | ||||||||
| Sales taxes | ||||||||
| Payroll taxes | ||||||||
| Professional Fees | ||||||||
| Interest | ||||||||
| Lender fees | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
The Company has estimated and accrued for its
sales tax liability at $
Note 11 – Notes Payable
The Company’s notes payable at March 31, 2026 and December 31, 2025 are as follows:
| March 31, 2026 | December 31, 2025 | |||||||
| $ | $ | $ | ||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
| Unamortized debt issuance cost and debt discount | ( | ) | ( | ) | ||||
| Total | ||||||||
| Current portion, other | ( | ) | ( | ) | ||||
| Long-term portion, other | $ | $ | ||||||
$2,000,000 February 10, 2022 Loan:
On February 10, 2022, the Company entered into
a promissory note for $
Subsequently and pursuant to the modification
agreement entered into on June 14th, 2023, effective September 9, 2022, the promissory loan would bear all the same characteristics
as the additional $
$6,000,000 March 8, 2022 Loans:
On March 8, 2022, the Company entered into Securities
Purchase Agreements with debenture holders for the Senior Subordinated Debentures in the amount of $
On March 31, 2024, the Company entered into a
Modification Agreement in relation to this loan, which consolidated it with the $
18
On May 30, 2025, the Company entered into a Subordination
Agreement in relation to this loan, whereby this loan becomes subordinated debt to the senior lender ($
“Interest Payment Conditions” means with respect to any payment of interest on any Sanders Note, the satisfaction of the following conditions:
| (a) | as of the date of any such interest payment and immediately after giving effect thereto, no Default or Event of Default has occurred and is continuing; |
| (b) | Liquidity (prior to and after giving effect to such payment) shall not be less than $ |
| (c) | the Fixed Charge Coverage Ratio of the Borrower and its Subsidiaries for the period of 12 fiscal months of the Borrower and its Subsidiaries most recently ended prior to such payment (and, for the avoidance of doubt, without giving effect to such payment for purposes of determining Consolidated Net Interest Expense), shall be not less than 1.20 to 1.00; and |
| (d) | the Administrative Agent shall have received a certificate of an Authorized Officer of the Borrower certifying as to compliance with the preceding clauses and demonstrating (in reasonable detail) the calculation required thereby. |
“Principal Payment Conditions” means with respect to any payment or prepayment of principal on any Sanders Note, the satisfaction of the following conditions:
| (a) | as of the date of any such principal payment and immediately after giving effect thereto, no Default or Event of Default has occurred and is continuing; |
| (b) | Liquidity (prior to and after giving effect to such payment) shall not be less than $ |
| (c) | the Fixed Charge Coverage Ratio of the Borrower and its Subsidiaries for the period of 12 fiscal months of the Borrower and its Subsidiaries most recently ended prior to such payment (and, for the avoidance of doubt, without giving effect to such payment for purposes of determining Consolidated Net Interest Expense), shall be not less than 1.20 to 1.00; |
| (d) | the Consolidated Senior Net Leverage Ratio of the Borrower and its Subsidiaries as of the end of such fiscal quarter of the Borrower ending on or most recently preceding the date of such payment or prepayment was less than 2.75 to 1.00; |
| (e) | such payment or prepayment is made using only Net Cash Proceeds of an Equity Issuance which are not required to be applied as a mandatory prepayment pursuant to Section 2.5(c)(v) in an amount not to exceed fifty percent ( |
| (f) | the Administrative Agent shall have received a certificate of an Authorized Officer of the Borrower certifying as to compliance with the preceding clauses and demonstrating (in reasonable detail) the calculation required thereby. |
On April 28, 2025, the Company entered into Assignment,
Assumption and Release Agreement with the holder to release Jack Ross (CEO of the Company) from the obligation to personally grant warrants
struck at $
During March 2026, the Company was notified that this lender believed this loan had a maturity date of March 31, 2026 and they did not intend to grant an extension on the maturity date. Due to this loan being fully subordinated to the senior lender, the Company does not believe this loan has any maturity date while the senior debt is outstanding.
