What changed in this filing

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Item 1. Financial Statements

2016-08-05 compared with 2016-04-25 · 527 added, 226 removed, 1366 unchanged (36% of the section changed)

1 unchanged sentence

Consolidated Balance Sheets

March 31, 2016

June 30, 2016

December 31, 2015

27 unchanged sentences

300,000,000 shares authorized;

shares issued and outstanding

and 81,692,954 shares issued and outstanding, respectively

Common stock to be issued

Additional paid in capital

Accumulated other comprehensive income

Accumulated deficit

2 unchanged sentences

accompanying notes are an integral part of these unaudited condensed consolidated financial statements

Condensed Consolidated Statements of Operations

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

For the three months ended

March 31, 2016

March 31, 2015

For the six months ended

June 30, 2016

June 30, 2015

June 30, 2016

June 30, 2015

Cost of sales

4 unchanged sentences

Total operating expenses

Income (loss) from operations

Income from operations

Other (income) expenses

1 unchanged sentence

Interest expense

Remeasurement gain on translation of foreign subsidiary

Gain on change in fair value of derivative liability

Remeasurement loss (gain) on translation of foreign subsidiary

Loss (gain) on change in fair value of derivative liability

Amortization of debt discount

Amortization of debt issuance cost

Total other (income) expenses

Total other expenses

Net income (loss) before income taxes

Income tax expense

Net Income (loss) after tax

Net (loss) income after tax

$ (2,604,538 )

Net income (loss) per share –

Net (loss) income per share –

Weighted average common shares outstanding

Comprehensive income (loss):

Net (loss) income

Foreign currency translation adjustment

Comprehensive (loss) income

$ (2,604,538 )

accompanying notes are an integral part of these unaudited condensed consolidated financial statements

Condensed Consolidated Statements of Cash Flows

For the three months ended

March 31, 2016

March 31, 2015

For the six months ended

June 30, 2016

June 30, 2015

Cash Flows from Operating Activities

1 unchanged sentence

$ (2,604,538 )

Adjustments to reconcile net loss to net cash provided by (used in) operating

Adjustments to reconcile net income (loss) to net cash provided by operating

Depreciation and amortization

Amortization of debt issuance cost

Stock issued for services

Stock based compensation expense

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Payments for acquisition of fixed assets

Payments for acquisition of Factor Nutrition Labs

Payments for acquisition of Focus Factor

Payments for acquisition transaction with Knight Therapeutics Inc.

Payment of earn out liability

Restricted cash

Net cash provided by (used in) investing activities

Cash Flows from

Financing Activities

Net cash used in investing activities

Cash Flows from Financing Activities

Proceeds from notes payable

Repayment of notes payable

Payment of earn out liability

Payment of debt issuance cost

Advances from related party note

Repayment to related party note

Proceeds from exercise of warrant

Net cash (used in) provided by financing activities

Net increase in cash and cash equivalents

Effect of exchange rate on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and Cash Equivalents, beginning of period

4 unchanged sentences

Reallocation of goodwill related to acquisition of Factor Nutrition to intellectual

Reallocation of goodwill related to acquisition of Breakthrough Products,

to intellectual property

Reallocation of non-compete agreement related to acquisition of Breakthrough

Products, Inc.

Adjusting the value of shares issued to goodwill related to acquisition of

Breakthrough Products, Inc.

Reallocation of blogger database and intellectual property related to acquisition

of Nomadchoice Pty Ltd.

to customer database

Common stock to be issued now issued

Common stock issued for settlement of debt

1 unchanged sentence

Assumption of assets and liabilities as part of acquisition transaction

Assumption of liabilities as part of acquisition transaction with Knight

Therapeutics, Inc.

Note issued as part of asset purchase agreement

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Synergy’s strategy is to grow its portfolio both organically and by further acquisition.

is the sole owner of three subsidiaries:

Neuragen Corp., Breakthrough Products, Inc.

and NomadChoice Pty Ltd.

and the results

have been consolidated in these statements.

is the sole owner of four subsidiaries:

Neuragen Corp., Breakthrough Products, Inc., NomadChoice Pty Ltd.

and Synergy CHC Inc.

and the results have been consolidated in these statements.

CHC Inc., a Canadian corporation, was created during February 2016 in order to perform marketing and customer service operations

for the companies owned by Synergy CHC Corp.

Summary of Significant Accounting Policies

accompanying condensed consolidated financial statements as of March 31, 2016 and December 31, 2015 and for the three months ended

March 31, 2016 and 2015 are unaudited.

These unaudited condensed consolidated financial statements have been prepared in accordance

with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and

are presented in accordance with the requirements of Rule S-X of the Securities and Exchange Commission (the “SEC”)

accompanying condensed consolidated financial statements as of June 30, 2016 and December 31, 2015 and for the three and six months

ended June 30, 2016 and 2015 are unaudited.

These unaudited condensed consolidated financial statements have been prepared in

accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information

and are presented in accordance with the requirements of Rule S-X of the Securities and Exchange Commission (the “SEC”)

and with the instructions to Form 10-Q.

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normal recurring accruals) considered necessary for a fair presentation have been included.

Operating results for the three months

ended March 31, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31,

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, 2015 and footnotes thereto included in the Company’s Annual Report

on Form 10-K filed with the SEC.

Operating results for the three and

six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending December

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, 2015 and footnotes thereto included in the Company’s Annual

Report on Form 10-K filed with the SEC.

of Presentation

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The Company minimizes this risk by placing its cash deposits with major financial institutions.

At March 31, 2016, the uninsured

At June 30, 2016, the uninsured

balance amounted to $2,910,492.

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a discounted cash flow analysis, and an impairment charge is recorded for the excess of carrying value over fair value.

March 31, 2016, our qualitative analysis of long-lived assets did not indicate any impairment.

