What changed in this filing

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Item 1. Financial Statements

2017-05-01 compared with 2016-10-26 · 623 added, 1559 removed, 540 unchanged (80% of the section changed)

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Consolidated Balance Sheets

September 30, 2016

December 31, 2015

and cash equivalents

receivable, net

Current Assets

Cash and cash equivalents

Restricted cash

Accounts receivable

Prepaid expenses

Total Current Assets

Fixes assets, net

Intangible assets, net

Liabilities and Stockholders’

and Stockholders’

payable and accrued liabilities

for income taxes payable

portion of long-term debt, net of debt discount and debt issuance cost, related party

portion of long-term debt

Current Liabilities

Accounts payable and accrued liabilities

Provision for income taxes payable

Earn out payment

Current portion of long-term debt, net of debt discount and debt issuance cost, related party

Current portion of long-term debt

Warrant derivative liability

Total Current Liabilities

payable, net of debt discount and debt issuance cost, related party

Long-term Liabilities

Royalty payable

Note payable, net of debt discount and debt issuance cost, related party

Total Long-term Liabilities

Total Liabilities

Commitments and contingencies

and contingencies

Stockholders’

Common stock, $0.00001 par value;

stock, $0.00001 par value;

300,000,000 shares authorized;

81,264,357 and 81,692,954 shares issued and outstanding, respectively

Common stock to be issued (125,000 and 213,742 shares, respectively)

Additional paid in capital

Accumulated other comprehensive income

Accumulated deficit

Total stockholders ’

Total Liabilities and Stockholders’

88,764,357 shares issued and outstanding

stock to be issued (125,000 shares)

paid in capital

other comprehensive income

stockholders ’

Liabilities and Stockholders’

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

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

For the three months ended

For the nine months ended

September 30, 2016

September 30, 2015

September 30, 2016

September 30, 2015

Cost of sales

Condensed Consolidated Statements of Income and Comprehensive Income

the three months ended

and marketing

and administrative

and amortization

operating expenses

Selling and marketing

General and administrative

Depreciation and amortization

Total operating expenses

Income from operations

Other (income) expenses

Interest income

Interest expense

Remeasurement gain on translation of foreign subsidiary

Gain on change in fair value of derivative liability

Settlement expense

Amortization of debt discount

Amortization of debt issuance cost

Total other (income) expenses

Net income (loss) before income taxes

Income tax expense

Net income (loss) after tax

$ (3,072,148 )

Net income (loss) per share –

Weighted average common shares outstanding

Comprehensive income (loss):

Net income (loss)

Foreign currency translation adjustment

Comprehensive income (loss)

$ (3,072,148 )

from operations

(income) expenses

Remeasurement

loss (gain) on translation of foreign subsidiary

on change in fair value of derivative liability

on sale of assets

of debt discount

of debt issuance cost

other expenses (income)

income before income taxes

income after tax

income per share –

average common shares outstanding

Comprehensive

currency translation adjustment

Comprehensive

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

Condensed Consolidated Statements of Cash Flows

For the nine months ended

September 30, 2016

September 30, 2015

Cash Flows from Operating Activities

Net income (loss)

$ (3,072,148 )

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

Depreciation and amortization

Amortization of debt issuance cost

Stock issued for services

Settlement expense

Stock based compensation expense

Change in the fair value of derivative liability

Remeasurement gain on translation of foreign subsidiary

Non cash implied interest

Amortization of debt discount

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expense

Accounts payable and accrued liabilities

Net cash provided by operating activities

Cash Flows from Investing Activities

Payments for acquisition of fixed assets

Payments for acquisition of Focus Factor

Payments for acquisition transaction with Knight Therapeutics Inc.

Payment of earn out liability

Restricted cash

Net cash used in investing activities

Cash Flows from Financing Activities

Proceeds from notes payable

Repayment of notes payable

Payment of debt issuance cost

Repayment of related party note

Proceeds from exercise of warrant

Net cash (used in) provided by financing activities

Effect of exchange rate on cash and cash equivalents

Net increase in cash and cash equivalents

Cash and Cash Equivalents, beginning of period

Cash and Cash Equivalents, end of period

Supplemental Disclosure of Cash Flow Information:

Cash paid during the period for:

Supplemental Disclosure of Non-cash Investing and Financing Activities:

Reallocation of goodwill related to acquisition of Factor Nutrition to intellectual property

Reallocation of goodwill related to acquisition of Breakthrough Products, Inc.

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

Cancellation of common stock

Common stock issued for settlement of debt

Beneficial conversion feature on warrants issued concurrent with debt

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

Common stock issued as part of contribution agreement

the three months ended

Flows from Operating Activities

to reconcile net income to net cash provided by operating activities:

and amortization

of debt issuance cost

on sale of assets

based compensation expense

in the fair value of derivative liability

Remeasurement

loss (gain) on translation of foreign subsidiary

currency transaction loss

cash implied interest

of debt discount

in operating assets and liabilities:

payable and accrued liabilities

cash provided by operating activities

Flows from Investing Activities

for acquisition of fixed assets

from sale of assets

cash (used in) provided by investing activities

Flows from Financing Activities

of notes payable

of earn out liability

cash used in financing activities

of exchange rate on cash and cash equivalents

(decrease) increase in cash and cash equivalents

and Cash Equivalents, beginning of period

and Cash Equivalents, end of period

Disclosure of Cash Flow Information:

paid during the period for:

Disclosure of Non-cash Investing and Financing Activities:

of goodwill related to acquisition of Factor Nutrition to intellectual property

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

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

is the sole owner of four subsidiaries:

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

and Synergy CHC Inc.

is the sole owner of five subsidiaries:

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

Sneaky Vaunt Corp.

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 September 30, 2016 and December 31, 2015 and for the three and

nine months ended September 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.

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 and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the

fiscal year ending December 31, 2016.

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.

accompanying condensed consolidated financial statements as of March 31, 2017 and December 31, 2016 and for the three months ended

March 31, 2017 and 2016 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.

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, 2017 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, 2016 and footnotes thereto included in the Company’s Annual Report

on Form 10-K filed with the SEC on March 24, 2017.

of Presentation

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highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.

As of September

31, 2017 the Company had no cash equivalents.

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

At September 30, 2016, the

uninsured balance amounted to $3,802,571.

At March 31, 2017, the uninsured

balance amounted to $1,255,907.

Capitalization

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Intangible assets are amortized on a straight line basis over the useful lives.

As of March 31, 2017, our qualitative

analysis of intangible assets with indefinite lives did not indicate any impairment.

assets include equipment and intangible assets other than those with indefinite lives.

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

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

March 31, 2017, our qualitative analysis of long-lived assets did not indicate any impairment.

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

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

As of September 30, 2016,

our qualitative analysis of goodwill did not indicate any impairment.

As of March 31, 2017, our

qualitative analysis of goodwill did not indicate any impairment.

However, as of December 31, 2016, our review of goodwill related

to one of our subsidiaries did indicate that the carrying amount of the asset may not be recoverable.

During the year ended December

31, 2016, the Company fully impaired related goodwill and charged to operations an impairment loss of $1,983,160.

Company recognizes revenue in accordance with the Financial Accounting Standards Board’s (“FASB”), Accounting

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Such costs are included in selling expense in the accompanying

unaudited condensed consolidated statements of operations.

unaudited condensed consolidated statements of income.

and Development

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in the period in which such determination is made.