$17,500,000 May 2025 Loan:
On May 30, 2025, Synergy CHC Corp. (the “Company”)
entered into a term loan credit agreement (the “Credit Agreement”) with ACP Agency, LLC (“ACP”). The Credit Agreement
consists of a $
19
The Credit Agreement has customary representations, warranties and covenants including restrictions on indebtedness, liens, restricted payments and dividends, investments, asset sales and similar covenants and contains customary events of default. The Credit Agreement also contains covenants requiring the Company and its subsidiaries to maintain a maximum (x) consolidated senior net leverage ratio of (i) 3.25:1.00 for the quarter ending September 30, 2025, (ii) 3.25:1.00 for the quarter ending December 31, 2025, (iii) 3.00:1.00 for the quarter ending March 31, 2026, (iv) 2.75:1.00 for the quarter ending June 30, 2026, (v) 2.75:1.00 for the quarter ending September 30, 2026, and (vi) 2.50:1.00 for the quarter ending December 31, 2026 and each fiscal quarter ended thereafter and (y) a fixed charge coverage ratio of 1.20 for the quarter ending September 30, 2025 and each fiscal quarter ended thereafter.
Of the Term Loan, $
The Company received $
On March 24, 2026, the Company entered into a second amendment (the “Second Amendment”) to its term loan credit agreement, dated May 30, 2025 (as previously amended, the “Credit Agreement”, and as amended by the Second Amendment, the “Amended Credit Agreement”), with ACP Agency, LLC (“ACP”), as administrative agent and collateral agent, and the lenders party thereto. The Second Amendment amends certain provisions of the Credit Agreement, including provisions relating to the amortization schedule for the term loan, interest payment mechanics, pricing, the application of equity issuance proceeds, limitations on the Company’s ability to elect Term SOFR-based interest, certain covenants, certain financial covenant levels and/or testing periods, and certain fee and expense provisions, as well as related Events of Default provisions. All capitalized terms used but not defined herein have the meanings assigned in the Amended Credit Agreement.
The Amended Credit Agreement provides for scheduled
principal payments of $
The Amended Credit Agreement adds an Applicable
Margin step-up pursuant to which, if the Company fails on or before September 30, 2026 to raise at least $
The Second Amendment also adds a Minimum Consolidated
Adjusted EBITDA covenant with stated dollar thresholds, including a minimum Consolidated Adjusted EBITDA requirement of $
The Second Amendment amends the fixed charge coverage ratio to be measured at December 31, 2026 and must be not less than 1.20:1.00 for each of the trailing four fiscal quarters thereafter.
The Second Amendment further revises certain mandatory
prepayment provisions relating to equity issuance proceeds. As amended, Net Cash Proceeds from Equity Issuances received on or after the
Second Amendment Effective Date (other than Excluded Equity Issuances) are to be applied such that the first $
20
The Second Amendment also revises the “Change
of Control” definition to include, among other circumstances, the acquisition of beneficial ownership of more than
The Second Amendment also amends the Credit Agreement to include installment payment mechanics for certain legal expenses of ACP, amends the conditions under which the Company may make interest and principal payments on other indebtedness, and amends the prepayment provisions related to certain specified asset dispositions.
In connection with the Second Amendment, on March
24, 2026 the Company issued a common stock purchase warrant (the “Lender Warrant”) to Acme Credit Partners Fund I, LP (the
“Holder”), a lender under the Credit Agreement. The Lender Warrant provides the Holder the right to purchase
The Lender Warrant contains an issuance limitation
providing that, until stockholder approval is obtained, the Company may not issue shares upon exercise of, after giving effect to such
issuance, the Holder and its affiliates would beneficially own more than
The Term Loan bears interest at the greatest of
The Company recognized interest expense of $
ACP has informally alleged that a default has occurred under the Credit Agreement, but the Company has not received any formal written notice of the alleged default. The Company does not believe it is in default and, if a notice of the alleged default is delivered, it intends to vigorously dispute the alleged default and pursue all available rights and defenses. While the Company cannot predict the outcome of this matter, if the alleged default is formally declared and not resolved, it could result in remedies under the Credit Agreement, which could adversely affect the Company's liquidity.
