What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-15 compared with 2024-12-06 · 112 added, 185 removed, 101 unchanged (75% of the section changed)

1 unchanged sentence

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.

References in this report

(the “Quarterly Report”) to “we,” “us” or the “Company” refer to Synergy CHC Corp.

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.

statements, other than statements of historical fact included in this Form 10-Q 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

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 final prospectus for our initial public offering filed with the SEC on October 23, 2024 (the “Prospectus”) and the

“Risk Factors” section of this 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.

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 Form 10-Q 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 final prospectus for our initial public offering filed with the SEC on October 23, 2024

(the “Prospectus”) and the “Risk Factors” section of this 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.

We are a provider of consumer

19 unchanged sentences

GAAP”), provides useful information to investors.

September 30,

Net income (loss)

Interest income

Interest expense

Income taxes benefit

Depreciation and amortization

September 30,

Net income (loss)

March 31, 2025

March 31, 2024

Interest income

Interest expense

Income taxes (benefit) expense

Depreciation and amortization

5 unchanged sentences

Results of Operations for the Three Months

Ended September 30, 2024 and September 30, 2023

Ended March 31, 2025 and March 31, 2024

During both the three months

ended September 30, 2024 and 2023, we focused on developing our currently owned brands into new markets and by product extensions.

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

ended March 31, 2025 and 2024, 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.

For the three months ended

September 30, 2024, we had revenue of $7,126,333 from sales of our products, as compared to revenue of $10,805,735 for the three months

ended September 30, 2023.

March 31, 2025, we had revenue of $6,670,534 from sales of our products and $1,500,000 from a license agreement, as compared to revenue

of $9,411,863 for the three months ended March 31, 2024.

The revenue is comprised of the following categories:

September 30,

Nutraceuticals

License Revenue

Consumer Goods

We had a decrease in Nutraceuticals

revenue in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 due to a delay

in a significant shipment of FOCUSfactor supplements due to packaging upgrade.

We had a decrease in Consumer Goods revenue in 2024 as

compared to 2023 due to no longer selling consumer goods products.

We had a decrease in Nutraceuticals revenue in the three months

ended March 31, 2025 as compared to the three months ended March 31, 2024 due to a new product sell-in to one customer in 2024 that

did not repeat in 2025.

Cost of Revenue

For the three months ended

September 30, 2024, our cost of revenue was $2,335,901.

Our cost of revenue for the three months ended September 30, 2023, was $3,028,023.

March 31, 2025, our cost of revenue was $2,006,513.

Our cost of revenue for the three months ended March 31, 2024, was $2,637,139.

The decrease in cost of sales was primarily due to the decrease in revenue.

Gross profit was $6,164,021,

or 67% of revenue, for the three months ended September 30, 2024, as compared to gross profit of $7,777,712, or 72% of revenue, for

the same period in 2023, a decrease of $2,987,280, or 38%.

or 75% of revenue, for the three months ended March 31, 2025, as compared to gross profit of $6,774,724, or 72% of revenue, for the

same period in 2024, a decrease of $610,703, or 9%.

The decrease in gross profit is directly related to the decrease in net sales.

2 unchanged sentences

For the three months ended

September 30, 2024, our selling and marketing expenses were $2,509,440 as compared to $4,302,034 for the three months ended September

30, 2023, which is primarily due to an improved management of promotions in 2024.

March 31, 2025, our selling and marketing expenses were $2,876,271 as compared to $3,584,677 for the three months ended March 31,

2024, which is primarily due to lower revenue and an improved management of promotions in 2025.

General and Administrative Expenses

For the three months ended

September 30, 2024, our general and administrative expenses were $1,196,784.

For the three months ended September 30, 2023, our general

and administrative expenses were $1,326,864.

March 31, 2025, our general and administrative expenses were $1,306,714.

For the three months ended March 31, 2024, our general and administrative

expenses were $1,348,385.

The decrease is primarily due to improved management of operating costs.

1 unchanged sentence

For the three months ended

September 30, 2024, our depreciation and amortization expenses were $33,333 as compared to $0 for the three months ended September

The increase is due to amortization of a license fee recorded in the fourth quarter of 2023.