Synergy CHC Inc.

is a wholly-owned foreign

subsidiary, is subject to income taxes in 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

Earnings (Loss) Per Common Share

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

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

As of March 31, 2017, options to purchase 6,300,000 shares of common stock and warrants to purchase 1,000,000 shares of common

stock were outstanding.

These potential shares were included in the shares used to calculate diluted earnings per share.

following is a reconciliation of the number of shares used in the calculation of basic earnings per share and diluted earnings

per share for the three months ended March 31, 2017, and 2016:

income after tax

Weighted average

common shares outstanding

stock to be issued

shares from the assumed exercise of dilutive stock options

shares from the assumed exercise of dilutive stock warrants

potential common shares

following securities were not included in the computation of diluted net earnings per share as their effect would have been antidilutive:

to purchase common stock

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

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The Company had

an accumulated deficit at September 30, 2016 of $2,721,289.

The Company had a working capital deficit of $2,487,840 as of September

an accumulated deficit at March 31, 2017 of $6,807,346.

The Company had a working capital deficit of $2,375,052 as of March 31,

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.

of revenue that is sufficient to cover its operating costs and has income from operations of $3,158,631.

Management’s

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to the fair value measurement.

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

the warrant derivative liability.

of March 31, 2017, the Company has determined that there were no assets or liabilities measured at fair value.

consists of raw materials, components and finished goods.

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Finished goods include the cost of labor to assemble the items.

Company adopted the provisions of ASC 718.

We estimate the fair value of stock options using a binomial model, consistent with

the provisions of ASC 718 and SEC Staff Accounting Bulletin No.

107, Share-Based Payment.

Option-pricing models require the input

of highly subjective assumptions, including the price volatility of the underlying stock.

We determined that the use of implied

volatility is expected to be more reflective of market conditions and, therefore, could reasonably be expected to be a better

indicator of our expected volatility than historical volatility.

The expected term assumption used in calculating the estimated

fair value of our stock-based compensation awards using the Black-Scholes-Merton (BSM) model is based on detailed historical data

about employees’

exercise behavior, vesting schedules, and death and disability probabilities.

In addition, we are required

to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest.

We estimate the forfeiture

rate based on historical experience of our stock-based awards that are granted, exercised and cancelled.

We believe the resulting

BSM calculation provides a more refined estimate of the fair value of our employee stock options.

718, “Compensation –

Stock Compensation,”

prescribes accounting and reporting standards for all share-based

payment transactions in which employee services are acquired.

Transactions include incurring liabilities, or issuing or offering

to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights.

payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements

based on their fair values.

That expense is recognized over the period during which an employee is required to provide services

in exchange for the award, known as the requisite service period (usually the vesting period).

Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC

505-50, “Equity –

Based Payments to Non-Employees.”

Measurement of share-based payment transactions with non-employees

is based on the fair value of whichever is more reliably measurable:

(a) the goods or services received;

or (b) the equity instruments

The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance

completion date.

Currency Translation

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translated into U.S.

Dollars at period end exchange rates and stockholders’equity is translated at the historical rates.

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.

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within the range of management’s expectations.

From time to time, a higher concentration of credit risk exist on outstanding

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.

costs include all third party warehouse rent fees and any additional costs relating to assembly or special pack-outs of the Company’s

products are charged to general and administrative expenses as incurred.

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.

display costs

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This also includes all costs

for display execution and setup and retail services are charged to general and administrative expenses as incurred.

Derivative Liabilities

815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments

and account for them as free standing derivative financial instruments.

These three criteria include circumstances in which (a)

the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic

characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument

and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with

changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative

instrument would be considered a derivative instrument subject to the requirements of ASC 815.

ASC 815 also provides an exception

to this rule when the host instrument is deemed to be conventional, as described.

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

Liabilities as of September 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:

September 30, 2016

Exercise Price

Expected Life (in years)

Stock Volatility

Risk-Free Rate

Dividend Rate

Outstanding Shares of Common Stock

for display execution and setup and retail services are charged to cost of sales and expensed as incurred.

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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loan and are being amortized to interest expense over the term of the related debt facilities.

of Long-Lived Assets

facts and circumstances indicate that the carrying values of long-lived assets, including fixed assets, may be impaired, an evaluation

of recoverability is performed by comparing the carrying value of the assets to projected future cash flows in addition to other

quantitative and qualitative analyses.

Upon indication that the carrying value of such assets may not be recoverable, the Company

recognizes an impairment loss as a charge against current operations.

Long-lived assets to be disposed of are reported at the

lower of the carrying amount or fair value, less estimated costs to sell.

The Company makes judgments related to the expected

useful lives of long-lived assets and its ability to realize undiscounted cash flows in excess of the carrying amounts of such

assets which are affected by factors such as the ongoing maintenance and improvements of the assets, changes in economic conditions

and changes in operating performance.

As the Company assesses the ongoing expected cash flows and carrying amounts of its long-lived

assets, these factors could cause the Company to realize a material impairment charge.

and handling costs billed to customers are recorded in sales.

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with related parties shall be recorded at fair value of the goods or services exchanged.

Property purchased from a related party

is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected

as a distribution to the related party.

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.

Reclassification

of Prior Period Presentation

reclassifications have been made to conform the prior period data to the current presentations.

These reclassifications had no

effect on the reported results.

Accounting Pronouncements

January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350), which simplifies the goodwill impairment

The effective date for ASU 2017-04 is for fiscal years beginning after December 15, 2019.

Early adoption is permitted for

interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

We are currently evaluating the

impact of adopting ASU 2017-04 on our consolidated financial statements.

January 2017, the FASB issued ASU No.

2017-01, Business Combinations (Topic 805):

Clarifying the Definition of a Business.

new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities

is not a business.

The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed

of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business.

new standard will be effective for the Company on January 1, 2018;

however, early adoption is permitted with prospective application

to any business development transaction.

We are currently evaluating the impact of adopting ASU 2017-04 on our consolidated financial

November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), which requires that restricted cash and restricted

cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash

amounts shown on the statement of cash flows.

The effective date for ASU 2016-18 is for fiscal years beginning after December

15, 2018, and interim periods within fiscal years beginning after December 15, 2019.

Early adoption is permitted.

We are currently

evaluating the impact of adopting ASU 2016-18 on our consolidated financial statements.

August 2016, the FASB issued AS 2016-15, Classification of Certain Cash Receipts and Cash Payments, which clarifies how certain

cash receipts and cash payments are presented and classified in the statement of cash flows.

The effective date for ASU 2016-15

is for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.

Early adoption is permitted.

We are currently evaluating the impact of adopting ASU 2016-18 on our consolidated financial statements.

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

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consolidated financial statements.

April 2015, the FASB issued ASU No.

2015-03, Interest - Imputation of Interest (Subtopic 835-30):

Simplifying the Presentation

of Debt Issuance Costs.

The amendments in this ASU require that debt issuance costs related to a recognized debt liability be

presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.

The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU.

The amendments

are effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2015.

The amendments are to be applied on a retrospective basis, wherein the balance sheet of each individual period

presented is adjusted to reflect the period-specific effects of applying the new guidance.

The Company reclassified debt issuance

cost of $208,569 and $378,852 from other assets to liabilities and netted off with the related loans in the liabilities as of

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

February 2015, the FASB issued ASU No.