June 30, 2016, our qualitative analysis of long-lived assets did not indicate any impairment.

asset purchase is accounted for under the purchase method of accounting.

2 unchanged sentences

over the estimated fair value of the net tangible and intangible assets acquired recorded as goodwill.

As of March 31, 2016, our

As of June 30, 2016, our

qualitative analysis of goodwill did not indicate any impairment.

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method), unless their effect on net loss per share is anti-dilutive.

As of March 31, 2016, options to purchase 5,000,000 shares of common stock and warrants to purchase 9,132,002 shares of common

As of June 30, 2016, options to purchase 5,000,000 shares of common stock and warrants to purchase 9,132,002 shares of common

stock were outstanding.

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The Company had

accumulated deficit at March 31, 2016 of $5,759,365.

The Company had a working capital deficit of $4,290,701 as of March 31, 2016.

Due to acquisitions during 2015 of revenue-producing products, the Company believes it has established an ongoing source of revenue

that is sufficient to cover its operating costs.

an accumulated deficit at June 30, 2016 of $5,771,954.

The Company had a working capital deficit of $4,791,382 as of June 30,

Due to acquisitions during 2015 of revenue-producing products, the Company believes it has established an ongoing source

of revenue that is sufficient to cover its operating costs.

Management’s

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to the fair value measurement.

of March 31, 2016, the Company has determined that there were no assets or liabilities measured at fair value, except for the

warrant derivative liability.

of June 30, 2016, the Company has determined that there were no assets or liabilities measured at fair value, except for the warrant

derivative liability.

consists of raw materials, components and finished goods.

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Currency Translation

functional currency of the Company’s foreign subsidiary (Nomadchoice Pty Ltd.) is the U.S.

The Company’s foreign

subsidiary maintains its record 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.

functional currency of one of the Company’s foreign subsidiaries (Nomadchoice Pty Ltd.) is the U.S.

The Company’s

foreign subsidiary maintains its record 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.

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.

functional currency of the Company’s other foreign subsidiary (Synergy CHC Inc.) is the Canadian Dollar (CAD).

The Company’s

foreign subsidiary maintains its record 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.

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 or Canadian Dollars, as the case may be, at the rate on the date of the

transaction and included in the results of operations as incurred.

Concentrations

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Black-Scholes-Merton option-pricing model, with dilution effects, was utilized to estimate the fair value of the Warrant Derivative

Liabilities as of March 31, 2016.

Liabilities as of June 30, 2016.

This model is subject to the significant assumptions discussed below and requires the following

key inputs with respect to the Company and/or instrument:

Life (in years)

Shares of Common Stock

June 30, 2016

Exercise Price

Expected Life (in years)

Stock Volatility

Risk-Free Rate

Dividend Rate

Outstanding Shares of Common Stock

of sales includes the purchase cost of products sold and all costs associated with getting the products into the retail stores

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Accounting Pronouncements

April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606):

Identifying Performance Obligations

and Licensing, which provides further guidance on identifying performance obligations and improves the operability and understandability

of licensing implementation guidance.

The effective date for ASU 2016-10 is the same as the effective date of ASU 2014-09 as amended

by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years.

The Company has not yet determined the impact of ASU 2016-10 on its consolidated financial statements.

March 2016, the FASB issued ASU No.

2016-09, Compensation –

Stock Compensation, or ASU No.

The areas for simplification

in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences,

classification of awards as either equity or liabilities, and classification on the statement of cash flows.

For public entities,

the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those

annual periods.

Early adoption is permitted in any interim or annual period.

If an entity early adopts the amendments in an interim

period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

that elects early adoption must adopt all of the amendments in the same period.

Amendments related to the timing of when excess

tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using

a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period

in which the guidance is adopted.

Amendments related to the presentation of employee taxes paid on the statement of cash flows

when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively.

requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating

expected term should be applied prospectively.

An entity may elect to apply the amendments related to the presentation of excess

tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method.

We are currently evaluating the impact of adopting ASU No.

2016-09 on our consolidated financial statements.

March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606):

Principal versus Agent Considerations

(Reporting Revenue Gross versus Net) that clarifies how to apply revenue recognition guidance related to whether an entity is

a principal or an agent.

ASU 2016-08 clarifies that the analysis must focus on whether the entity has control of the goods or

services before they are transferred to the customer and provides additional guidance about how to apply the control principle

when services are provided and when goods or services are combined with other goods or services.

The effective date for ASU 2016-08

is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December

15, 2017, including interim periods within those years.

The Company has not yet determined the impact of ASU 2016-08 on its consolidated

financial statements.

January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

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cost of $253,589 and $378,852 from other assets to liabilities and netted off with the related loans in the liabilities as of

March 31, 2016 and December 31, 2015, respectively.

June 30, 2016 and December 31, 2015, respectively.

February 2015, the FASB issued ASU No.

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carrying value of inventory consisted of the following:

March 31, 2016

June 30, 2016

December 31, 2015

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of January 22, 2015, inventory was pledged to Knight Therapeutics under the Loan Agreement (see note 10).

the three month period ended June 30, 2016, a subsidiary reached an agreement with a former manufacturer and gained control over

raw materials which will be used in future production.

Accounts Receivable

receivable, net of allowances for sales returns and doubtful accounts, consisted of the following:

March 31, 2016

June 30, 2016

December 31, 2015

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the year ended December 31, 2015, the Company charged $50,000 to bad debt expense in setting up an allowance.

During the three

and six months ended June 30, 2016, the Company charged $nil to bad debt expense in setting up an allowance.

Prepaid Expenses

expenses consisted of the following:

June 30, 2016

December 31, 2015

Advances for inventory

Media production

License agreement

Prepayment on share settlement

Miscellaneous

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its cash deposits with major financial institutions.

At March 31, 2016 and December 31, 2015, the uninsured balances amounted

to $3,501,592 and $3,453,290, respectively.

of March 31, 2016, four customers accounted for 77% of the Company’s accounts receivable.

