What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-14 compared with 2025-05-15 · 205 added, 175 removed, 38 unchanged (91% of the section changed)

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.

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 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

health care, beauty, and lifestyle products.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Synergy

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.

Note Regarding Forward-Looking Statements

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

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

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.

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.

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

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.

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.

Financial Measures

currently focus on EBITDA to evaluate our business relationships and our resulting operating performance and financial position.

is defined as net income plus interest expense, income tax expense, depreciation and amortization.

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.

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

Interest income

Interest expense

Income taxes (benefit) expense

Income tax expense

Depreciation and amortization

EBITDA is considered non-GAAP

financial measures.

June 30, 2025

June 30, 2024

Interest income

Interest expense

Income tax expense

Depreciation and amortization

is considered non-GAAP financial measures.

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.

Results of Operations for the Three Months

Ended March 31, 2025 and March 31, 2024

During both the three months

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

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.

Our definition

of EBITDA might not be comparable to similarly titled measures reported by other companies.

of Operations for the Three Months Ended June 30, 2025 and June 30, 2024

both the three months ended June 30, 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 June 30, 2025, we had revenue of $6,734,996 from sales of our products and $1,400,000 from a license agreement, as compared to

revenue of $8,024,840 for the three months ended June 30, 2024.

The revenue is comprised of the following categories:

1 unchanged sentence

License Revenue

Consumer Goods

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

ended June 30, 2025 as compared to the three months ended June 30, 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

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.

We also had revenue from a license agreement to expand into selected foreign territories.

the three months ended June 30, 2025, our cost of revenue was $1,896,391.

Our cost of revenue for the three months ended June

30, 2024, was $2,448,890.

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

Gross profit was $6,164,021,

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.

Operating Expenses

Selling and Marketing Expenses

For the three months ended

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

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.

Depreciation and Amortization Expenses

For the three months ended

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

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

March 31, 2025

March 31, 2024

Gross profit was $6,238,605, or 77% of revenue, for the three months

ended June 30, 2025, as compared to gross profit of $5,575,950, or 69% of revenue, for the same period in 2024, an increase of $662,665,

The increase in gross profit is directly related to the license revenue.

and Marketing Expenses

the three months ended June 30, 2025, our selling and marketing expenses were $3,062,211 as compared to $3,055,186 for the three months

ended June 30, 2024, which is an immaterial increase.

and Administrative Expenses

the three months ended June 30, 2025, our general and administrative expenses were $1,519,325.

For the three months ended June 30,

2024, our general and administrative expenses were $903,838.

The increase is primarily due to public market expenses.

and Amortization Expenses

For the three months ended June 30, 2025, our depreciation and

amortization expenses were $33,334 as compared to $33,334 for the three months ended June 30, 2024.

Income and Expenses

the three months ended June 30, 2025 and 2024 we had other income and expense items as follows:

Interest expense

Interest income

Remeasurement loss (gain) on translation of foreign subsidiary

Gain on settlement of loans

Remeasurement loss on translation of foreign subsidiary

Total other (income) expense

For the three months ended June 30, 2025, we had interest expense

of $2,107,714 as compared to $745,528 for the three months ended June 30, 2024.

The increase is primarily due to the advance, shares

issued related to the modification of notes payable and new May 2025 loan.

For the three months ended June 30, 2025, our net income was $1,473,237

as compared to a net income of $655,186 for the three months ended June 30, 2024 due to a gain on settlement of loans.

of Operations for the Six Months Ended June 30, 2025 and June 30, 2024

both the six months ended June 30, 2025 and 2024, we focused on developing our currently owned brands into new markets and by product

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 six months ended June 30, 2025, we had revenue of $13,405,530

from sales of our products and $2,900,000 from a license agreement, as compared to revenue of $17,436,703 for the six months ended

June 30, 2024.

The revenue is comprised of the following categories:

Nutraceuticals

License Revenue

We had a decrease in Nutraceuticals

revenue in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 due to a new product sell-in

to one customer in 2024 that did not repeat in 2025.

We also had revenue from a license agreement to expand into selected foreign territories.

the six months ended June 30, 2025, our cost of revenue was $3,902,904.

Our cost of revenue for the six months ended June 30,

2024, was $5,086,029.

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

profit was $12,402,626, or 76% of revenue, for the six months ended June 30, 2025, as compared to gross profit of $12,350,674, or

71% of revenue, for the same period in 2024, an increase of $51,952, or 0.4%.