The Company is required to make future payments as follows:
| 2026 | $ | |||
| 2027 | $ | |||
| 2028 | $ | |||
| 2029 | $ |
$3,024,000 November 2025 Accounts Receivable Advance:
On November 12, 2025, the Company entered into a cash advance agreement
of $
The Company recognized interest expense of $
$4,032,000 March 2026 Accounts Receivable Advance:
On March 10, 2026, the Company entered into a cash advance agreement
of $
21
The Company recognized total interest expense of $
Subsequent to March 31, 2026 the Company has made
two payments of $
As of March 31, 2026 and as of the date of filing this Report, the Company was in compliance with all applicable covenants under its debt agreements.
Note 12 – Stockholders’ Deficit
The total number of shares of all classes of capital
stock which the Company is authorized to issue is
As of both March 31, 2026 and December 31, 2025,
there were
Note 13 – Commitments and Contingencies
Litigation:
From time to time the Company may become a party to litigation in the normal course of business. Management believes that there are no current legal matters that would have a material effect on the Company’s financial position or results of operations.
License Revenue:
During 2025 the Company entered into a license
agreement with a company to license its IP to territories in the United Arab Emirates and Turkey. The Company recognized $
Note 14 – Stock Options and Warrants
The following table summarizes the options outstanding, option exercisability and the related prices for the shares of the Company’s common stock issued to employees and consultants under a stock option plan at March 31, 2026:
| Options Outstanding | Options Exercisable | |||||||||||||||||||||
| Exercise Prices ($) | Number Outstanding | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price ($) | Number Exercisable | Weighted Average Exercise Price ($) | |||||||||||||||||
| $ | | $ | | $ | ||||||||||||||||||
The stock option activity for the three months ended March 31, 2026 is as follows:
| Options | Weighted Average Exercise Price | |||||||
| Outstanding at December 31, 2025 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Expired or canceled | ||||||||
| Outstanding at March 31, 2026 | $ | |||||||
| Exercisable at March 31, 2026 | $ | |||||||
22
Stock-based compensation expense related to vested
options was $
The following table summarizes the changes in warrants outstanding and the related prices for the shares of the Company’s common stock issued at March 31, 2026:
| Warrants Outstanding | Warrants Exercisable | |||||||||||||||||||||
| Exercise Price ($) | Number Outstanding | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price ($) | Number Exercisable | Weighted Average Exercise Price ($) | |||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
The warrant activity for the three months ended March 31, 2026 is as follows:
| Warrants | Weighted Average Exercise Price | |||||||
| Outstanding at December 31, 2025 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Expired or canceled | ||||||||
| Outstanding at March 31, 2026 | $ | |||||||
| Exercisable at March 31, 2026 | $ | |||||||
Stock warrants outstanding as of March 31, 2026, as disclosed in the
above table, have an intrinsic value of $
Note 15 – Segments
Segment identification and selection is consistent with the management structure used by the Company’s CODM to evaluate performance and make decisions regarding resource allocation, as well as the materiality of financial results consistent with that structure. Based on the Company’s management structure and method of internal reporting, the Company has one operating segment. The Company derives its revenue from the sale of nutraceuticals. The accounting policies of the segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance for the segment and decides how to allocate resources based on net income that also is reported on the income statement as consolidated net income. The measure of segment assets is reported on the balance sheet as total consolidated assets. Significant segment expenses include retailer promotions, freight and fulfillment, marketing and salaries. The Company’s CODM reviews financial information presented and decides how to allocate resources based on net income. The Company does not have any intra-entity sales or transfers. The Company’s CODM does not review operating results on a disaggregated basis; rather, the CODM reviews operating results on an aggregated basis.