March 31, 2025, our depreciation and amortization expenses were $33,333 as compared to $33,333 for the three months ended March 31,

Other Income and Expenses

For the three months ended

September 30, 2024 and 2023 we had other income and expense items as follows:

September 30,

Interest expense, net

March 31, 2025 and 2024 we had other income and expense items as follows:

March 31, 2025

March 31, 2024

Interest expense

Interest income

Remeasurement loss (gain) on translation of foreign subsidiary

1 unchanged sentence

For the three months ended

September 30, 2024, we had net interest expense of $704,707 as compared to $885,548 for the three months ended September 30, 2023.

The decrease is primarily due to a reduction in the interest rate effective with the sixth amended loan agreement.

March 31, 2025, we had net interest expense of $1,095,369 as compared to $1,109,980 for the three months ended March 31, 2024.

decrease is primarily due to a reduction in the interest rate effective with the sixth amended loan agreement offset by a new loan.

For the three months ended

September 30, 2024, our net income was $783,593 as compared to a net income of $1,284,187 for the three months ended September 30,

2023 due to lower revenue.

Results of Operations for the Nine Months

Ended September 30, 2024 and September 30, 2023

During both the nine months

ended September 30, 2024 and 2023, we focused on developing our currently owned brands into new markets and by product extensions.

objective is to grow our two targeted verticals (Nutraceuticals and RTDs) to provide a balanced and synergistic portfolio that drives

consumer demand via multiple channels.

Our Nutraceuticals vertical consists of FOCUSfactor, including RTDs, and Flat Tummy consumables.

For the nine months ended

September 30, 2024, we had revenue of $24,563,036 from sales of our products, as compared to revenue of $29,559,440 for the nine months

ended September 30, 2023.

The revenue is comprised of the following categories:

September 30,

Nutraceuticals

Consumer Goods

We had a decrease in Nutraceuticals

revenue in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 due to:

launch of our FOCUSfactor vision product line to some of our major retailers in 2023, and (ii) a delay in a significant shipment of FOCUSfactor

supplements due to packaging upgrade in the third quarter of 2024.

The decrease was due primarily to sales volume increases in 2023, as

prices for our products did not decrease year-over-year.

We had a decrease in Consumer Goods revenue in 2024 as compared to 2023 due to

no longer selling consumer goods products.

Cost of Revenue

For the nine months ended

September 30, 2024, our cost of revenue was $7,421,930.

Our cost of revenue for the nine months ended September 30, 2023, was $8,351,645.

The decrease in cost of sales was primarily due to the decrease in revenue.

Gross profit was $17,141,106,

or 70% of revenue, for the nine months ended September 30, 2024, as compared to gross profit of $21,207,795, or 72% of revenue, for

the same period in 2023, a decrease of $4,066,689, or 19%.

The decrease in gross profit is directly related to the decrease in net sales.

Operating Expenses

Selling and Marketing Expenses

For the nine months ended

September 30, 2024, our selling and marketing expenses were $9,149,303 as compared to $10,533,217 for the nine months ended September

30, 2023, which is primarily due to a an improved management of promotions in 2024.

General and Administrative Expenses

For the nine months ended

September 30, 2024, our general and administrative expenses were $3,449,007.

For the nine months ended September 30, 2023, our general

and administrative expenses were $4,294,634.

The decrease is primarily due to improved management of operating costs.

Depreciation and Amortization Expenses

For the nine months ended

September 30, 2024, our depreciation and amortization expenses were $100,000 as compared to $0 for the nine months ended September

The increase is due to amortization of a license fee recorded in the fourth quarter of 2023.

Other Income and Expenses

For the nine months ended

September 30, 2024 and 2023 we had other income and expense items as follows:

September 30,

Interest expense, net

Remeasurement loss (gain) on translation of foreign subsidiary

Total other expense

For the nine months ended

September 30, 2024, we had net interest expense of $2,559,454 as compared to $2,605,320 for the nine months ended September 30, 2023.

The decrease is primarily due to a reduction in the interest rate effective with the sixth amended loan agreement.

For the nine months ended

September 30, 2024, our net income was $2,019,309 as compared to a net income of $3,747,444 for the nine months ended September 30,

2023 due to lower revenue.