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ASU 2014-17 was effective on November 18, 2014.

The adoption of ASU 2014-17 did not have any effect

on our consolidated financial statements.

The adoption of this new standard did not have any

effect on our consolidated financial statements.

November 2014, the FASB issued ASU 2014-16, Derivatives and Hedging (Topic 815).

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Adoption of this new standard

did not have any impact on the Company’s financial position, results of operations or cash flows.

did not have any impact on the Company’s consolidated financial statements.

August 2014, the FASB issued ASU No.

2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40).

provides guidance related to management’s responsibility to evaluate whether there is substantial doubt about an entity’s

ability to continue as a going concern and to provide related footnote disclosure.

ASU 2014-15 is effective for annual periods

ending after December 15, 2016, and for interim and annual periods thereafter.

Early application is permitted.

We do not expect

the adoption of ASU 2014-15 to have a material effect on our consolidated financial statements.

2014-15 Presentation of Financial Statements-Going Concern.

The amendments in this update

apply to all reporting entities and require an entity’s management, in connection with preparing financial statements for

each annual and interim reporting period, to evaluate whether there are conditions or events, considered in the aggregate, that

raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the

financial statements are issued (or within one year after the date that the financial statements are available to be issued when

This ASU is effective for annual periods ending after December 15, 2016.

We adopted this standard for the year ended

December 31, 2016.

Based on the results of our analysis, no additional disclosures were required.

June 2014, the FASB issued ASU No.

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is permitted in the first quarter of 2017.

We are still evaluating the effect of the adoption of ASU 2014-09 on our consolidated

We are still evaluating the effect of the adoption of the new standard on our consolidated

financial statements.

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within those fiscal years, beginning on or after December 15, 2014.

The adoption of ASU 2014-08 did not have any effect on our

consolidated financial statements.

The adoption of the new standard did not have any effect on

our consolidated financial statements.

were various updates recently issued, most of which represented technical corrections to the accounting literature or application

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carrying value of inventory consisted of the following:

September 30, 2016

December 31, 2015

Finished goods

Raw Materials

Total inventory

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

the nine month period ended September 30, 2016, one of the Company’s subsidiaries reached an agreement with a former manufacturer

regarding a payment dispute and gained control over approximately $90,000 worth of raw materials which will be used in future

Accounts Receivable

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accounts receivable, net

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

During the three

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

Prepaid Expenses

expenses consisted of the following:

September 30, 2016

December 31, 2015

Advances for inventory

Media production

Promotion - Bloggers

License agreement

In-store demos

for inventory

subscriptions

Miscellaneous

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its cash deposits with major financial institutions.

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

At March 31, 2017 and December 31, 2016, the uninsured balances amounted

to $1,255,907 and $2,038,985, respectively.

of September 30, 2016, three 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 nine months ended September 30, 2016, four customers accounted for approximately 37% of the Company’s net revenue.

the three months ended September 30, 2016, three customers accounted for approximately 53% of the Company’s net revenue.

For the nine months ended September 30, 2015, four customers accounted for approximately 94% of the Company’s net revenue.

For the three months ended September 30, 2015, three customers accounted for approximately 96% of the Company’s net revenue.

For the year ended December 31, 2015, four customers accounted for approximately 75% of the Company’s net revenues.

of March 31, 2017, three customers accounted for 96% of the Company’s accounts receivable.

As of December 31, 2016, three

customers accounted for 91% of the Company’s accounts receivable.

the three months ended March 31, 2017, three customers accounted for approximately 39% of the Company’s net revenue.

the year ended December 31, 2016, three customers accounted for approximately 34% of the Company’s net revenues.

Substantially

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

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

the three months ended March 31, 2017 and the year ended December 31, 2016, our products were made by the following suppliers:

Innovations - Pittsburgh, PA

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Nutrition - Ogden, UT

HealthSpecialty

- Santa Fe Springs, CA

Jingrui - China

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

is not a significant concentration.

Note 7 –

Fixed Assets and Intangible

As of September 30, 2016 and December 31, 2015,

fixed assets and intangible assets consisted of the following:

September 30, 2016

December 31, 2015

Property and equipment

Less accumulated depreciation

Fixed assets, net

Depreciation expense for the three months ended

September 30, 2016 and 2015 was $16,089 and $217, respectively.

Depreciation expense for the nine months ended September 30, 2016

and 2015 was $26,783 and $430, respectively.

September 30, 2016

December 31, 2015

FOCUSfactor intellectual property

Intangible assets subject to amortization

Less accumulated amortization

Intangible assets, net

Amortization expense for the nine months ended

September 30, 2016 and 2015 was $844,306 and $281,826, respectively.

Amortization expense for the three months ended September

30, 2016 and 2015 was $281,990 and $102,886, respectively.

These intangible assets were acquired through an Asset Purchase Agreement

and Stock Purchase Agreements entered into during 2015 for the acquisitions of the FocusFactor, UrgentRx and Flat Tummy Tea businesses.

During 2016, valuations were performed on acquisitions

that occurred during 2015.

Based on those valuations the Company adjusted intangible asset and goodwill –

Note 8 –

Fixed Assets and Intangible Assets

of March 31, 2017 and December 31, 2016, fixed assets and intangible assets consisted of the following:

and equipment

accumulated depreciation

expense for the three months ended March 31, 2017 and 2016 was $25,065 and $2,227, respectively.

During the three months ended

March 31, 2017, we sold fixed assets with an aggregate carrying value of $9,076 for $6,199 which resulted in loss on sale of fixed

assets of $2,877.

intellectual property

assets subject to amortization

accumulated amortization

expense for the three months ended March 31, 2017 and 2016 was $267,253 and $276,410, respectively.

These intangible assets were

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

Related Party Transactions

The Company accrued and paid consulting fees

of $25,000 per month to a company owned by Mr.

Company accrued and paid consulting fees of $41,250 per month, accounting fees of $12,500 per month and rent of $1,500 per month

to a company owned by Mr.

Jack Ross, Chief Executive Officer of the Company.

As of September 30, 2016, the

total outstanding balance was $0.

On January 22, 2015, the Company entered into

a Loan Agreement with Knight Therapeutics (Barbados) Inc.

(“Knight”), a related party, for the purchase of the Focus

Factor assets.

At September 30, 2016, the Company owed Knight $3,060,920 on this loan, net of debt discount and debt issuance cost

(see Note 10).

On June 26, 2015, the Company entered into

a Security Agreement with Knight Therapeutics, Inc., through its wholly owned subsidiary Neuragen Corp., for the purchase of Knight

Therapeutics, Inc.’s assets.

At September 30, 2016, the Company owed Knight $292,931 in relation to this agreement (see Note

On August 18, 2015, the Company entered into

a Consulting Agreement with Kara Harshbarger, the co-founder of Hand MD, LLC, pursuant to which she will provide marketing and

sales related service.

The Company will pay Ms.

Harshbarger $10,000 a month for one year unless the Consulting Agreement is terminated

earlier by either party.

The Company expensed $165,750 during the three months

ended March 31, 2017.

As of March 31, 2017, the total outstanding balance was $90,291 for consulting fees and reimbursements.

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

(“Knight”), a

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

At March 31, 2017, the Company owed Knight $2,204,096 on this loan,

net of debt issuance cost (see Note 10).