Net sales attributed to customers in the United States and foreign countries for the three months ended March 31, 2026 and 2025 were as follows:
| March 31, 2026 | March 31, 2025 | |||||||
| United States | $ | $ | ||||||
| Canada | ||||||||
| Mexico | ||||||||
| Other | ||||||||
| $ | $ | |||||||
23
The Company’s net sales by product group for the three months ended March 31, 2026 and 2025 were as follows:
| March 31, 2026 | March 31, 2025 | |||||||
| Nutraceuticals | $ | $ | ||||||
| Beverages | ||||||||
| License Revenue | ||||||||
| $ | $ | |||||||
The Company’s net sales by major sales channel for the three months ended March 31, 2026 and 2025 were as follows:
| March 31, 2026 | March 31, 2025 | |||||||
| Online | $ | $ | ||||||
| Retail | ||||||||
| $ | $ | |||||||
The Company’s significant segment expenses for the three months ended March 31, 2026 and 2025 were as follows:
| March 31, 2026 | March 31, 2025 | |||||||
| Retailer promotions | $ | $ | ||||||
| Freight and fulfillment | ||||||||
| Online marketing | ||||||||
| Salaries and benefits, marketing | ||||||||
| Other selling and marketing | ||||||||
| IT expenses | ||||||||
| Salaries and benefits, non-marketing | ||||||||
| Professional fees | ||||||||
| Travel | ||||||||
| Stock based compensation | ||||||||
| Board of Directors compensation | ||||||||
| Other general and administrative expenses | ||||||||
| Amortization | ||||||||
| $ | $ | |||||||
Long-lived assets (net) attributable to operations in the United States and foreign countries as of March 31, 2026 and December 31, 2025 were as follows:
| March 31, 2026 | December 31, 2025 | |||||||
| United States | $ | $ | ||||||
| Foreign countries | ||||||||
| $ | $ | |||||||
Note 16 – Subsequent Events
Management evaluated all activities of the Company through the issuance date of the Company’s unaudited condensed consolidated financial statements and concluded that except as noted below, no subsequent events have occurred that would require adjustment or disclosure into the unaudited condensed consolidated financial statements.
During April 2026, the Company sold
During April 2026, the Company issued
During April 2026, the Company issued
On May 11, 2026, the Company filed a Current Report on Form 8-K with the SEC regarding the entry into an equity purchase agreement (“ELOC”), pursuant to which the Company may issue and sell shares of its common stock from time to time, subject to market conditions and other factors.
24
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Synergy CHC Corp. References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and variations thereof and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 1, 2026 (the “Annual Report”) and the “Risk Factors” section of this Quarterly Report. Our securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
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 Investigational New Drug 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 Quarterly Report. 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.
| Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Net (loss) income | $ | (2,568,899 | ) | $ | 876,264 | |||
| Interest income | (340 | ) | (13,882 | ) | ||||
| Interest expense | 2,012,121 | 1,095,369 | ||||||
| Income tax benefit | (13,720 | ) | (11,460 | ) | ||||
| Depreciation and amortization | 33,333 | 33,333 | ||||||
| EBITDA | $ | (537,505 | ) | $ | 1,979,624 | |||
EBITDA is considered a non-GAAP financial measure. 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.
25
Results of Operations for the Three Months Ended March 31, 2026 and March 31, 2025
During both the three months ended March 31, 2026 and 2025, 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 Ready To Drinks (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.
Revenue
For the three months ended March 31, 2026, we had revenue of $5,492,705 from sales of our products, as compared to revenue of $8,170,534 for the three months ended March 31, 2025. The revenue is comprised of the following categories:
| March 31, 2026 | March 31, 2025 | |||||||
| Nutraceuticals | $ | 4,824,763 | $ | 6,639,564 | ||||
| Beverages | 667,942 | 30,970 | ||||||
| License Revenue | - | 1,500,000 | ||||||
| $ | 5,492,705 | $ | 8,170,534 | |||||
We had a decrease in Nutraceuticals revenue in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 due to a decrease in online sales. We had an increase in Beverages revenue in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 due to new retail distribution. We had a decrease in License Revenue in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 as that was a one-time item that did not repeat.
Cost of Revenue
For the three months ended March 31, 2026, our cost of revenue was $1,521,910. Our cost of revenue for the three months ended March 31, 2025, was $2,006,513. The decrease in cost of sales was primarily due to the decrease in revenue.
Gross Profit
Gross profit was $3,970,795, or 72% of revenue, for the three months ended March 31, 2026, as compared to gross profit of $6,164,021, or 75% of revenue, for the same period in 2025, a decrease of $2,193,226, or 36%. The decrease in gross profit is directly related to the license revenue in 2025.
Operating Expenses
Selling and Marketing Expenses
For the three months ended March 31, 2026, our selling and marketing expenses were $2,455,732 as compared to $2,876,271 for the three months ended March 31, 2025, which is primarily due to lower revenue.