At June 30, 2016 and December 31, 2015, the uninsured balances amounted to

$2,910,492 and $3,453,290, respectively.

of June 30, 2016, five customers accounted for 83% of the Company’s accounts receivable.

As of December 31, 2015, one customer

accounted for 78% of the Company’s accounts receivable.

the three months ended March 31, 2016, two customers accounted for approximately 26% of the Company’s gross revenue.

the year ended December 31, 2015, two customers accounted for approximately 71% of the Company’s gross revenues.

Substantially

all of the Company’s business is with companies in the United States.

the period ended March 31, 2016 and the year ended December 31, 2015, our products were made by the following suppliers:

Flat Tummy Tea

Linthicum Heights,

For the six months ended June 30, 2016, four

customers accounted for approximately 30% of the Company’s gross revenue.

For the three months ended June 30, 2016, four

customers accounted for approximately 38% of the Company’s gross revenue.

For the six months ended June 30, 2015, four customers

accounted for approximately 94% of the Company’s gross revenue.

For the three months ended June 30, 2015, four customers

accounted for approximately 97% of the Company’s gross revenue.

For the year ended December 31, 2015, two customers accounted

for approximately 71% of the Company’s gross revenues.

Substantially all of the Company’s business is with companies

in the United States.

the three and six months ended June 30, 2016 and 2015, our products were made by the following suppliers:

is the opinion of management that the products can be produced by other manufacturers and the choice to utilize these suppliers

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Fixed Assets and Intangible Assets

of March 31, 2016 and December 31, 2015, fixed assets and intangible assets consisted of the following:

of June 30, 2016 and December 31, 2015, fixed assets and intangible assets consisted of the following:

June 30, 2016

December 31, 2015

Property and equipment

Less accumulated depreciation

Construction in progress

Fixed assets, net

expense for the three months ended March 31, 2016 and 2015 was $2,227 and $75, respectively

FOCUSfactor intellectual

expense for the three months ended June 30, 2016 and 2015 was $8,467 and $138, respectively.

Depreciation expense for the six

months ended June 30, 2016 and 2015 was $10,694 and $213, respectively.

June 30, 2016

December 31, 2015

FOCUSfactor intellectual property

Intangible assets subject to amortization

Less accumulated

expense for the three months ended March 31, 2016 and 2015 was $276,410 and $77,167, respectively.

These intangible assets were

acquired through Asset Purchase Agreement and Stock Purchase Agreements entered into during 2015.

Less accumulated amortization

Intangible assets, net

expense for the six months ended June 30, 2016 and 2015 was $562,316 and $178,940, respectively.

Amortization expense for the

three months ended June 30, 2016 and 2015 was $285,906 and $101,773, respectively.

These intangible assets were acquired through

Asset Purchase Agreement and Stock Purchase Agreements entered into during 2015.

2016, valuations were performed on acquisitions that occurred during 2015.

Based on those valuations the Company adjusted intangible

asset and goodwill –

refer Note 17.

Related Party Transactions

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Jack Ross, Chief Executive Officer of

As of March 31, 2016, the total outstanding balance was $0.

As of June 30, 2016, the total outstanding balance was $0.

January 22, 2015, the Company entered into a Loan Agreement with Knight Therapeutics (Barbados) Inc.

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related party, for the purchase of the Focus Factor assets.

At March 31, 2016, the Company owed Knight $4,110,521 on this loan,

At June 30, 2016, the Company owed Knight $3,683,782 on this loan,

net of discount (see Note 10).

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Neuragen Corp., for the purchase of Knight Therapeutics, Inc.’s assets.

At March 31, 2016, the Company owed Knight $538,102

At June 30, 2016, the Company owed Knight $294,843

in relation to this agreement (see Note 10).

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Hand MD, LLC is a 50% owner in Hand MD Corp.

expensed $30,000 through payroll for the three months ended March 31, 2016.

As of March 31, 2016, the total outstanding balance

expensed $60,000 through payroll for the six months ended June 30, 2016 and $30,000 for the three months ended June 30, 2016.

As of June 30, 2016, the total outstanding balance was $0.

November 12, 2015, the Company entered into a Loan Agreement with Knight Therapeutics (Barbados) Inc., a related party, for the

purchase of NomadChoice Pty Limited and Breakthrough Products, Inc.

At March 31, 2016, the Company owed Knight $3,828,660 on this

At June 30, 2016, the Company owed Knight $4,086,007 on this

loan, net of discount (see Note 10).

March 31, 2016 NomadChoice Pty Ltd., a subsidiary of the Company, owed Knight Therapeutics $46,323 in connection with a royalty

June 30, 2016 NomadChoice Pty Ltd., a subsidiary of the Company, owed Knight Therapeutics $45,783 in connection with a royalty

distribution agreement.

Accounts Payable and Accrued Liabilities

of March 31, 2016 and December 31, 2015, accounts payable and accrued liabilities consisted of the following:

March 31, 2016

of June 30, 2016 and December 31, 2015, accounts payable and accrued liabilities consisted of the following:

June 30, 2016

December 31, 2015

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Returns allowance

10 –Notes Payable

Company’s loans payable at March 31, 2016 and December 31, 2015 are as follows:

Notes Payable

Company’s loans payable at June 30, 2016 and December 31, 2015 are as follows:

June 30, 2016

December 31, 2015

Loans payable

Unamortized debt

issuance cost

Unamortized debt discount

Unamortized debt issuance cost

Current portion

Long-term portion

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period then ending.

Principal payments under the Loan Agreement commenced on June 30, 2015 and continue quarterly as set forth

on the Repayment Schedule to the Loan Agreement.

These covenants were achieved, therefore the Company chose to extend the loan for the first 12-month period.

Principal payments under the Loan Agreement commenced on June 30, 2015 and continue quarterly as set forth on the Repayment Schedule

to the Loan Agreement.

to certain restrictions, the Company may prepay the outstanding principal of the Loan (in whole but not in part) at any time if

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warrants), respectively, and was recorded as debt discount of the corresponding debt.

Company recognized amortization of debt discount of $218,253 (LT warrants) during the three months ended March 31, 2016.

debt discount as of March 31, 2016 amounted to $389,479.

Company recognized amortization of debt discount of $135,761 and $354,014 (LT warrants) during the three and six months ended

June 30, 2016, respectively.

Unamortized debt discount as of June 30, 2016 amounted to $253,718.

Company also recorded deferred financing costs of $289,045 with respect to the above loan in 2015.

The Company recognized amortization

of deferred financing costs of $35,636 during the three months ended March 31, 2016.

Company recognized and paid interest expense of $181,814 during the three months ended March 31, 2016.

Accrued interest expense

was $0 as of March 31, 2016.

Loan payable balance was $4,500,000 as of March 31, 2016.

of deferred financing costs of $28,806 and $64,441 during the three and six months ended June 30, 2016, respectively.

Company recognized and paid interest expense of $167,828 and $349,642 during the three and six months ended June 30, 2016, respectively.

Accrued interest expense was $0 as of June 30, 2016.

Loan payable balance was $3,937,500 as of June 30, 2016.

January 22, 2015 Loan:

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$750,000 to be paid on or before January 20, 2017.

Loan payable balance was $750,000 as of March 31, 2016.

The loan payable balance was $750,000 as of June 30, 2016.

June 26, 2015 Security Agreement:

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The Company recognized

amortization of deferred financing costs of $1,293 during the three months ended March 31, 2016.

The Company has recorded present

value of future payments of $538,102 and $515,854 as of March 31, 2016 and December 31, 2015, respectively.

The Company has recorded

interest expense of $19,013 for the three months ended March 31, 2016.

amortization of deferred financing costs of $1,307 and $2,600 during the three and six months ended June 30, 2016, respectively.

The Company has recorded present value of future payments of $294,843 and $515,854 as of June 30, 2016 and December 31, 2015,

respectively.

The Company has recorded interest expense of $19,241 for the three months and $38,254 for the six months ended June

November 12, 2015 Loan:

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calculation on 4,547,243 warrants, refer to Note 15.

Company recognized amortization of debt discount of $257,347 (4,547,243 warrants) during the three months ended March 31, 2016.

Unamortized debt discount as of March 31, 2016 amounted to $1,671,339.

Company recognized amortization of debt discount of $257,347 (4,547,243 warrants) during the three months and $514,693 during

the six months ended June 30, 2016, respectively.

Unamortized debt discount as of June 30, 2016 amounted to $1,413,993.

Company also recorded deferred financing costs of $233,847 with respect to the above loan in 2015.

The Company recognized amortization

of deferred financing costs of $29,111 during the three months ended March 31, 2015.

Company recognized interest expense of $206,250 during the three months ended March 31, 2016.

Accrued interest expense was $45,206

as of March 31, 2016.

The balance at March 31, 2016 was $5,500,000.

of deferred financing costs of $29,111 and $58,222 during the three and six months ended June 30, 2015, respectively.

Company recognized interest expense of $206,250 and $412,500 during the three and six months ended June 30, 2016, respectively.

Accrued interest expense was $45,206 as of June 30, 2016.

The balance at June 30, 2016 was $5,500,000.

Stockholders’

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stock with $0.00001 par value.

of both March 31, 2016 and December 31, 2015, there were 81,692,954 shares of the Company’s common stock issued and outstanding.

the six months ended June 30, 2016, the Company issued 213,742 shares of its common stock valued at $0.32 per share as part of

an agreement for services rendered.

the six months ended June 30, 2016, the Company issued 71,428 shares of its common stock valued at $0.70 per share for services

of June 30, 2016 and December 31, 2015, there were 81,978,124 and 81,692,954 shares of the Company’s common stock issued

and outstanding, respectively.

Commitments & Contingencies

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April 2014, a subsidiary entered into an extension of a non-cancellable operating lease for office space that expires on March

Rent expense under this lease for the three months ended March 31, 2016 was $8,923 per month less a $3,010 per month

sublease through March 2017.

Rent expense under this lease for the three and six months ended June 30, 2016 was $8,923 per month less a $3,010 per

month sublease through March 2017.

During the month of June 2016, the company was relieved from a portion of the lease, leaving

the monthly obligation at $2,609 with the sublease of $3,010 still in effect.

December 2015, a subsidiary entered into a non-cancellable operating lease for office space through November 2016.

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following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining

non-cancelable lease terms in excess of one year as of March 31, 2016:

ending December 31:

remaining nine months

non-cancelable lease terms in excess of one year as of June 30, 2016:

Year ending December 31:

remaining six months

December 8, 2014, a subsidiary entered into a non-cancellable 36 month phone lease with an estimated cost of $894 a month.

following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining

non-cancelable lease terms in excess of one year as of March 31, 2016:

ending December 31:

remaining nine months

non-cancelable lease terms in excess of one year as of June 30, 2016:

Year ending December 31:

remaining six months

Stock Options

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following table summarizes the changes in options outstanding 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, 2016:

stock issued to employees and consultants under a stock option plan at June 30, 2016:

Options Outstanding

Options Exercisable

Contractual Life

stock option activity for the three months ended March 31, 2016 is as follows:

Exercise Price

stock option activity for the six months ended June 30, 2016 is as follows:

Options Outstanding

Weighted Average

Outstanding at December 31, 2015

Expired or canceled

Outstanding at

March 31, 2016

compensation expense related to vested options was $302,641 during the three months ended March 31, 2016.

The Company determined

the value of share-based compensation for options vesting during the period using the Black-Scholes fair value option-pricing

model with the following weighted average assumptions:

estimated fair value of Company’s common stock of $0.74, risk-free

interest rate of 2.23%, volatility of 154%, expected lives of 10 years, and dividend yield of 0%.

Stock options outstanding as

of March 31, 2016, as disclosed in the above table, have an intrinsic value of $600,000.

Outstanding at June 30, 2016

compensation expense related to vested options was $304,643 and $607,284 during the three and six months ended June 30, 2016,

respectively.

The Company determined the value of share-based compensation for options vesting during the period using the Black-Scholes

fair value option-pricing model with the following weighted average assumptions:

estimated fair value of Company’s common

stock of $0.74, risk-free interest rate of 2.23%, volatility of 154%, expected lives of 10 years, and dividend yield of 0%.

options outstanding as of June 30, 2016, as disclosed in the above table, have an intrinsic value of $1,080,000.

Stock Warrants

following table summarizes the changes in warrants outstanding and the related prices for the shares of the Company’s common

stock at March 31, 2016:

stock at June 30, 2016:

Warrants Outstanding

Warrants Exercisable

Contractual Life

warrant activity for the three months ended March 31, 2016 is as follows:

Outstanding at December 31, 2015

Expired or canceled

Outstanding at March 31, 2016

warrant activity for the six months ended June 30, 2016 is as follows:

at December 31, 2015

at June 30, 2016

Company has incurred a liability for the estimated fair value of a derivative warrant instrument.

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based on the following assumptions:

November 12, 2015

Risk-free interest rate

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value at December 31, 2015 was estimated to be $3,096,179 and based on the following assumptions:

December 31, 2015

Risk-free interest rate

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as a loss on change in fair value of derivative liability.

value at March 31, 2016 was estimated to be $2,009,681 and based on the following assumptions:

value at June 30, 2016 was estimated to be $2,673,104 and based on the following assumptions:

June 30, 2016

Risk-free interest rate

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Dividend yield

the period ended March 31, 2016, the decrease in the fair value of the warrant derivative liability of $1,086,498 was recorded

the six months ended June 30, 2016, the decrease in the fair value of the warrant derivative liability of $423,075 was recorded

as a gain on change in fair value of derivative liability.

the three months ended June 30, 2016, the increase in the fair value of the warrant derivative liability of $663,423 was recorded

as a loss on change in fair value of derivative liability.

identification and selection is consistent with the management structure used by the Company’s chief operating decision

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rather, the chief operating decision maker reviews operating results on an aggregate basis.

sales attributed to customers in the United States and foreign countries for the period ended March 31, 2016 and 2015 were as

sales attributed to customers in the United States and foreign countries for the six months ended June 30, 2016 and 2015 were

June 30, 2016

June 30, 2015

United States

Foreign countries

Company’s net sales by product group for the period ended March 31, 2016 and 2015 were as follows:

Company’s net sales by product group for the six months ended June 30, 2016 and 2015 were as follows:

June 30, 2016

June 30, 2015

Nutraceuticals

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Cosmeceuticals

sales attributed to customers in the United States and foreign countries for the three months ended June 30, 2016 and 2015 were

June 30, 2016

June 30, 2015

United States

Foreign countries

Company’s net sales by product group for the three months ended June 30, 2016 and 2015 were as follows:

June 30, 2016

June 30, 2015

Nutraceuticals

Over the Counter (OTC)

Cosmeceuticals

Net sales for any other product group of similar products are less than 10% of consolidated net sales.

assets (net) attributable to operations in the United States and foreign countries as of March 31, 2016 and December 31, 2015

were as follows:

assets (net) attributable to operations in the United States and foreign countries as of June 30, 2016 and December 31, 2015 were

June 30, 2016

December 31, 2015

United States

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The Company believes that the restated amount of $1,450,000 properly states the fair value of the FOCUSfactor brand

tax expense was $183,905 for the three months ended March 31, 2016, compared to $0 for the same period in 2015.

The current provision

is attributable to Australian operations and the current tax rate in effect in that country.

the Company’s Annual Report on Form 10-K, the following disclosure was made with regard to the Company’s initial allocation

of the fair value of the assets and liabilities acquired in the Breakthrough Products, Inc.

Purchase Agreement with Breakthrough Products, Inc.:

Company has accounted for this transaction under the acquisition method of accounting.

Under the acquisition method of accounting,

the total acquisition consideration price is allocated to the assets acquired and liabilities assumed based on their preliminary

estimated fair values based on the management’s estimates as of the date of the acquisition.

The Company expects to retain

the services of independent valuation firm to determine the fair value of these identifiable intangible assets.

Once determined,

the Company will reallocate the purchase price of the acquisition based on the results of the independent evaluation if they are

materially different from the allocations as recorded on November 12, 2015.

The Company expects the purchase price allocations

for the acquisition of UrgentRx to be completed during 2016.”

Company has consulted with a valuation professional to assist in determining the fair value of the identifiable Breakthrough Products,

Inc.’s intangible assets.

As a result of this work, the Company has increased the amount allocated to the UrgentRx patent

by $150,000, decreased the amount allocated to a Non-Compete agreement by $50,000 and reduced the amount recorded to goodwill

by the identical amounts.

In addition, it was determined that an incorrect stock price was used to calculate the purchase price

of the transaction.

As a result of this determination, the Company decreased Additional Paid In Capital and Goodwill by $1,170,000.

These adjustments had no effect on the income statement.

The Company believes that these restated amounts properly states the

fair value of the Breakthrough Products, Inc.

the Company’s Annual Report on Form 10-K, the following disclosure was made with regard to the Company’s initial allocation

of the fair value of the assets and liabilities acquired in the TPR Investments Pty Ltd.

Purchase Agreement with TPR Investments Pty Ltd.:

Company has accounted for this transaction under the acquisition method of accounting.

Under the acquisition method of accounting,

the total acquisition consideration price is allocated to the assets acquired and liabilities assumed based on their preliminary

estimated fair values based on the management’s estimates as of the date of the acquisition.

The Company expects to retain

the services of independent valuation firm to determine the fair value of these identifiable intangible assets.

Once determined,

the Company will reallocate the purchase price of the acquisition based on the results of the independent evaluation if they are

materially different from the allocations as recorded on November 1, 2015.

The Company expects the purchase price allocations

for the acquisition of NomadChoice to be completed during 2016.”

Company has consulted with a valuation professional to assist in determining the fair value of the identifiable NomadChoice’s

intangible assets.

As a result of this work, the Company has increased the amount allocated to the Customer Database by $215,000,

decreased the amount allocated to Intellectual Property by $100,000 and decreased the amount allocated to the Blogger Database

These adjustments had no effect on the income statement.

The Company believes that these restated amounts properly

state the fair value of the TPR Investments Pty Ltd.

tax expense was $211,180 and $395,085 for the three and six months ended June 30, 2016, respectively compared to $0 for the same

periods in 2015.

The current provision is attributable to Australian operations and the current tax rate in effect in that country.

total deferred tax asset is calculated by multiplying a domestic (US) 34% marginal tax rate by the cumulative net operating loss

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The Company currently has NOLs, which expire through 2035.

The deferred tax asset related to

Management has determined based on all the available information that a 100% valuation reserve is required.

Management has determined based

on all the available information that a 100% valuation reserve is required.

purposes, the Company has not completed its evaluation of NOL utilization limitations under Internal Revenue Code, as amended

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evaluated all activities of the Company through the issuance date of the Company’s unaudited condensed consolidated financial

statements and concluded that no subsequent events have occurred that would require adjustments or disclosure into the unaudited

condensed consolidated financial statements.

statements and concluded that the only subsequent event is the cancellation of 713,767 shares of common stock in relation to a

settlement with a former shareholder.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion and analysis of the results of operations and financial condition of Synergy for the three months ended March

31, 2016 and 2015, should be read in conjunction with the financial statements of Synergy, and the notes to those financial statements

that are included elsewhere in this Form 10-Q.

Our discussion includes forward-looking statements based upon current expectations

that involve risks and uncertainties, such as our plans, objectives, expectations and intentions.

Actual results and the timing

of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors,

including those set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections

in our Form 10-K filed on March 31, 2016.

following discussion and analysis of the results of operations and financial condition of Synergy for the three and six months

ended June 30, 2016 and 2015, should be read in conjunction with the financial statements of Synergy, and the notes to those financial

statements that are included elsewhere in this Form 10-Q.

Our discussion includes forward-looking statements based upon current

expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions.

Actual results

and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number

of factors, including those set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business

sections in our Form 10-K filed on March 31, 2016.

We use words such as “anticipate,”

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GAAP”), provides useful information to investors.

March 31, 2016

June 30, 2016

Interest income

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Stock-based compensation

One-time expenses for acquisitions

Stock issued for services

One-time expenses

Gain on foreign currency translation and transaction

Adjusted EBITDA

For the three months

ended June 30, 2016

Interest income

Interest expense

Loss on change in fair value of derivative liability

Stock-based compensation

Stock issued for services

One-time expenses

Loss on foreign currency translation and transaction

Adjusted EBITDA

and Adjusted EBITDA are considered non-GAAP financial measures.

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to similarly titled measures reported by other companies.

of Operations for the Three months Ended March 31, 2016 and 2015

the three months ended March 31, 2016, we had revenue of $8,267,751 from sales of our products, as compared to revenue of $1,600,249

of Operations for the Three months Ended June 30, 2016 and 2015

the three months ended June 30, 2016, we had revenue of $8,274,575 from sales of our products, as compared to revenue of $2,455,747

for the same period in 2015.

This is primarily due to the acquisitions we completed during 2015.

the three months ended March 31, 2016, our cost of revenue was $2,036,577.

Our cost of revenue for the three months ended March

the three months ended June 30, 2016, our cost of revenue was $2,182,292.

Our cost of revenue for the three months ended June

30, 2015, was $1,028,052.

This increase is also due to the acquisitions we completed during 2015.

profit was $6,231,174 for the three months ended March 31, 2016, as compared to gross profit of $994,967 for the same period in

profit was $6,092,283 for the three months ended June 30, 2016, as compared to gross profit of $1,427,695 for the same period

and Marketing Expenses

the three months ended March 31, 2016, our selling and marketing expenses were $1,447,676 as compared to $733,589 for the same

the three months ended June 30, 2016, our selling and marketing expenses were $2,189,179 as compared to $680,189 for the same

period in 2015, which is primarily due to marketing our various products in multiple media channels including print, television

and Administrative Expenses

the three months ended March 31, 2016, our general and administrative expenses were $1,868,805.

For the three months ended March

31, 2015, our operating expenses were $314,820.

The increase is primarily due to the acquisitions completed during 2015 and having

general costs now to run and manage each brand.

the three months ended June 30, 2016, our general and administrative expenses were $1,679,378.

For the three months ended June

30, 2015, our general and administrative expenses were $385,832.

The increase is primarily due to the acquisitions completed during

2015 and having general costs now to run and manage each brand.

and Amortization Expenses

the three months ended March 31, 2016, our depreciation and amortization expenses were $278,637 as compared to $77,242 for the

the three months ended June 30, 2016, our depreciation and amortization expenses were $294,373 as compared to $101,911 for the

same period in 2015.

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Income and Expenses

the three months ended March 31, 2016 and 2015 we had other (income) and expense items of the following:

Three months ended

March 31, 2016

Three months ended

March 31, 2015

the three months ended June 30, 2016 and 2015 we had other (income) and expense items of the following:

June 30, 2016

June 30, 2015

Interest income

Interest expense

Remeasurement gain on translation of foreign subsidiary

Gain on change in fair value of derivative liability

Remeasurement loss on translation of foreign subsidiary

Loss on change in fair value of derivative liability

Amortization of debt discount

Amortization of debt issuance cost

the three months ended March 31, 2016, we had interest expense of $431,264 as compared to $171,393 for the same period in 2015.

the three months ended June 30, 2016, we had interest expense of $401,958 as compared to $227,797 for the same period in 2015.

The increase was due to the issuance of loans for the purpose of acquisitions of various companies during 2015.

We also issued

warrants along with the loans and paid debt issuance cost in 2015 which lead to the amortization of debt discount and debt issuance

We issued warrants with a reset provision in 2015 which lead to the calculation of warrant derivative liability and hence

we recorded a gain on change in fair value of derivative liability.

warrants along with the loans and paid debt issuance cost in 2015 which led to the amortization of debt discount and debt issuance

We issued warrants with a reset provision in 2015 which led to the calculation of warrant derivative liability and hence

we recorded a loss on change in fair value of derivative liability of $663,423.

During 2015, we acquired a foreign subsidiary

and thus recorded a remeasurement loss on the foreign currency translation.

the three months ended June 30, 2016, our net loss was ($12,590), as compared to a net loss of ($186,136) for the same period

of Operations for the Six months Ended June 30, 2016 and 2015

the six months ended June 30, 2016, we had revenue of $16,542,326 from sales of our products, as compared to revenue of $4,055,996

for the same period in 2015.

This is primarily due to the acquisitions we completed during 2015.

the six months ended June 30, 2016, our cost of revenue was $4,218,869.

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

2015, was $1,633,334.

This increase is also due to the acquisitions we completed during 2015.

profit was $12,323,457 for the six months ended June 30, 2016, as compared to gross profit of $2,422,662 for the same period in

and Marketing Expenses

the six months ended June 30, 2016, our selling and marketing expenses were $3,636,855 as compared to $1,413,778 for the same

period in 2015, which is primarily due to marketing our various products in multiple media channels including print, television

and Administrative Expenses

the six months ended June 30, 2016, our general and administrative expenses were $3,548,183.

For the six months ended June 30,

2015, our general and administrative expenses were $700,652.

The increase is primarily due to the acquisitions completed during

2015 and having general costs now to run and manage each brand.

and Amortization Expenses

the six months ended June 30, 2016, our depreciation and amortization expenses were $573,010 as compared to $179,153 for the same

period in 2015.

The increase in 2016 is due to the acquisitions completed during 2015.

Income and Expenses

the six months ended June 30, 2016 and 2015 we had other (income) and expense items of the following:

Six months ended

June 30, 2016

Six months ended

June 30, 2015

Interest income

Interest expense

Remeasurement gain on translation of foreign subsidiary

Gain on change in fair value of derivative liability

Amortization of debt discount

Amortization of debt issuance cost

the six months ended June 30, 2016, we had interest expense of $833,222 as compared to $399,190 for the same period in 2015.

increase was due to the issuance of loans for the purpose of acquisitions of various companies during 2015.

We also issued warrants

along with the loans and paid debt issuance cost in 2015 which led to the amortization of debt discount and debt issuance costs.

We issued warrants with a reset provision in 2015 which led to the calculation of warrant derivative liability and hence we recorded

a gain on change in fair value of derivative liability of $423,075.

During 2015, we acquired a foreign subsidiary and thus recorded

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Income (Loss)

the three months ended March 31, 2016, our net income was $2,810,476, as compared to a net loss of ($2,418,404) for the same period

the six months ended June 30, 2016, our net income was $2,797,886, as compared to a net loss of ($2,604,538) for the same period

and Capital Resources

of March 31, 2016, we had $3,763,085 cash on hand and a $4,446,866 working capital deficit.

of June 30, 2016, we had $3,006,615 cash on hand and a $4,791,382 working capital deficit.

The deficit is largely due to a derivative

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In addition, we also had restricted cash of $291,620 which is comprised

of $104,488 for a rolling reserve with Paypal, $3,693 in an escrow account and $50,000 for credit card collateral.

of $191,620 for a rolling reserve with Paypal and $100,000 for credit card collateral.

Company’s unaudited condensed consolidated financial statements are prepared using U.S.

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The Company had

accumulated deficit at March 31, 2016 of $5,759,365.

The Company had a working capital deficit of $4,290,701 as of March 31, 2016.

Due to acquisitions during 2015 of revenue-producing products, the Company believes it has established an ongoing source of revenue

that is sufficient to cover its operating costs.

an accumulated deficit at June 30, 2016 of $5,771,954.

The Company had a working capital deficit of $4,791,382 as of June 30,

Due to acquisitions during 2015 of revenue-producing products, the Company believes it has established an ongoing source

of revenue that is sufficient to cover its operating costs.

Management’s

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unable to continue as a going concern.

months ended March 31, 2016 and 2015

months ended June 30, 2016 and 2015

Cash Provided by Operating Activities

cash provided by operating activities for the three months ended March 31, 2016 was $3,425,171, compared to $495,221 for the same

cash provided by operating activities for the six months ended June 30, 2016 was $3,720,005, compared to $204,718 for the same

period in 2015.

This increase in net cash provided by operating activities for the three months ended March 31, 2016 was primarily

This increase in net cash provided by operating activities for the six months ended June 30, 2016 was primarily

attributable to an increase in net income due to the acquisitions in 2015 as well as the changes in operating assets and liabilities.

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Stock based compensation

Stock issued for services

Amortization of debt discount

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Decrease in accounts receivable

Decrease in inventory

Increase in inventory

Increase in prepaid expenses

Decrease in accounts payable and accrued expenses

Cash Provided by (Used in) Investing Activities

cash provided by investing activities for the three months ended March 31, 2016 was $386,021, compared to net cash used of $4,501,654

Cash Used in Investing Activities

cash used in investing activities for the six months ended June 30, 2016 was $2,392,903, compared to net cash used of $4,751,654

for the same period in 2015.