The increase in gross profit is related to the license

and Marketing Expenses

the six months ended June 30, 2025, our selling and marketing expenses were $5,938,482 as compared to $6,639,863 for the six months

ended June 30, 2024, which is primarily due to lower revenue and an improved management of promotions in 2025.

and Administrative Expenses

the six months ended June 30, 2025, our general and administrative expenses were $2,826,039.

For the six months ended June 30, 2024,

our general and administrative expenses were $2,252,223.

The increase is primarily public market expenses.

and Amortization Expenses

the six months ended June 30, 2025, our depreciation and amortization expenses were $66,667 as compared to $66,667 for the six months

ended June 30, 2024.

Income and Expenses

the six months ended June 30, 2025 and 2024 we had other income and expense items as follows:

Interest expense

Interest income

Gain on settlement of loans

Remeasurement loss (gain)

on translation of foreign subsidiary

Total other expense

For the three months ended

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

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 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 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

For the six months ended June 30, 2025, we had interest expense of

$3,203,083 as compared to $1,855,508 for the six months ended June 30, 2024.

The increase is primarily due to an advance taken in

2025, shares issued related to the modification of notes payable and new May 2025 loan.

For the six months ended June 30, 2025, our net income was $2,349,501

as compared to a net income of $1,235,716 for the six months ended June 30, 2024 due to lowering operating expenses and gain on loan

and Capital Resources

of June 30, 2025, we had $1,458,561 cash on hand and restricted cash of $100,000 which is held for credit card collateral.

Flows from Operating Activities

For the six months ended

June 30, 2025, net cash used in operating activities was $899,731 compared to net cash used in operating activities of $1,140,005 for

the six months ended June 30, 2024.

This decrease in net cash used by operating activities for the six months ended June 30,

2025 is detailed in the table below.

For the six months ended June 30, 2025, net cash used in operating

activities of $899,731 consisted of our net income of $2,349,501 adjusted by:

Amortization of debt discount and debt issuance cost

Depreciation and amortization

Stock issued for modification of notes payable

Foreign currency transaction gain

Remeasurement gain on translation of foreign subsidiary

Changes in operating assets and liabilities:

Remeasurement loss on translation of foreign subsidiary

Gain on settlement of debt

Accounts receivable

1 unchanged sentence

Loan receivable, related party

Prepaid expense

Prepaid expenses

Prepaid expense, related party

2 unchanged sentences

Accounts payable and accrued liabilities

Accounts payable, related party

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:

Accounts payable, shareholder

For the six months ended June 30, 2024, net cash used in operating

activities of $1,140,004 consisted of our net income of $1,235,716 adjusted by:

Depreciation and amortization

Stock based compensation expense

Foreign currency transaction loss

1 unchanged sentence

Non cash implied interest

Changes in operating assets and liabilities:

Accounts receivable

Loan receivable, related party

Prepaid expense

Prepaid expenses

Prepaid expense, related party

2 unchanged sentences

Accounts payable and accrued liabilities

Accounts payable, related party

Cash Flows from 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 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 three months ended March 31, 2025 and 2024:

March 31, 2025

March 31, 2024

Accounts payable, shareholder

Flows from Investing Activities

the six months ended June 30, 2025 and 2024, we used net cash of $0 in investing activities.

Flows from Financing Activities

For the six months ended June 30, 2025, net cash provided by financing

activities was $1,632,433 compared to net cash provided by financing activities of $407,391 for the six months ended June 30, 2024.

The increase was attributable to new loans.

activities during the six months ended June 30, 2025 and 2024:

Advances from related party

1 unchanged sentence

Proceeds from notes payable

Payment of loan financing fees

Repayment of notes payable, shareholder

(10,000,000 )

Repayment of notes payable

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, 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 three months ended March 31, 2025 or 2024.

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

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.

Quantitative and Qualitative Disclosures

About Market Risk

As a smaller reporting company,

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

Near-Term Initiatives

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.

Sheet Arrangements

the six months ended June 30, 2025, and during the year ended December 31, 2024, we had no off-balance sheet arrangements.

effect of inflation on our operating results was not significant in the six months ended June 30, 2025 or 2024.

Accounting Estimates

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.

Accounting Pronouncements

2 to our unaudited condensed consolidated financial statements appearing elsewhere in this report includes Recent Accounting Pronouncements.

Quantitative and Qualitative Disclosures About Market Risk

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