General and Administrative Expenses
For the three months ended March 31, 2026, our general and administrative expenses were $2,048,850. For the three months ended March 31, 2025, our general and administrative expenses were $1,306,714. The increase is largely due to increased salaries and benefits, stock-based compensation, board compensation and professional fees.
Depreciation and Amortization Expenses
For both the three months ended March 31, 2026 and 2025, our depreciation and amortization expenses were $33,333.
Other Income and Expenses
For the three months ended March 31, 2026 and 2025 we had other income and expense items as follows:
| Three months ended March 31, 2026 | Three months ended March 31, 2025 | |||||||
| Interest expense | $ | 2,012,121 | $ | 1,095,369 | ||||
| Interest income | (340 | ) | (13,882 | ) | ||||
| Remeasurement loss on translation of foreign subsidiary | 3,718 | 1,412 | ||||||
| Total other expense | $ | 2,015,499 | $ | 1,082,899 | ||||
26
For the three months ended March 31, 2026, we had net interest expense of $2,012,121 as compared to $1,095,369 for the three months ended March 31, 2025. The increase is primarily due to an advance taken and the amortization of original debt discount on the May 2025 loan.
Net Income
For the three months ended March 31, 2026, our net loss was $2,568,899 as compared to a net income of $876,264 for the three months ended March 31, 2025 due to lower revenue.
Liquidity and Capital Resources
Overview
As of March 31, 2026, we had $292,115 cash on hand and restricted cash of $100,000 which is held for credit card collateral.
In connection with preparing unaudited condensed consolidated financial statements for the three months ended March 31, 2026, management evaluated whether there were conditions and events, considered in the aggregate, that raised substantial doubt about the Company’s ability to continue as a going concern within one year from the date that the unaudited condensed consolidated financial statements are issued.
The Company considered the following:
| ● | At March 31, 2026, we had an accumulated deficit of $59,009,920. |
| ● | At March 31, 2026, we had a decrease in net revenue of $2,677,829. |
| ● | At March 31, 2026, we had a decrease in net income of $3,445,163. |
| ● | At March 31, 2026, we had a working capital deficit of $503,862 |
| ● | During the three months ended March 31, 2026, we used $2,044,678 in operating activities. |
Ordinarily, conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern relate to the entity’s ability to meet its obligations as they become due.
We evaluated our ability to meet our obligations as they become due within one year from the date that the unaudited condensed consolidated financial statements are issued by considering the following:
| ● | We entered into a second amendment with our current lender which adjusts various covenants and payment terms. |
| ● | We laid off 13 employees in order to right size our overhead expenses. |
| ● | We established an at-the-market (“ATM”) equity offering program pursuant to which we may issue and sell shares of our common stock from time to time, subject to market conditions and other factors. Subsequent to March 31, 2026, we have drawn down $2,673,201 in gross proceeds. |
| ● | We have entered into an equity purchase agreement (“ELOC”), pursuant to which we may issue and sell shares of our common stock from time to time, subject to market conditions and other factors (see Note 16). |
Cash Flows from Operating Activities
For the three months ended March 31, 2026, net cash used in operating activities was $2,044,678 compared to net cash used in operating activities of $822,781 for the three months ended March 31, 2025. This increase in net cash used by operating activities for the three months ended March 31, 2026 was primarily attributable to a decrease in net income.