March 31, 2025, our net income was $876,264 as compared to a net income of $580,530 for the three months ended March 31, 2024 due

to lower operating expenses.

Liquidity and Capital Resources

As of September 30, 2024, we

had $259,375 cash on hand and restricted cash of $100,000 which is held for credit card collateral.

As of March 31, 2025, we had

$177,882 cash on hand and restricted cash of $100,000 which is held for credit card collateral.

Cash Flows from Operating Activities

For the nine months ended

September 30, 2024, net cash used by operating activities was $1,377,479 compared to net cash used in operating activities of $2,737,849

for the nine months ended September 30, 2023.

This decrease in net cash used by operating activities for the nine months ended

September 30, 2024 was primarily attributable to a decrease in accounts payable and accrued expenses offset by increase in accounts receivable

and inventory.

For the nine months ended

September 30, 2024, net cash used in operating activities of $1,377,479 consisted of our net income of $2,019,309 adjusted by:

For the three months ended

March 31, 2025, net cash used by operating activities was $822,781 compared to net cash used in operating activities of $858,042 for the

three months ended March 31, 2024.

This decrease in net cash used by operating activities for the three months ended March 31,

2024 was primarily attributable to an increase in inventory and a decrease in accounts payable and accrued expenses, offset by a decrease

in accounts and other receivables.

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

Depreciation and amortization

Foreign currency transaction loss

Stock based compensation expense

Foreign currency transaction gain

Remeasurement gain on translation of foreign subsidiary

Non cash implied interest

Changes in operating assets and liabilities:

Accounts receivable

Other receivables

Loan receivable, related party

5 unchanged sentences

Accounts payable, related party

For the nine months ended

September 30, 2023, net cash used by operating activities of $2,737,849 consisted of our net income of $3,747,444 adjusted by:

Amortization of debt issuance cost

For the three months ended

March 31, 2024, net cash used in operating activities of $858,042 consisted of our net income of $580,530 adjusted by:

Depreciation and amortization

Foreign currency transaction loss

Remeasurement loss on translation of foreign subsidiary

Remeasurement gain on translation of foreign subsidiary

Non cash implied interest

4 unchanged sentences

Prepaid expense, related party

Income taxes receivable

Income taxes payable

Contract liabilities

2 unchanged sentences

Cash Flows from Investing Activities

For the nine months ended September

30, 2024 and 2023, we used net cash of $0 in investing activities.

For the three months ended

March 31, 2025 and 2024, we used net cash of $0 in investing activities.

Cash Flows from Financing Activities

For the nine months ended

September 30, 2024, net cash provided by financing activities was $895,972 compared to net cash provided by financing activities of $553,490

for the nine months ended September 30, 2023.

The increase was attributable to an advance from a related party and repayment of notes

For the three months ended

March 31, 2025, net cash provided by financing activities was $314,678 compared to net cash provided by financing activities of $1,004,620

for the three months ended March 31, 2024.

The decrease was attributable to increased payoffs of loans.

Financing activities during

the nine months ended September 30, 2024 and September 30, 2023:

September 30,

the three months ended March 31, 2025 and 2024:

March 31, 2025

March 31, 2024

Advances from related party

Repayment of advances from related party

Repayment of notes payable, related party

9 unchanged sentences

Off-Balance Sheet Arrangements

During the nine months

ended September 30, 2024, and during the year ended December 31, 2023, we had no off-balance sheet arrangements.

During the three months

ended March 31, 2025, and during the year ended December 31, 2024, we had no off-balance sheet arrangements.

The effect of inflation on

our operating results was not significant in the nine months ended September 30, 2024 or 2023.

our operating results was not significant in the three months ended March 31, 2025 or 2024.

Critical Accounting Estimates

The preparation of financial statements in conformity

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.

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

The more critical accounting estimates include estimates related to revenue recognition and accounts receivable allowances.

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.

Note 2 to our unaudited condensed

consolidated financial statements appearing elsewhere in this report includes Recent Accounting Pronouncements.

Quantitative and Qualitative Disclosures

About Market Risk

As a smaller reporting company, we have elected

not to provide the disclosure required by this item.

As a smaller reporting company,

we have elected not to provide the disclosure required by this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis