Synergy CHC Corp. 10-Q

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 $ 292,115 $ 2,622,313 Restricted cash 100,000 100,000 Accounts receivable, net 1,268,022 3,203,505 Prepaid expenses (including related party amount of $ 652,270 and $ 110,803 , respectively) 1,303,173 351,049 Inventory, net 3,381,614 3,737,509 Total Current Assets 6,344,924 10,014,376 Intangible assets, net 116,667 150,000 Total Assets $ 6,461,591 $ 10,164,376 Liabilities and Stockholders’ Deficit Current Liabilities: Accounts payable and accrued liabilities (including payable to shareholder of $ 193,641 and $ 197,512 , respectively) $ 4,031,994 $ 6,388,219 Income taxes payable 85,811 88,108 Contract liabilities - 1,526 Short term loans payable, net of debt discount, related party - 100,000 Current portion of notes payable, net of debt discount 2,730,981 1,658,215 Total Current Liabilities 6,848,786 8,236,068 Long-term Liabilities: Notes payable, net of debt discount 25,018,055 25,056,446 Total long-term liabilities 25,018,055 25,056,446 Total Liabilities 31,866,841 33,292,514 Commitments and contingencies Stockholders’ Deficit: Common stock, $ 0.00001 par value; 300,000,000 shares authorized; 11,483,926 shares issued; 11,303,853 outstanding 114 114 Additional paid in capital 33,710,857 33,594,550 Common stock to be issued 153,400 - Accumulated other comprehensive loss ( 132,201 ) ( 154,281 ) Accumulated deficit ( 59,009,920 ) ( 56,441,021 ) Less: Treasury stock ( 180,073 shares) at cost ( 127,500 ) ( 127,500 ) Total stockholders’ deficit ( 25,405,250 ) ( 23,128,138 ) Total Liabilities and Stockholders’ Deficit $ 6,461,591 $ 10,164,376 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 $ 5,492,705 $ 6,670,534 License Revenue - 1,500,000 Total Revenue 5,492,705 8,170,534 Cost of Sales 1,521,910 2,006,513 Gross Profit 3,970,795 6,164,021 Operating expenses Selling and marketing 2,455,732 2,876,271 General and administrative 2,048,850 1,306,714 Depreciation and amortization 33,333 33,333 Total operating expenses 4,537,915 4,216,318 (Loss) Income from operations ( 567,120 ) 1,947,703 Other (income) expenses Interest income ( 340 ) ( 13,882 ) Interest expense 2,012,121 1,095,369 Remeasurement loss on translation of foreign subsidiary 3,718 1,412 Total other expenses 2,015,499 1,082,899 Net (loss) income before income taxes ( 2,582,619 ) 864,804 Income tax benefit 13,720 11,460 Net (loss) income after tax $ ( 2,568,899 ) $ 876,264 Net (loss) income per share – basic $ ( 0.23 ) $ 0.10 Net (loss) income per share – diluted $ ( 0.23 ) $ 0.10 Weighted average common shares outstanding Basic 11,303,853 8,560,636 Diluted 11,303,853 8,577,620 Comprehensive (loss) income: Net (loss) income $ ( 2,568,899 ) $ 876,264 Foreign currency translation adjustment 22,080 ( 1,935 ) Comprehensive (loss) income $ ( 2,546,819 ) $ 874,329 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 8,721,818 $ 87 $ 27,643,660 $ ( 47,777 ) $ ( 127,500 ) $ ( 44,099,813 ) $ ( 16,631,343 ) Foreign currency translation loss ( 1,935 ) ( 1,935 ) Issuance of common stock for loan financing 30,360 1 117,647 117,648 Net income 876,264 876,264 Balance as of March 31, 2025 8,752,178 $ 88 $ 27,761,307 $ ( 49,712 ) $ ( 127,500 ) $ ( 43,223,549 ) $ ( 15,639,366 ) 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 11,483,926 $ 114 $ 33,594,550 $ - $ ( 154,281 ) $ ( 127,500 ) $ ( 56,441,021 ) $ ( 23,128,138 ) Foreign currency translation income 22,080 22,080 Fair value of vested stock options 116,307 116,307 Common stock to be issued for accounts receivable advance financing 153,400 153,400 Net loss ( 2,568,899 ) ( 2,568,899 ) Balance as of March 31, 2026 11,483,926 $ 114 $ 33,710,857 $ 153,400 $ ( 132,201 ) $ ( 127,500 ) $ ( 59,009,920 ) $ ( 25,405,250 ) 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 $ ( 2,568,899 ) $ 876,264 Adjustments to reconcile net (loss) income to net cash used in operating activities: Amortization of debt discount and debt issuance cost 951,942 406,841 Depreciation and amortization 33,333 33,333 Stock based compensation 116,307 - Foreign currency transaction loss (gain) 2,684 ( 3,137 ) Remeasurement loss (gain) on translation of foreign subsidiary 3,718 ( 1,412 ) Changes in operating assets and liabilities: Accounts receivable 1,935,483 940,519 Other receivables - 144,637 Loan receivable, related party - ( 833 ) Inventory 355,895 ( 629,935 ) Prepaid expenses ( 410,657 ) ( 114,787 ) Prepaid expense, related party ( 541,467 ) ( 195,913 ) Income taxes payable ( 2,297 ) ( 165,413 ) Contract liabilities ( 1,526 ) ( 24,216 ) Accounts payable and accrued liabilities ( 1,915,323 ) ( 2,218,041 ) Accounts payable, related party ( 3,871 ) 129,312 Net cash used in operating activities ( 2,044,678 ) ( 822,781 ) Cash Flows from Investing Activities - - Cash Flows from Financing Activities 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 ) Net cash (used in) provided by financing activities ( 307,600 ) 314,678 Effect of exchange rate on cash, cash equivalents and restricted cash 22,080 ( 1,935 ) Net decrease in cash, cash equivalents and restricted cash ( 2,330,198 ) ( 510,038 ) Cash and restricted cash, beginning of year 2,722,313 787,920 Cash and restricted cash, end of period $ 392,115 $ 277,882 Supplemental Disclosure of Cash Flow Information: Cash paid during the period for: Interest $ 392,846 $ 573,529 Income taxes $ - $ - Supplemental Disclosure of Noncash Investing and Financing Activities: Issuance of common stock for accounts receivable advance financing $ - $ 117,648 Loan financing fees, accrued $ 110,000 $ - Capitalized interest on senior debt $ 400,033 $ - Common stock to be issued for accounts receivable advance financing $ 153,400 $ - 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 December 29, 2010 in Nevada under the name “Oro Capital Corporation.” On April 21, 2014, the Company changed its fiscal year end from July 31 to December 31. On April 28, 2014, the Company changed its name to “Synergy Strips Corp.” On August 5, 2015, the Company changed its name to “Synergy CHC Corp.” The Company is a consumer health care company that is in the process of building a portfolio of best-in-class consumer product brands. Synergy’s strategy is to grow its portfolio both organically and by further 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 no 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 $ 250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. At March 31, 2026 and December 31, 2025, the uninsured balances amounted to $ 126,445 and $ 2,450,399 , respectively. 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 $ 292,115 $ 2,622,313 Restricted cash 100,000 100,000 Total cash and restricted cash shown in the statement of cash flows $ 392,115 $ 2,722,313 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. Once all revenue recognition criteria have been met, the contract liabilities are recognized. March 31, 2026 December 31, 2025 Beginning balance $ 1,526 $ 24,252 Additions - 1,526 Recognized as revenue ( 1,526 ) ( 24,252 ) Ending balance $ - $ 1,526 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 $ 43,856 and $ 377,579 , respectively. 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 100 % has been established due to the uncertainty of the Company’s realization of the net operating loss carry forward prior to its expiration. 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 1,200,000 and 252,102 shares of common stock, respectively, were outstanding. As of March 31, 2026 and 2025, warrants to purchase 3,156,000 and 103,500 shares of common stock, respectively, were outstanding. 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 $ ( 2,568,899 ) $ 876,264 Weighted average common shares outstanding 11,303,853 8,560,636 Incremental shares from the assumed exercise of dilutive stock options - 16,984 Dilutive potential common shares 11,303,853 8,577,620 Net (loss) earnings per share: Basic $ ( 0.23 ) $ 0.10 Diluted $ ( 0.23 ) $ 0.10 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 1,200,000 235,118 Warrants to purchase common stock 3,156,000 103,500 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 $ 0.6844 $ 0.6696 Period-end CAD: USD exchange rate $ 0.7174 $ 0.7296 Period-end MXN: USD exchange rate $ 0.0551 $ 0.0555 Income statement: March 31, March 31, 2026 2025 Average three months AUD: USD exchange rate $ 0.6941 $ 0.6272 Average three months CAD: USD exchange rate $ 0.7290 $ 0.6968 Average three months MXN: USD exchange rate $ 0.0570 $ - 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 Segment identification and selection is consistent with the management structure used by the Company’s chief executive officer who is the Chief Operating Decision Maker (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. 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 $ 59,009,920 . ● At March 31, 2026, the Company had a decrease in net revenue of $ 2,677,829 . ● At March 31, 2026, the Company had a decrease in net income of $ 3,445,163 . ● At March 31, 2026, the Company had a working capital deficit of $ 503,862 . ● During the three months ended March 31, 2026, the Company 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. 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 $ 2,673,201 in gross proceeds. ● 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 $ ( 542,350 ) ( 21 )% $ 181,609 21 % AU/CA/MXN rates in excess of the US rate ( 30,868 ) ( 1 )% ( 4,593 ) ( 1 ) % Increase (decrease) in valuation allowance 590,370 22 % ( 188,477 ) ( 21 )% Permanent differences - - % - - % Prior period true up ( 3,432 ) ( 1 )% - - % Total provision for income taxes $ ( 13,720 ) ( 1 )% $ ( 11,460 ) ( 1 )% 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 $ 10,703,792 $ 11,993,073 Obsolete inventory 26,326 26,326 Nonstatutory stock options 548,931 515,319 Other 57,750 43,313 Impairment of intangible asset 220,150 220,150 Amortization - - Bad debt reserve - - Other - 2,815,819 Deferred tax asset 11,556,949 15,614,000 Valuation allowance for deferred tax assets ( 11,556,949 ) ( 15,614,000 ) Net deferred tax assets $ - $ - 14 The Company had tax benefit of $ 13,720 and $ 11,460 for the three months ended March 31, 2026 and 2025, respectively. 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 ( 13,720 ) ( 11,460 ) Total Current ( 13,720 ) ( 11,460 ) Deferred Federal - - State - - Foreign - - Total Deferred - - Total income tax benefit $ ( 13,720 ) $ ( 11,460 ) The table below summarizes the (loss) income before taxes for domestic and foreign jurisdictions: March 31, 2026 March 31, 2025 Domestic (U.S.) $ ( 2,239,496 ) $ 916,230 Foreign ( 343,123 ) ( 51,426 ) Total $ ( 2,582,619 ) $ 864,804 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 ( 13,720 ) ( 11,460 ) Total $ ( 13,720 ) $ ( 11,460 ) The Company also has net operating loss carryforwards of approximately $ 59,582,000 and approximately $ 57,000,000 (United States, Canada and Australia) included in the deferred tax assets for March 31, 2026 and December 31, 2025, respectively, the majority attributable to the acquisition of Breakthrough Products, Inc. However, due to limitations of carryover attributes and separate return limitation year rules, it is unlikely the company will benefit from the NOLs and thus management has determined a 100 % valuation allowance is required. Further, the Company has not completed an evaluation of the NOLs attributable to Breakthrough Products, Inc. at the date of this report. 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 $ 1,311,878 $ 3,581,084 Less allowances ( 43,856 ) ( 377,579 ) Total accounts receivable, net $ 1,268,022 $ 3,203,505 15 During the three months ended March 31, 2026 and 2025, the Company charged $ 0 to bad debt expense. During the three months ended March 31, 2026 the Company wrote off $ 333,720 of allowance for doubtful accounts to accounts receivable that it deemed uncollectible. The Company’s accounts receivables fluctuate due to increasing or decreasing shipments and promotions that it runs with its customers. The Company records an allowance for doubtful accounts when it becomes more likely than not that an account is uncollectible. 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 $ 195,234 $ 168,174 Insurance 79,103 17,081 Accounting 45,000 - Contract employee, related party 638,203 110,803 Rent, related party 14,067 - Legal expenses 105,341 - Conferences 24,614 11,333 Professional fees 89,405 - IT expenses 60,166 43,132 Payroll 51,504 - Miscellaneous 536 526 Total $ 1,303,173 $ 351,049 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 $ 250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. At March 31, 2026 and December 31, 2025, the uninsured balances amounted to $ 126,445 and $ 2,450,399 respectively. Accounts receivable As of March 31, 2026 and December 31, 2025, three customers and one customer accounted for 58 % and 71 %, respectively, of the Company’s trade accounts receivable. Major customers For the three months ended March 31, 2026, three customers accounted for approximately 85 % of the Company’s net revenue. For the three months ended March 31, 2025, three customers accounted for approximately 71 % of the Company’s net revenue. Substantially all of the Company’s business is with companies in North America. Accounts payable As of March 31, 2026 and December 31, 2025, two vendors accounted for 57 % and 64 %, respectively, of the Company’s accounts payable. Major suppliers For the three months ended March 31, 2026, one supplier accounted for approximately 38 % of the Company’s purchases. For the three months ended March 31, 2025, two suppliers accounted for approximately 44 % of the Company’s purchases. 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 $ 2,993,516 $ 3,325,093 Components 302,641 412,416 Ingredients 85,457 - Total inventory $ 3,381,614 $ 3,737,509 During the three months ended March 31, 2026 and 2025, the Company had no inventory write-offs. Note 8 – Intangible Assets March 31, 2026 December 31, 2025 License Fee $ 450,000 $ 450,000 Less accumulated amortization ( 333,333 ) ( 300,000 ) Intangible assets, net $ 116,667 $ 150,000 Amortization for both the three months ended March 31, 2026 and 2025 was $ 33,333 . The estimated aggregate amortization expense over each of the next five years is as follows: 2026 (remaining) $ 100,000 2027 16,667 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 $ 377,400 of consulting fees and expensed $ 225,000 of consulting fees during the three months ended March 31, 2026. The Company advanced $ 180,000 in prepaid consulting fees during the three months ended March 31, 2025. The Company paid a bonus of $ 400,000 for 2026 to the related party. The prepaid balance as of March 31, 2026 and December 31, 2025 was $ 638,203 and $ 110,803 , respectively. During March 2026, the Company paid $ 12,500 for a vehicle allowance, of which $ 7,500 has been expensed and $ 5,000 remains in prepaid expenses. During the three months ended March 31, 2026, the Company repaid a short-term note of $ 100,000 . The balance owed as of March 31, 2026 was $ 0 . During the three months ended March 31, 2025, the Company was advanced $ 135,000 in the form of a short-term note. The balance owed as of March 31, 2025 was $ 135,000 . The Company paid rent through March 2026 to a company owned by Mr. Jack Ross, Chief Executive Officer of the Company. The Company expensed $ 58,824 Canadian Dollars ($ 42,885 US Dollars) for the three months ended March 31, 2026, leaving a prepaid balance of $ 19,608 Canadian Dollars ($ 14,067 US Dollars). 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 30 % of gross sales for sales achieved through a direct sales channel and 5 % of gross sales for sales achieved through retail sales. The minimum due to Knight under this agreement is $ 100,000 Canadian dollars. As of both March 31, 2026 and December 31, 2025, the total outstanding balance was $ 269,920 Canadian dollars. In US Dollars, the total outstanding balance was $ 193,641 and $ 196,934 as of March 31, 2026 and December 31, 2025, respectively. The Company expensed royalty of $ 0 and $ 4,549 for the three months ended March 31, 2026 and 2025, respectively. At March 31, 2026 and December 31, 2025, the Company owed Knight $ 0 and $ 578 , respectively, in connection with a royalty distribution agreement. 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 $ 405,723 $ 316,580 Legal fees 260,000 233,199 Commissions 229,412 297,831 Manufacturers 1,202,911 1,664,299 Promotions 686 1,126,523 Accounting Fees 86,712 53,683 Freight 169,952 274,735 Royalties, shareholder 193,641 197,512 Warehousing 516,679 894,161 Sales taxes 1,145 106,909 Payroll taxes 308,598 446,521 Professional Fees 26,400 - Interest 181,904 300,397 Lender fees 325,000 325,000 Others 123,231 150,867 Total $ 4,031,994 $ 6,388,219 The Company has estimated and accrued for its sales tax liability at $ 1,145 and $ 355 for the parent entity as of March 31, 2026 and December 31, 2025, respectively. 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 $ 2,000,000 and $ 6,000,000 Notes $ 9,595,223 $ 9,595,223 $ 3,024,000 November 12, 2025 Accounts Receivable Advance - 2,436,000 $ 4,032,000 March 10, 2026 Accounts Receivable Advance 3,830,400 - $ 17,500,000 May 2025 Loan 17,725,033 17,500,000 31,150,656 29,531,223 Unamortized debt issuance cost and debt discount ( 3,401,620 ) ( 2,816,562 ) Total 27,749,036 26,714,661 Current portion, other ( 2,730,981 ) ( 1,658,215 ) Long-term portion, other $ 25,018,055 $ 25,056,446 $2,000,000 February 10, 2022 Loan: On February 10, 2022, the Company entered into a promissory note for $ 2,000,000 with an individual which was to be repaid with subsequent financing. Subsequently and pursuant to the modification agreement entered into on June 14 th , 2023, effective September 9, 2022, the promissory loan would bear all the same characteristics as the additional $ 6,000,000 loan noted below. $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 $ 6,000,000 with an original maturity date of September 8, 2022 and warrants with a term of 3 years. The Senior Subordinated Debentures were modified on June 14, 2023 in conjunction with the promissory note. On March 31, 2024, the Company entered into a Modification Agreement in relation to this loan, which consolidated it with the $ 2,000,000 February 10, 2022 loan above. 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 ($ 17,500,000 May 2025 Loan). This loan may only be repaid based on certain conditions which must be met before payment can be made. There is no maturity date on this loan, and bears interest at 12 % per annum. “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 $ 2,000,000 ; (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 $ 4,000,000 ; (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 ( 50 %) of such Net Cash Proceeds; and (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 $ 0.01 penny per share, covering 10 % of his stock to the lender for non-payment of principal amount plus loan renegotiation fees by December 31, 2024. The Company issued 441,178 shares valued at $ 847,062 to the lender for releasing Jack Ross (CEO) from this obligation. 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 $ 15.0 million term loan (the “Term Loan”), up to $ 2.5 million in a committed delayed draw facility (the “Delayed Draw Facility”), and up to $ 2.5 million in an uncommitted term loan incremental facility (the “Incremental Facility”), which facilities are secured by all of the assets of the Company and certain of its subsidiaries; including, without limitation, a pledge of the Company’s equity interests in its subsidiaries and their respective rights to intellectual property. Further, the obligations of the Company under the Credit Agreement are guaranteed by the Company and certain of its subsidiaries. The proceeds of the Term Loan are to be used to repay existing indebtedness of the Company, pay related fees and transaction costs, and provide working capital to the Company. The proceeds of the Delayed Draw Facility are to be used to pay off all indebtedness owed by the Company pursuant to certain settlement agreements. All capitalized words used but not defined herein have the meanings assigned in the Credit Agreement. 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, $ 175,000 is subject to repayment on each of January 1, 2026, April 1, 2026, July 1, 2026 and October 1, 2026 and the remaining balance is to be repaid in the amount of $ 350,000 beginning January 1, 2027 and the first day of each quarter thereafter. The Term Loan bears interest at a rate equal to the Term SOFR rate plus 8.50%. The Delayed Draw Facility and Incremental Facility, if applicable, shall bear interest following any advance of proceed thereunder, at a rate of either (x) (i) Term SOFR rate plus (ii) 8.5%, or (y) (i) a reference rate equal to the greater of (a) 6.0% per annum, (b) the federal funds rate plus 0.50% per annum, (c) the Term SOFR rate plus 1% per annum, and (d) the rate last quoted by The Wall Street Journal as the “Prime Rate” in the United States, plus (ii) 7.50%. The Company received $ 15,000,000 in May 2025 on the initial draw and $ 2,500,000 in June 2025 on a delayed draw. The proceeds of the loan were used to pay out existing debt. The Company recorded $ 2,385,954 as original debt discount. The Company recognized $ 155,943 as amortization during the three months ended March 31, 2026. The unamortized balance amounts to $ 2,034,500 at March 31, 2026. 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 $ 175,000 on each of July 1, 2026 and October 1, 2026, followed by a scheduled principal payment of $ 525,000 on January 1, 2027, and scheduled principal payments of $ 350,000 beginning April 1, 2027 and on the first day of each quarter thereafter. 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 $ 10,000,000 of Net Cash Proceeds from Equity Issuances made on or after the Second Amendment Effective Date (and apply such proceeds as required under the Credit Agreement), then commencing October 1, 2026 the Applicable Margin will increase by 2.00 % per annum for the applicable Loans until the Company satisfies that $ 10,000,000 equity raise condition and applies such proceeds as required. In addition, the Second Amendment modifies interest payment mechanics by requiring that the interest payment due on March 2, 2026 be paid in kind by capitalizing such interest and adding it to the then-outstanding principal amount of the Term Loan and permitting the Company, at its election and subject to providing the required notice, to pay all or a portion of the interest payment due on April 1, 2026 in kind through similar capitalization. The Second Amendment also adds a Minimum Consolidated Adjusted EBITDA covenant with stated dollar thresholds, including a minimum Consolidated Adjusted EBITDA requirement of $ 500,000 for the fiscal quarter ended June 30, 2026 and $ 1,000,000 for the fiscal quarter ended September 30, 2026. The Second Amendment also revises the consolidated senior net leverage ratio testing levels and related testing periods (including a specified maximum ratio of 20.00:1.00 for the fiscal quarter ended December 31, 2025 and a revised step-down schedule thereafter). 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 $ 6,000,000 may be retained for general corporate purposes, the next $ 4,000,000 must be applied to prepay the outstanding principal amount of the Term Loan, and Net Cash Proceeds received in excess of $ 10,000,000 are subject to additional mandatory prepayment requirements, including a requirement to prepay 50 % of such excess proceeds if the Company’s Consolidated Senior Net Leverage Ratio as of the end of the most recent fiscal quarter ended on or before the date of receipt of such proceeds is equal to or greater than 2.50 to 1.00 and 0 % of such excess proceeds if such ratio is less than 2.50 to 1.00. The Second Amendment also limits the Company’s ability to elect Term SOFR-based interest by providing that, effective February 1, 2026, all outstanding Term SOFR Rate Loans are automatically converted to Reference Rate Loans and the Company may not elect the Term SOFR rate option for any Loans until it has made principal reduction payments from and after the Second Amendment Effective Date in an aggregate amount of not less than $ 4,000,000 . 20 The Second Amendment also revises the “Change of Control” definition to include, among other circumstances, the acquisition of beneficial ownership of more than 40 % (increased from 30 %) of the aggregate outstanding voting or economic power of the Company’s equity interests by any person or group (other than Jack Ross). 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 3,000,000 shares of the Company’s common stock at an exercise price of $ 0.00001 per share. The Lender Warrant has a ten-year term and becomes exercisable upon the occurrence of a “Qualified Event of Default,” defined as the occurrence of any event of default under Section 8.1(a) of the Credit Agreement; the Lender Warrant terminates upon the indefeasible payment in full of all secured obligations under the Credit Agreement and related loan documents. 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 19.9 % of the Company’s outstanding common stock (the “Beneficial Ownership Limitation”). The Company has covenanted to seek stockholder approval for issuances in excess of the Beneficial Ownership Limitation at the Company’s next annual meeting of stockholders, to be held no later than June 30, 2026, and to use reasonable best efforts to solicit such approval and to cause the Company’s board of directors to recommend approval. The Lender Warrant also provides for a cashless (net) exercise feature following a Qualified Event of Default. The Term Loan bears interest at the greatest of 6.0 % per annum, the Federal Funds Rate plus 0.50 % per annum, Term SOFR rate plus 1.00 % and the rate last quoted by The Wall Street Journal as the “Prime Rate” in the United States, plus 7.5 %, which resulted in an effective rate of 14.25 % per annum as of March 31, 2026, and matures on May 30, 2029 . The Company recognized interest expense of $ 742,460 during the three months ended March 31, 2026. The Company accrued interest of $ 400,033 , which is added to the principal balance. 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 $ 350,000 2027 $ 1,575,000 2028 $ 1,400,000 2029 $ 14,400,033 $3,024,000 November 2025 Accounts Receivable Advance: On November 12, 2025, the Company entered into a cash advance agreement of $ 3,024,000 with Cedar Advance LLC for an advancement of working capital through the sale of receivables. The Company received $ 2,000,000 and recorded $ 1,024,000 as original issue discount. The advance bears a repayment rate of $ 84,000 per week with a total payment of $ 3,024,000 . In conjunction with the advance, the Company issued 52,000 shares of common stock to the consultant who facilitated the facility and thus recognized $ 103,220 as financing cost. The Company recognized interest expense of $ 777,785 during the three months ended March 31, 2026. During March 2026, this advance was consolidated into the advance detailed below. The outstanding advance balance at March 31, 2026 and December 31, 2025 was $ 0 and $ 2,436,000 , with unamortized debt discount of $ 0 and $ 777,785 resulting in a net carrying amount of $ 0 and $ 1,658,215 , respectively. $4,032,000 March 2026 Accounts Receivable Advance: On March 10, 2026, the Company entered into a cash advance agreement of $ 4,032,000 with Cedar