June 26, 2015, the Company entered into a Security Agreement with Knight Therapeutics, Inc., through its wholly owned subsidiary

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

At March 31, 2017, the Company owed Knight $612,500

in relation to this agreement (see Note 10).

August 18, 2015, the Company entered into a Consulting Agreement with Kara Harshbarger, the co-founder of Hand MD, LLC, pursuant

to which she will provide marketing and sales related service.

The Company pays Ms.

Harshbarger $10,000 a month for one year unless

the Consulting Agreement is terminated earlier by either party.

The Company has extended this agreement on a month to month basis.

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

The Company expensed $90,000 through payroll for the nine

months ended September 30, 2016 and $30,000 for the three months ended September 30, 2016.

As of September 30, 2016, the total

outstanding balance was $0.

On 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 September 30, 2016, the Company owed Knight $3,528,163 on this loan, net of debt discount and debt issuance cost

(see Note 10).

At September 30, 2016 NomadChoice Pty Ltd.,

a subsidiary of the Company, owed Knight Therapeutics $74,056 in connection with a royalty distribution agreement.

Note 9 –

Accounts Payable and Accrued

As of September 30, 2016 and December 31, 2015,

accounts payable and accrued liabilities consisted of the following:

September 30, 2016

December 31, 2015

Accrued payroll

Accrued legal fees

Accounting fees

The Company expensed $30,000 through payroll for the three months ended March 31,

As of March 31, 2017, 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, 2017, the Company owed Knight $2,677,703 on this

loan, net of debt issuance cost (see Note 10).

Company expensed royalty of $136,636 during the three months ended March 31, 2017.

At March 31, 2017 NomadChoice Pty Ltd., a subsidiary

of the Company, owed Knight Therapeutics $53,934 in connection with a royalty distribution agreement.

Company expensed royalty of $27,414 during the three months ended March 31, 2017.

At March 31, 2017 Sneaky Vaunt Corp., a subsidiary

of the Company, owed Knight Therapeutics $27,414 in connection with a royalty distribution agreement.

Company expensed commissions of $35,622 during the three months ended March 31, 2017.

At March 31, 2017 Sneaky Vaunt Corp., a

subsidiary of the Company, owed Founded Ventures, owned by a shareholder in the Company, $35,622 in connection with a commission

Accounts Payable and Accrued Liabilities

of March 31, 2017 and December 31, 2016, accounts payable and accrued liabilities consisted of the following:

Manufacturers

Returns allowance

Note 10 –

related party

Notes Payable

The Company’s

loans payable at September 30, 2016 and December 31, 2015 are as follows:

September 30, 2016

December 31, 2015

Loans payable

Unamortized debt discount

Unamortized debt issuance cost

Company’s loans payable at March 31, 2017 and December 31, 2016 are as follows:

debt issuance cost

Current portion

Long-term portion

January 22, 2015 Loan:

On January 22, 2015, the Company entered into

a Loan and Security Agreement (“Loan Agreement”) with Knight Therapeutics (Barbados) Inc.

(“Knight”), pursuant

to which Knight agreed to loan the Company $6.0 million (the “Loan”), and which amount was borrowed at closing (the

“Financing”) for the purpose of acquiring the Focus Factor Business (defined below).

At closing, the Company paid Knight

an origination fee of $120,000 and a work fee of $60,000 and also paid $40,000 of Knight’s expenses associated with the Loan.

January 22, 2015, the Company entered into a Loan and Security Agreement (“Loan Agreement”) with Knight Therapeutics

(Barbados) Inc.

(“Knight”), pursuant to which Knight agreed to loan the Company $6.0 million (the “Loan”),

and which amount was borrowed at closing (the “Financing”) for the purpose of acquiring the Focus Factor Business

(defined below).

At closing, the Company paid Knight an origination fee of $120,000 and a work fee of $60,000 and also paid $40,000

of Knight’s expenses associated with the Loan.

The Loan bears interest at a rate of 15% per year;

provided, however, that upon the occurrence of an equity or convertible equity

offering by the Company of at least $1.0 million, the interest rate will drop to 13% per year.

Interest accrues quarterly and is

payable in arrears on March 31, June 30, September 30 and December 31 in each year, beginning on March 31, 2015.

All outstanding principal and accrued and unpaid

interest is due on the earliest to occur of either January 20, 2017 (the “Maturity Date”), or the date that Knight,

in its discretion, accelerates the Company’s obligations due to an event of default.

The Company may extend the Maturity

Date for two successive additional 12-month periods if at March 31, 2016 and March 31, 2017, respectively, the Company’s

revenues exceed $13.0 million and its EBITDA exceeds $2.0 million for the respective 12-month period then ending.

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.

Subject to certain restrictions, the Company

may prepay the outstanding principal of the Loan (in whole but not in part) at any time if the Company pays a concurrent prepayment

fee equal to the greater of (i) the total unpaid annual interest that would have been payable during the year in which the prepayment

is made if the prepayment is made prior to the first anniversary of the closing, and (ii) $300,000.

The Company’s obligations

under the Loan Agreement are secured by a first priority security interest in all present and future assets of the Company.

Company also agreed to not pledge or otherwise encumber its intellectual property assets, subject to certain customary exceptions.

The Loan Agreement includes customary representations,

warranties, and affirmative and restrictive covenants, including covenants to attain and maintain certain financial metrics, and

to not merge or dispose of assets, acquire other businesses (except for businesses substantially similar or complementary to the

Company’s business and the aggregate consideration to be paid does not exceed $100,000) or make capital expenditures in excess

of $100,000 over the Company’s annual business plan in any year.

The Loan Agreement also includes customary events of default,

including payment defaults, breaches of covenants, change of control and material adverse effect default.

Upon the occurrence of

an event of default and during the continuation thereof, the principal amount of the Loan will bear a default interest rate of

an additional 5%.

In connection with the Loan Agreement, the

Company issued to Knight a warrant that entitled Knight to purchase 4,595,187 shares of common stock of the Company (“Common

Stock”) on or prior to close of business on January 30, 2015 (the “ST Warrant”).

The aggregate exercise price

of the Common Stock under the ST Warrant is $1.00.

provided, however, that

upon the occurrence of an equity or convertible equity offering by the Company of at least $1.0 million, the interest rate will

drop to 13% per year.

Interest accrues quarterly and is payable in arrears on March 31, June 30, September 30 and December 31

in each year, beginning on March 31, 2015.

outstanding principal and accrued and unpaid interest is due on the earliest to occur of either January 20, 2017 (the “Maturity

Date”), or the date that Knight, in its discretion, accelerates the Company’s obligations due to an event of default.

The Company may extend the Maturity Date for two successive additional 12-month periods if at March 31, 2016 and March 31, 2017,

respectively, the Company’s revenues exceed $13.0 million and its EBITDA exceeds $2.0 million for the respective 12-month

period then ending.

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

to January 20, 2018.

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

the Company pays a concurrent prepayment fee equal to the greater of (i) the total unpaid annual interest that would have been

payable during the year in which the prepayment is made if the prepayment is made prior to the first anniversary of the closing,

and (ii) $300,000.

The Company’s obligations under the Loan Agreement are secured by a first priority security interest

in all present and future assets of the Company.

The Company also agreed to not pledge or otherwise encumber its intellectual

property assets, subject to certain customary exceptions.

Loan Agreement includes customary representations, warranties, and affirmative and restrictive covenants, including covenants

to attain and maintain certain financial metrics, and to not merge or dispose of assets, acquire other businesses (except for

businesses substantially similar or complementary to the Company’s business and the aggregate consideration to be paid does

not exceed $100,000) or make capital expenditures in excess of $100,000 over the Company’s annual business plan in any year.

The Loan Agreement also includes customary events of default, including payment defaults, breaches of covenants, change of control

and material adverse effect default.

Upon the occurrence of an event of default and during the continuation thereof, the principal

amount of the Loan will bear a default interest rate of an additional 5%.

connection with the Loan Agreement, the Company issued to Knight a warrant that entitled Knight to purchase 4,595,187 shares of

common stock of the Company (“Common Stock”) on or prior to close of business on January 30, 2015 (the “ST Warrant”).

The aggregate exercise price of the Common Stock under the ST Warrant is $1.00.

Knight exercised the ST Warrant on January 22,

Also in connection with

the Loan Agreement, the Company issued to Knight a warrant to purchase 3,584,759 shares of Common Stock on or prior to the close

of business of January 22, 2025 (the “LT Warrant”).

The exercise price per share of the Common Stock under the LT Warrant

Also in connection with the Loan Agreement, the Company issued to Knight a warrant to purchase 3,584,759 shares of Common

Stock on or prior to the close of business of January 22, 2025 (the “LT Warrant”).

The exercise price per share of

the Common Stock under the LT Warrant is $0.34.

The LT Warrant provides for cashless exercise.

The LT Warrant also provides that in the event the closing price of the

Common Stock remains above $1.00 for six consecutive months, Knight will forfeit the difference between the number of shares acquired

under the LT Warrant prior to 90 days after such six-month period, and 25% of the shares purchasable under the LT Warrant.

The beneficial conversion feature of the warrants

issued to the noteholders amounted to $1,952,953 (ST warrants) and $1,462,560 (LT warrants), respectively, and was recorded as

debt discount of the corresponding debt.

The Company recognized amortization of debt

discount of $13,766 and $367,781 (LT warrants) during the three and nine months ended September 30, 2016, respectively.

debt discount as of September 30, 2016 amounted to $239,951.

The 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 $14,267

and $78,709 during the three and nine months ended September 30, 2016, respectively.

Unamortized debt issuance cost as of September

30, 2016 amounted to $74,129.

The Company recognized and paid interest expense

of $148,463 and $498,105 during the three and nine months ended September 30, 2016, respectively.

Accrued interest expense was

$0 as of September 30, 2016.

Loan payable balance was $3,375,000 as of September 30, 2016.

The LT Warrant also provides that

in the event the closing price of the Common Stock remains above $1.00 for six consecutive months, Knight will forfeit the difference

between the number of shares acquired under the LT Warrant prior to 90 days after such six-month period, and 25% of the shares

purchasable under the LT Warrant.

beneficial conversion feature of the warrants issued to Knight amounted to $1,952,953 (ST warrants) and $1,462,560 (LT warrants),

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

2016, this debt discount was fully expensed in conjunction with the cancellation of all warrants and options held by Knight.

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

The Company recognized amortization

of deferred financing costs of $13,957 during the three months ended March 31, 2017, respectively.

Unamortized debt issuance cost

as of March 31, 2017 amounted to $45,904.

Company recognized and paid interest expense of $103,740 during the three months ended March 31, 2017, respectively.

Accrued interest

expense was $0 as of March 31, 2017.

Loan payable balance was $2,250,000 as of March 31, 2017.

January 22, 2015 Loan:

On January 22, 2015, the Company issued a 0%

promissory note in a principal amount of $1,500,000 in connection with an Asset Purchase Agreement.

The note has a maturity date

of January 20, 2017, with $750,000 to be paid on or before January 20, 2016 and an additional $750,000 to be paid on or before

January 20, 2017.

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

January 22, 2015, the Company issued a 0% promissory note in a principal amount of $1,500,000 in connection with an Asset Purchase

The note has a maturity date of January 20, 2017, with $750,000 to be paid on or before January 20, 2016 and an additional

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

This loan was paid in full in January 2017.

June 26, 2015 Security Agreement:

On June 26, 2015, the Company, through its

wholly owned subsidiary, Neuragen Corp.

(“Neuragen”), issued a 0% promissory note in a principal amount of $950,000

in connection with an Asset Purchase Agreement.

The note requires $250,000 to be paid on or before June 30, 2016, and $700,000

to be paid in quarterly installments (beginning with the quarter ended September 30, 2015) equal to the greater of $12,500 or 5%

June 26, 2015, the Company, through its wholly owned subsidiary, Neuragen Corp.

(“Neuragen”), issued a 0% promissory

note in a principal amount of $950,000 in connection with an Asset Purchase Agreement.

The note requires $250,000 to be paid on

or before June 30, 2016, and $700,000 to be paid in quarterly installments (beginning with the quarter ended September 30, 2015)

equal to the greater of $12,500 or 5% of U.S.

net sales, and 2% of U.S.

net sales of Neuragen for 60 months thereafter.

The payment of such amounts is secured by a security

interest in certain assets, undertakings and property (“Collateral”) pursuant to the Security Agreement, which will

be released upon receipt of total payments of $1.2 million.

The Company also recorded deferred financing

costs of $10,486 with respect to the above agreement in 2015.

The Company recognized amortization of deferred financing costs of

$1,321 and $3,921 during the three and nine months ended September 30, 2016, respectively.

Unamortized debt issuance cost as of

September 30, 2016 amounted to $3,921.

The Company recorded present value of future payments of $292,931 and $531,589 as of September

of such amounts is secured by a security interest in certain assets, undertakings and property (“Collateral”) pursuant

to the Security Agreement, which will be released upon receipt of total payments of $1.2 million.

Company also recorded deferred financing costs of $10,486 with respect to the above agreement.

The Company recognized amortization

of deferred financing costs of $1,293 during the three months ended March 31, 2017.

Unamortized debt issuance cost as of March

31, 2017 amounted to $1,307.

The Company recorded present value of future payments of $288,889 and $290,947 as of March 31, 2017

and December 31, 2016, respectively.

The Company recorded interest expense of $10,588 and $48,842 for the three and nine

months ended September 30, 2016, respectively.

The Company recorded imputed interest expense of $10,442 for the three months ended March

the three months ended March 31, 2017, the Company made payments of $31,250 in connection with this Security Agreement.

November 12, 2015 Loan:

On November 12, 2015, we entered into a First

Amendment to Loan Agreement (“First Amendment”) with Knight, pursuant to which Knight agreed to loan us an additional

$5.5 million, and which amount was borrowed at closing (the “Financing”) for the purpose of acquiring Breakthrough

Products, Inc.

November 12, 2015, we entered into a First Amendment to Loan Agreement (“First Amendment”) with Knight, pursuant to

which Knight agreed to loan us an additional $5.5 million, and which amount was borrowed at closing (the “Financing”)

for the purpose of acquiring Breakthrough Products, Inc.

and NomadChoice Pty Limited through Stock Purchase Agreements.

At closing, we paid Knight an origination fee of

$110,000 and a work fee of $55,000 and also paid $24,000 of Knight’s expenses associated with the Loan.

The Loan bears interest

at a rate of 15% per year.

The interest rate will decrease to 13% if we meet certain equity-fundraising targets.

The New Loan Agreement

matures on November 11, 2017.

In connection with the New Loan Agreement,

we issued Knight a warrant that entitles Knight to purchase 5,550,625 shares of our common stock (“Knight Warrant Shares”)

representing approximately 6.5% of our fully diluted capital, which Knight exercised in full on November 12, 2015.

received a 10-year warrant entitling Knight to purchase up to 4,547,243 shares of our common stock at $0.49 per share (“Knight

Warrants”).

The beneficial conversion feature of the warrants

issued to the noteholders amounted to $2,553,287 (5,550,625 warrants) and $2,067,258 (4,547,243 warrants), respectively, and was

recorded as debt discount of the corresponding debt in 2015.

For derivative liability calculation on 4,547,243 warrants, refer

The Company recognized amortization of debt

discount of $260,175 (4,547,243 warrants) during the three months and $774,868 during the nine months ended September 30, 2016,

respectively.

Unamortized debt discount as of September 30, 2016 amounted to $1,153,818.

The 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 $29,431

and $87,653 during the three and nine months ended September 30, 2016, respectively.

Unamortized debt issuance cost as of September

we paid Knight an origination fee of $110,000 and a work fee of $55,000 and also paid $24,000 of Knight’s expenses associated

with the Loan.

The Loan bears interest at a rate of 15% per year.

The interest rate will decrease to 13% if we meet certain equity-fundraising

The New Loan Agreement matures on November 11, 2017.

connection with the First Amendment, we issued Knight a warrant that entitles Knight to purchase 5,550,625 shares of our common

stock (“Knight Warrant Shares”) representing approximately 6.5% of our fully diluted capital, which Knight exercised

in full on November 12, 2015.

Knight also received a 10-year warrant entitling Knight to purchase up to 4,547,243 shares of our

common stock at $0.49 per share (“Knight Warrants”).

beneficial conversion feature of the warrants issued to Knight amounted to $2,553,287 (5,550,625 warrants) and $2,067,258 (4,547,243

warrants), respectively, and was recorded as debt discount of the corresponding debt in 2015.

2016, this debt discount was fully expensed in conjunction with the cancellation of all warrants and options held by Knight.

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

The Company recognized amortization

of deferred financing costs of $28,791 during the three months ended March 31, 2017.

Unamortized debt issuance cost as of March

31, 2017 amounted to $72,297.

The Company recognized interest expense of

$201,953 and $614,453 during the three and nine months ended September 30, 2016, respectively.

During the three and nine months

ended September 30, 2016, the Company paid interest of $206,250 and $684,298, respectively.

Accrued interest was $45,206 as of

September 30, 2016.

The balance at September 30, 2016 was $4,812,500.

Note 11 –

Company recognized interest expense of $120,430 during the three months ended March 31, 2017.

During the three months ended March

31, 2017, the Company paid interest of $128,906.

Accrued interest was $22,603 as of March 31, 2017.

Loan balance at March 31,

2017 was $2,750,000.

Stockholders’

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.

During the nine months ended September 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.

During the nine months ended September 30,

2016, the Company issued 71,428 shares of its common stock valued at $0.70 per share for services rendered.

During the nine months ended September 30,

2016, the Company cancelled 713,767 shares of its common stock valued at $125,000 in conjunction with an agreement with a former

The Company committed to issue 125,000 shares to former shareholders valued at $56,250 recorded as settlement expense

during the three and nine months ended September 30, 2016.

These shares were not issued as of the date of this Quarterly Report.

As of September 30, 2016 and December 31, 2015,

there were 81,264,357 and 81,692,954 shares of the Company’s common stock issued and outstanding, respectively.

Note 12 –

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.

of March 31, 2017 and December 31, 2016, there were 88,764,357 shares of the Company’s common stock issued and outstanding.

Commitments & Contingencies

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.

Operating leases

In April 2014, a subsidiary entered into an

extension of a non-cancellable operating lease for office space that expires on March 31, 2017.

Rent expense under this lease for

the first six months of 2016 was $8,923 per month less a $3,010 per month sublease through March 2017.

During the month of June

2016, the subsidiary was relieved from a portion of the lease, leaving the monthly obligation at $2,609 with the sublease of $3,010

still in effect.

In December 2015, a subsidiary entered into

a non-cancellable operating lease for office space through November 2016.

Rental payments under this lease are $5,500 Australian

dollars per month, which is approximately $4,200.

In December 2015, the Company entered into

a non-cancellable operating lease for office space through December 2016.

Rental payments under this lease are $5,500 per month.

The 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 September 30, 2016:

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.

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

Rent expense under this lease for the period from acquisition until March 31, 2017 was $8,923 per month less a $3,010

per month sublease through March 2017.

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

was extended until April 2017.

Rental payments under this lease are $5,900 Australian dollars per month, which is approximately

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, 2017:

Year ending December

remaining three months

On December 8, 2014, a subsidiary entered into

a non-cancellable 36 month phone lease with an estimated cost of $894 a month.

The 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 September 30, 2016:

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, 2017:

Year ending December

remaining three months

Note 13 –

remaining nine months

Stock Options

On July 30, 2014, the Company’s board

of directors approved the Company’s 2014 Equity Incentive Plan (the “Plan”) and the reservation of 15,525,000

shares of common stock for issuance under the Plan.

The Plan was approved by the Company’s shareholders and became effective

on August 5, 2015.

On April 2, 2014, the Company granted 1,000,000

options with an exercise price of $0.25 per share to a company owned by Mr.

Jack Ross, Chief Executive Officer of the Company.

On December 14, 2015, the Company granted 1,000,000

options each with an exercise price of $0.25 per share to two Board members of the Company.

On December 14, 2015, the Company granted 1,000,000

options each with an exercise price of $0.65 per share to two employees of the Company.

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 the Plan at September 30, 2016:

Options Outstanding

Options Exercisable

The stock option activity for the nine months

ended September 30, 2016 is as follows:

Weighted Average

July 30, 2014, the Company’s board of directors approved the Company’s 2014 Equity Incentive Plan (the “Plan”)

and the reservation of 15,525,000 shares of common stock for issuance under the Plan.

The Plan was approved by the Company’s

shareholders and became effective on August 5, 2015.

April 2, 2014, the Company granted 1,000,000 options with an exercise price of $0.25 per share to a company owned by Mr.

Ross, Chief Executive Officer of the Company.

December 14, 2015, the Company granted 1,000,000 options each with an exercise price of $0.25 per share to two Board members of

December 14, 2015, the Company granted 1,000,000 options each with an exercise price of $0.65 per share to two employees of the

February 18, 2016, the Company granted 300,000 options with an exercise price of $0.70 per share to an employee of the Company.

April 18, 2016, the Company granted 500,000 options with an exercise price of $0.70 per share to an employee of the Company.

July 4, 2016, the Company granted 500,000 options with an exercise price of $0.70 per share to an employee of the Company.

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 the Plan at March 31, 2017:

stock option activity for the three months ended March 31, 2017 is as follows:

Exercise Price

1 unchanged sentence

Expired or canceled

Outstanding at September 30, 2016

Stock-based compensation expense related to

vested options was $306,646 and $913,930 during the three and nine months ended September 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%.

Stock options outstanding as of September

30, 2016, as disclosed in the above table, have an intrinsic value of $nil.

Note 14 –

Outstanding at March 31, 2017

compensation expense related to vested options was $339,136 during the three months ended March 31, 2017 which is a component

of general and administrative expense in the statement of income.

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

estimated fair value of Company’s common stock of $0.40-0.74, risk-free interest rate of 0.90-2.23%, volatility

of 135-160%, expected lives of 3-10 years, and dividend yield of 0%.

Stock options outstanding as of March 31, 2017, as disclosed

in the above table, have an intrinsic value of $928,500.

of March 31, 2017, unrecognized compensation costs related to non–vested stock–based compensation arrangements were

$1,216,279, and is expected to be recognized over a weighted average period of 1.25 years.

Stock Warrants

The following table summarizes the warrants

outstanding, warrant exercisability and the related prices for the shares of the Company’s common stock at September 30,

Warrants Outstanding

Warrants Exercisable

The warrant activity for

the nine months ended September 30, 2016 is as follows:

following table summarizes the warrants outstanding, warrant exercisability and the related prices for the shares of the Company’s

common stock at March 31, 2017:

warrant activity for the three months ended March 31, 2017 is as follows:

Outstanding at December 31, 2016

Expired or canceled

Outstanding at September 30, 2016

Note 15 –

The Company has incurred a liability for the

estimated fair value of a derivative warrant instrument.

The estimated fair value of the derivative warrant instruments has been

calculated using the Black-Scholes fair value option-pricing model with key input variables provided by management, as of the issue

date, with the valuation offset against additional paid in capital, and at each reporting date, with changes in fair value recorded

as gains or losses on revaluation in non-operating income (expense).

The Company identified embedded derivatives

related to the warrants issued along with loan payable entered into in November 2015.

These embedded derivatives included certain

conversion features.

The accounting treatment of derivative financial instruments requires that the Company record the fair value

of the derivatives as of the inception date of the warrants and to adjust the fair value as of each subsequent balance sheet date.

At the inception of the warrants, the Company determined a fair value of $2,067,258 of the embedded derivative.

The fair value

of the embedded derivative was determined using the Black-Scholes Model based on the following assumptions:

November 12, 2015

Risk-free interest rate

Expected remaining term

Expected volatility

Dividend yield

The initial fair values of the embedded derivative

of $2,067,258 was allocated as a debt discount $2,067,258.

Fair 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

Expected remaining term

Expected volatility

Dividend yield

During the year ended December 31, 2015, the

increase in the fair value of the warrant derivative liability of $1,028,921 was recorded as a loss on change in fair value of

derivative liability.

Fair value at September 30, 2016 was estimated

to be $1,535,795 and based on the following assumptions:

September 30, 2016

Risk-free interest rate

Expected remaining term

Expected volatility

Dividend yield

During the nine months ended September 30,

2016, the decrease in the fair value of the warrant derivative liability of $1,560,384 was recorded as a gain on change in fair

value of derivative liability.

During the three months ended September 30,

2016, the decrease in the fair value of the warrant derivative liability of $1,137,309 was recorded as a gain on change in fair

value of derivative liability.

Note 16 –

Segment identification and selection is consistent

with the management structure used by the Company’s chief operating decision maker 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’s chief operating

decision maker does not review operating results on a disaggregated basis;

rather, the chief operating decision maker reviews operating

results on an aggregate basis.

Net sales attributed to customers in the United

States and foreign countries for the nine months ended September 30, 2016 and 2015 were as follows:

September 30, 2016

September 30, 2015

United States

Foreign countries

The Company’s net sales by product group

for the nine months ended September 30, 2016 and 2015 were as follows:

September 30, 2016

September 30, 2015

Nutraceuticals

Over the Counter (OTC)

Cosmeceuticals

Net sales attributed to customers in the United

States and foreign countries for the three months ended September 30, 2016 and 2015 were as follows:

September 30, 2016

September 30, 2015

Outstanding at March 31, 2017

outstanding as of March 31, 2017, as disclosed in the above table, have an intrinsic value of $0.

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

maker 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’s chief operating decision maker does not review operating results on a disaggregated

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 three months ended March 31, 2017 and 2016 were

United States

Foreign countries

The Company’s net sales by product group

for the three months ended September 30, 2016 and 2015 were as follows:

September 30, 2016

September 30, 2015

Company’s net sales by product group for the three months ended March 31, 2017 and 2016 were as follows:

Nutraceuticals

Over the Counter (OTC)

Consumer Goods

Cosmeceuticals

(1) Net sales for any other

product group of similar products are less than 10% of consolidated net sales.

Long-lived assets (net) attributable to operations

in the United States and foreign countries as of September 30, 2016 and December 31, 2015 were as follows:

September 30, 2016

December 31, 2015

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, 2017 and December 31, 2016

were as follows:

United States

Foreign countries

Note 17 –

In 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 FOCUSfactor acquisition.

“Note 3 –

Asset Purchase Agreement with Factor Nutrition

The 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 January 22, 2015.

The Company expects the purchase price allocations for the acquisition of Focus

Factor Business to be completed by the filing of first quarter 2016 statements.”

The Company has consulted with a valuation

professional to assist in determining the fair value of the identifiable FOCUSfactor intangible assets.

As a result of this work,

the Company has increased the amount allocated to the FOCUSfactor indefinite-lived brand and patent by $450,000 and reduced the

amount recorded to goodwill by an identical amount.

This adjustment had no effect on the income statement.

The Company believes

that the restated amount of $1,450,000 properly states the fair value of the FOCUSfactor brand and patent.

In 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.

“Note 3 –

Stock Purchase Agreement with Breakthrough

Products, Inc.:

The 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.”

The 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.

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,

In 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.

“Note 3 –

Stock Purchase Agreement with TPR Investments

The 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.”

The 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 by $115,000.

These adjustments

had no effect on the income statement.

The Company believes that these restated amounts properly states the fair value of the TPR

Investments Pty Ltd.

Note 18 –

Income tax expense was $264,377 and $659,462

for the three and nine months ended September 30, 2016, respectively, compared to $0 for the same periods in 2015.

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

The total deferred tax asset is calculated

by multiplying a domestic (US) 34% marginal tax rate by the cumulative net operating loss carryforwards (“NOL”).

Company currently has NOLs, which expire through 2035.

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 (the “Code”) Section 382, change

of ownership rules.

If the Company has had a change in ownership, the NOL’s would be limited as to the amount that could

be utilized each year, based on the Code.

Note 19 –

Income tax expense was $291,467 for the three

months ended March 31, 2017, respectively, compared to $183,905 for the same period in 2016.

The current provision is attributable

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

The Company also has operations in Canada that

started at the beginning of 2016 and is currently evaluating its tax position as it pertains to the 2017 year end.

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

carryforwards (“NOL”).

The Company currently has NOLs, which expire through 2035.

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

(the “Code”) Section 382, change of ownership rules.

If the Company has had a change in ownership, the NOL’s

would be limited as to the amount that could be utilized each year, based on the Code.

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

no subsequent events have occurred that would require adjustments or disclosure into the unaudited condensed consolidated financial

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion

and analysis of the results of operations and financial condition of Synergy for the three and nine months ended September 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,”

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 except as disclosed below have occurred that would require adjustments or disclosure

into the unaudited condensed consolidated financial statements.