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in 2015 is attributable to the purchase of the Focus Factor assets.

for acquisition of fixed assets

Payments for acquisition of fixed assets

Payment of earn out liability

Restricted cash

Cash (Used in) Provided by Financing Activities

cash used in financing activities for the three months ended March 31, 2016 was $3,689,000, compared to net cash provided of $5,722,140

cash used in financing activities for the six months ended June 30, 2016 was $1,962,500, compared to net cash provided of $5,183,836

for the same period in 2015.

This is attributable to the repayment of notes during 2016 and the proceeds of the notes in 2015.

of notes payable

Payment of earn

out liability

Repayment of notes payable

$ (1,962,500 )

2016 Initiatives

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a discounted cash flow analysis, and an impairment charge is recorded for the excess of carrying value over fair value.

March 31, 2016, our qualitative analysis of long-lived assets did not indicate any impairment.

June 30, 2016, our qualitative analysis of long-lived assets did not indicate any impairment.

asset purchase is accounted for under the purchase method of accounting.

2 unchanged sentences

over the estimated fair value of the net tangible and intangible assets acquired recorded as goodwill.

As of March 31, 2016, our

As of June 30, 2016, our

qualitative analysis of goodwill did not indicate any impairment.

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method), unless their effect on net loss per share is anti-dilutive.

As of March 31, 2016, options to purchase 5,000,000 shares of common stock and warrants to purchase 9,132,002 shares of common

As of June 30, 2016, options to purchase 5,000,000 shares of common stock and warrants to purchase 9,132,002 shares of common

stock were outstanding.

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The Company had

accumulated deficit at March 31, 2016 of $5,759,365.

The Company had a working capital deficit of $4,290,701 as of March 31, 2016.

Due to acquisitions during 2015 of revenue-producing products, the Company believes it has established an ongoing source of revenue

that is sufficient to cover its operating costs.

an accumulated deficit at June 30, 2016 of $5,771,954.

The Company had a working capital deficit of $4,791,382 as of June 30,

Due to acquisitions during 2015 of revenue-producing products, the Company believes it has established an ongoing source

of revenue that is sufficient to cover its operating costs.

Management’s

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to the fair value measurement.

of March 31, 2016, the Company has determined that there were no assets or liabilities measured at fair value, except for the

warrant derivative liability.

of June 30, 2016, the Company has determined that there were no assets or liabilities measured at fair value, except for the warrant

derivative liability.

consists of raw materials, components and finished goods.

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Currency Translation

functional currency of each of the Company’s foreign subsidiary (Nomadchoice Pty Ltd.) is the U.S.

functional currency of one of the Company’s foreign subsidiaries (Nomadchoice Pty Ltd.) is the U.S.

The Company’s

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of operations as Remeasurement gain or loss on translation of foreign subsidiary.

functional currency of the Company’s other foreign subsidiary (Synergy CHC Inc.) is the Canadian Dollar (CAD).

The Company’s

foreign subsidiary maintains its record 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.

gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional

currency are translated either into Australian Dollars or Canadian Dollars, as the case may be, at the rate on the date of the

transaction and included in the results of operations as incurred.

Concentrations

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Black-Scholes-Merton option-pricing model, with dilution effects, was utilized to estimate the fair value of the Warrant Derivative

Liabilities as of March 31, 2016.

Liabilities as of June 30, 2016.

This model is subject to the significant assumptions discussed below and requires the following

key inputs with respect to the Company and/or instrument:

June 30, 2016

Exercise Price

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Dividend Rate

Outstanding Shares

of Common Stock

Outstanding Shares of Common Stock

of sales includes the purchase cost of products sold and all costs associated with getting the products into the retail stores

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Accounting Pronouncements

April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606):

Identifying Performance Obligations

and Licensing, which provides further guidance on identifying performance obligations and improves the operability and understandability

of licensing implementation guidance.

The effective date for ASU 2016-10 is the same as the effective date of ASU 2014-09 as amended

by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years.

The Company has not yet determined the impact of ASU 2016-10 on its consolidated financial statements.

March 2016, the FASB issued ASU No.

2016-09, Compensation –

Stock Compensation, or ASU No.

The areas for simplification

in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences,

classification of awards as either equity or liabilities, and classification on the statement of cash flows.

For public entities,

the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those

annual periods.

Early adoption is permitted in any interim or annual period.

If an entity early adopts the amendments in an interim

period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

that elects early adoption must adopt all of the amendments in the same period.

Amendments related to the timing of when excess

tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using

a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period

in which the guidance is adopted.

Amendments related to the presentation of employee taxes paid on the statement of cash flows

when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively.

requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating

expected term should be applied prospectively.

An entity may elect to apply the amendments related to the presentation of excess

tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method.

We are currently evaluating the impact of adopting ASU No.

2016-09 on our consolidated financial statements.

March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606):

Principal versus Agent Considerations

(Reporting Revenue Gross versus Net) that clarifies how to apply revenue recognition guidance related to whether an entity is

a principal or an agent.

ASU 2016-08 clarifies that the analysis must focus on whether the entity has control of the goods or

services before they are transferred to the customer and provides additional guidance about how to apply the control principle

when services are provided and when goods or services are combined with other goods or services.

The effective date for ASU 2016-08

is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December

15, 2017, including interim periods within those years.

The Company has not yet determined the impact of ASU 2016-08 on its consolidated

financial statements.

January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

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cost of $253,589 and $378,852 from other assets to liabilities and netted off with the related loans in the liabilities as of

March 31, 2016 and December 31, 2015, respectively.

June 30, 2016 and December 31, 2015, respectively.

February 2015, the FASB issued ASU No.

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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 1. Financial Statements