Advance LLC for an advancement of working capital through the sale of receivables. The Company received $ 980,000 and repaid $ 1,680,000 of the November advance. The Company recorded $ 1,372,000 as original issue discount. The advance bears a repayment rate of $ 100,800 per week with a total payment of $ 4,032,000 . In conjunction with the advance, the Company will issue 118,000 shares of common stock to the consultant who facilitated the facility and thus recognized $ 153,400 as financing cost. 21 The Company recognized total interest expense of $ 171,614 during the three months ended March 31, 2026. The outstanding advance balance at March 31, 2026 was $ 3,830,400 , with unamortized debt discount of $ 1,353,786 resulting in a net carrying amount of $ 2,476,614 . Subsequent to March 31, 2026 the Company has made two payments of $ 201,600 on this advance. 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 300,000,000 shares of common stock with $ 0.00001 par value. As of both March 31, 2026 and December 31, 2025, there were 11,483,926 shares issued, and 11,303,853 shares outstanding. 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 $ 1,500,000 as licensing revenue in conjunction with this agreement during March 2025. Due to the instability in the countries, the licensee terminated the agreement in February 2026 with the Company, resulting in a reversal of the $ 1,500,000 license fee revenue during December 2025. Despite the termination, the Company is still pursuing the registration of the IP in those countries. 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 ($) $ 2.38 1,200,000 4.46 $ 2.38 - $ - 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 1,200,000 $ 2.38 Granted - - Exercised - - Expired or canceled - - Outstanding at March 31, 2026 1,200,000 $ 2.38 Exercisable at March 31, 2026 - $ - 22 Stock-based compensation expense related to vested options was $ 116,307 during the three months ended March 31, 2026 and is recognized utilizing the straight-line method. Stock options outstanding as of March 31, 2026, as disclosed in the above table, have an intrinsic value of $ 0 . Stock options exercisable as of March 31, 2026, as disclosed in the above table, have an intrinsic value of $ 0 . As of March 31, 2026, unamortized stock-based compensation costs related to options was $ 1,144,243 and will be recognized over a period of 2.5 years. 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 ($) $ 0.00001 – 11.70 3,156,000 3.16 $ 0.43 156,000 $ 8.69 The warrant activity for the three months ended March 31, 2026 is as follows: Warrants Weighted Average Exercise Price Outstanding at December 31, 2025 156,000 $ 8.69 Granted 3,000,000 0.00001 Exercised - - Expired or canceled - - Outstanding at March 31, 2026 3,156,000 $ 0.43 Exercisable at March 31, 2026 156,000 $ 8.69 Stock warrants outstanding as of March 31, 2026, as disclosed in the above table, have an intrinsic value of $ 3,869,970 . Stock warrants exercisable as of March 31, 2026, as disclosed in the above table, have an intrinsic value of $ 0 . 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 $ 5,221,880 $ 7,454,724 Canada 227,580 656,877 Mexico 42,831 1,320 Other 414 57,613 $ 5,492,705 $ 8,170,534 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 $ 4,824,763 $ 6,639,564 Beverages 667,942 30,970 License Revenue - 1,500,000 $ 5,492,705 $ 8,170,534 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 $ 1,787,085 $ 2,761,845 Retail 3,705,620 5,408,689 $ 5,492,705 $ 8,170,534 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 $ 689,381 $ 939,453 Freight and fulfillment 341,919 497,748 Online marketing 900,722 931,827 Salaries and benefits, marketing 432,559 328,174 Other selling and marketing 91,491 179,069 IT expenses 144,704 140,576 Salaries and benefits, non-marketing 1,059,304 567,993 Professional fees 254,270 163,768 Travel 160,733 155,120 Stock based compensation 160,057 - Board of Directors compensation 31,250 - Other general and administrative expenses 238,192 279,257 Amortization 33,333 33,333 $ 4,537,915 $ 4,216,318 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 $ 116,667 $ 150,000 Foreign countries - - $ 116,667 $ 150,000 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 3,278,030 shares under its ATM program, raising $ 2,673,201 in gross proceeds, which includes $ 80,261 of issuance expenses. During April 2026, the Company issued 118,000 shares to a consultant that facilitated the loan facility. During April 2026, the Company issued 200,000 shares for services rendered. 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