27
For the three months ended March 31, 2026, net cash used in operating activities of $2,044,678 consisted of our net loss of $2,568,899 adjusted by:
| Amortization of debt issuance cost | $ | 951,942 | ||
| Depreciation and amortization | 33,333 | |||
| Stock based compensation | 116,307 | |||
| Foreign currency transaction gain | 2,684 | |||
| Remeasurement loss on translation of foreign subsidiary | 3,718 | |||
| Changes in operating assets and liabilities: | ||||
| Accounts receivable | 1,935,483 | |||
| Inventory | 355,895 | |||
| Prepaid expense | (410,657 | ) | ||
| Prepaid expense, related party | (541,467 | ) | ||
| Income taxes payable | (2,297 | ) | ||
| Contract liabilities | (1,526 | ) | ||
| Accounts payable and accrued liabilities | (1,915,323 | ) | ||
| Accounts payable, related party | (3,871 | ) |
For the three months ended March 31, 2025, net cash used in operating activities of $822,781 consisted of our net income of $876,264 adjusted by:
| Amortization of debt issuance cost | $ | 406,841 | ||
| Depreciation and amortization | 33,333 | |||
| Foreign currency transaction gain | (3,137 | ) | ||
| Remeasurement gain on translation of foreign subsidiary | (1,412 | ) | ||
| Changes in operating assets and liabilities: | ||||
| Accounts receivable | 940,519 | |||
| Other receivables | 144,637 | |||
| Loan receivable, related party | (833 | ) | ||
| Inventory | (629,935 | ) | ||
| Prepaid expense | (114,787 | ) | ||
| Prepaid expense, related party | (195,913 | ) | ||
| Income taxes payable | (165,413 | ) | ||
| Contract liabilities | (24,216 | ) | ||
| Accounts payable and accrued liabilities | (2,218,041 | ) | ||
| Accounts payable, related party | 129,312 |
Cash Flows from Investing Activities
For the three months ended March 31, 2026 and 2025, we used net cash of $0 in investing activities.
Cash Flows from Financing Activities
For the three months ended March 31, 2026, net cash used in financing activities was $307,600 compared to net cash provided by financing activities of $314,678 for the three months ended March 31, 2025. The decrease was attributable to decreased proceeds of notes.
Financing activities during the three months ended March 31, 2026 and 2025:
| Three months ended March 31, 2026 | Three months ended March 31, 2025 | |||||||
| Advances from related party | $ | - | $ | 135,000 | ||||
| Repayment of notes payable, related party | (100,000 | ) | - | |||||
| Proceeds from notes payable | 2,660,000 | 1,496,250 | ||||||
| Payment of loan financing fees | (55,000 | ) | - | |||||
| Repayment of notes payable | (2,812,600 | ) | (1,316,572 | ) | ||||
28
Key Near-Term Initiatives
We intend to organically grow our current product lines by developing and launching new products and expanding into new markets. Specifically, for FOCUSfactor, we are working on increased distribution for our recently launched ready-to-drink beverage. Lastly, we intend to grow further through additional strategic acquisitions and we continue to evaluate opportunities and candidates that we believe fit well with our brand portfolio.
Off-Balance Sheet Arrangements
During the three months ended March 31, 2026, and during the year ended December 31, 2025, we had no off-balance sheet arrangements.
Inflation
The effect of inflation on our operating results was not significant in the three months ended March 31, 2026 or 2025.
Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported periods. The more critical accounting estimates include estimates related to revenue recognition and accounts receivable allowances. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results, which are described in Note 2 to our unaudited condensed consolidated financial statements appearing elsewhere in this report.
Recent Accounting Pronouncements
Note 2 to our unaudited condensed consolidated financial statements appearing elsewhere in this report includes Recent Accounting Pronouncements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we have elected not to provide the disclosure required by this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Disclosure controls and procedures are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that as of the end of the period covered by this Quarterly Report, (i) the Company’s disclosure controls and procedures were not effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “Commission”), and (ii) the Company’s controls and procedures have not been designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, during the quarter ended March 31, 2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
29
PART II-OTHER INFORMATION
Item 1. Legal Proceedings.
We are not party to any material legal proceedings. From time to time, we may be involved in legal proceedings or subject to claims incidental to the ordinary course of business. The outcome of litigation is inherently uncertain, and there can be no assurances that favorable outcomes will be obtained. In addition, regardless of the outcome, such proceedings or claims can have an adverse impact on us, which may be material because of defense and settlement costs, diversion of resources and other factors.
Item 1A. Risk Factors.
As a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Quarterly Report. However, as of the date of this Quarterly Report, there have been no material changes with respect to those risk factors previously disclosed in the “Risk Factors” section of the Annual Report. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) None.
(b) None.
(c) None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
(a) None.
(b) None.
(c) During the quarter ended
March 31, 2026, no director or officer of the Company
30
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.
| * | Filed with this Report. |
| ** | Furnished with this Report. |
31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SYNERGY CHC CORP. | ||
Date: May 14, 2026 |
By: | /s/ Jack Ross |
| Name: | Jack Ross | |
| Title: | Chief Executive Officer and Chairman | |
| (Principal Executive Officer) | ||
32