Company paid $761,935 as consulting fees to a related party (officer) for services rendered in April 2017.

April 2017, the Company paid $378,125 in principal and accrued interest on the second loan (November 12, 2015) to Knight Therapeutics.

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, 2017 and 2016, should be read in conjunction with the unaudited condensed consolidated financial statements of

Synergy, and the notes to those unaudited condensed consolidated financial statements that are included elsewhere in this

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 caption, "Cautionary Notice Regarding Forward-Looking Statements"

"Business"

section in our Form 10-K filed on March 24, 2017.

We use words such as

“anticipate,”

“estimate,”

11 unchanged sentences

and similar expressions to identify forward-looking

The Company is in the

business of marketing and distributing consumer branded products through various distribution channels primarily in the health

and wellness industry.

Company is in the business of marketing and distributing consumer branded products through various distribution channels primarily

in the health and wellness industry.

The Company’s strategy is to grow both organically and by future acquisition.

During 2015, we completed

five acquisitions, with at least one in each of the three targeted verticals of Nutraceuticals, Cosmeceuticals and Over the Counter

Our objective is to grow all three verticals to provide a balanced and synergistic portfolio that drives consumer demand

via multiple channels.

We expect the incorporation of these acquisitions into the Company will have a significant impact on our

revenue and results of operations.

Our management’s

discussion and analysis of our financial condition and results of operations are only based on Synergy’s current business.

Our previous shell company’s results of operations are immaterial and will not be included in the discussion below.

affecting our results of operations include revenues, cost of revenues, operating expenses and income and taxation.

Non-GAAP Financial

We currently focus on

Adjusted EBITDA to evaluate our business relationships and our resulting operating performance and financial position.

EBITDA is defined as EBITDA (net income plus interest expense, income tax expense, depreciation and amortization), further adjusted

to exclude certain non-cash expenses and other adjustments as set forth below.

We present Adjusted EBITDA because we consider it

an important measure of our performance and it is a meaningful financial metric in assessing our operating performance from period

to period by excluding certain items that we believe are not representative of our core business, such as certain non-cash items

and other adjustments.

We believe that Adjusted

EBITDA, viewed in addition to, and not in lieu of, our reported results in accordance with accounting principles generally accepted

in the United States (“U.S.

management’s discussion and analysis of our financial condition and results of operations are only based on our current

business and should be read in conjunction with our condensed consolidated financial statements.

Key factors affecting our results

of operations include revenues, cost of revenues, operating expenses and income and taxation.

Financial Measures

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

Adjusted EBITDA is defined as EBITDA (net income plus interest expense, income tax expense, depreciation and amortization),

further adjusted to exclude certain non-cash expenses and other adjustments as set forth below.

We present Adjusted EBITDA because

we consider it an important measure of our performance and it is a meaningful financial metric in assessing our operating performance

from period to period by excluding certain items that we believe are not representative of our core business, such as certain

non-cash items and other adjustments.

believe that Adjusted EBITDA, viewed in addition to, and not in lieu of, our reported results in accordance with accounting principles

generally accepted in the United States (“U.S.

GAAP”), provides useful information to investors.

September 30, 2016

March 31, 2017

Interest income

Interest expense

Gain on change in fair value of derivative liability

Stock-based compensation

Stock issued for services

One-time expenses

Gain on foreign currency translation and transaction

Loss on foreign

currency translation and transaction

Adjusted EBITDA

For the three

September 30, 2016

Interest income

Interest expense

and Adjusted EBITDA are considered non-GAAP financial measures.

EBITDA represents earnings before interest, taxes, depreciation

and amortization.

Adjusted EBITDA represents EBITDA, further adjusted to exclude the impact of higher-than-normal revenue change

other activity and certain expenses and transactions that we believe are not representative of our core operating results, including

gain on change in fair value of derivative liability;

stock-based compensation;

One-time expenses

Gain on foreign currency translation and transaction

Adjusted EBITDA

EBITDA and Adjusted EBITDA

are considered non-GAAP financial measures.

EBITDA represents earnings before interest, taxes, depreciation and amortization.

EBITDA represents EBITDA, further adjusted to exclude the impact of higher-than-normal revenue change order activity and certain

expenses and transactions that we believe are not representative of our core operating results, including gain on change in fair

value of derivative liability;

stock-based compensation;

one-time expenses for acquisitions;

and the gain on foreign currency translation

and transaction.

The Company’s definitions of EBITDA and adjusted EBITDA might not be comparable to similarly titled measures

reported by other companies.

Results of Operations

for the Three months Ended September 30, 2016 and 2015

For the three months ended

September 30, 2016, we had revenue of $11,569,568 from sales of our products, as compared to revenue of $3,181,623 for the same

period in 2015.

This is primarily due to the acquisitions we completed during 2015 and is comprised of the following categories:

September 30, 2016

Nutraceuticals

Over the Counter (OTC)

Cosmeceuticals

Cost of Revenue

For the three months ended

September 30, 2016, our cost of revenue was $3,475,159.

Our cost of revenue for the three months ended September 30, 2015, was

This increase is also due to the acquisitions we completed during 2015 and is comprised of the following categories:

September 30, 2016

Nutraceuticals

Over the Counter (OTC)

Cosmeceuticals

Gross profit was $8,094,409

for the three months ended September 30, 2016, as compared to gross profit of $1,711,713 for the same period in 2015.

Operating Expenses

Selling and Marketing Expenses

For the three months ended

September 30, 2016, our selling and marketing expenses were $3,051,808 as compared to $814,640 for the same period in 2015, which

is primarily due to marketing our various products in multiple media channels including print, television and online.

This increase

is solely attributable to the acquisitions we completed during 2015.

General and Administrative Expenses

For the three months ended

September 30, 2016, our general and administrative expenses were $1,811,395.

For the three months ended September 30, 2015, our

general and administrative expenses were $706,806.

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

having general costs now to run and manage each brand.

Depreciation and Amortization Expenses

For the three months ended

September 30, 2016, our depreciation and amortization expenses were $298,079 as compared to $103,103 for the same period in 2015.

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

Other Income and Expenses

For the three months ended

September 30, 2016 and 2015 we had other (income) and expense items of the following:

September 30, 2016

September 30, 2015

Interest income

Interest expense

Remeasurement gain on translation of foreign subsidiary

Gain on change in fair value of derivative liability

Settlement expense

Amortization of debt discount

Amortization of debt issuance cost

For the three months ended

September 30, 2016, we had interest expense of $432,622 as compared to $212,904 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 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 $1,137,309.

During 2015, we acquired a foreign subsidiary and thus recorded a remeasurement

gain on the foreign currency translation.

Net Income (Loss)

For the three months ended

September 30, 2016, our net income was $3,050,666 as compared to a net loss of ($467,610) for the same period in 2015.

Results of Operations

for the Nine months Ended September 30, 2016 and 2015

For the nine months ended

September 30, 2016, we had revenue of $28,111,894 from sales of our products, as compared to revenue of $7,237,619 for the same

period in 2015.

This is primarily due to the acquisitions we completed during 2015 and is comprised of the following categories:

September 30, 2016

on foreign currency translation and transaction.

The Company’s definitions of EBITDA and adjusted EBITDA might not be comparable

to similarly titled measures reported by other companies.

of Operations for the Three months Ended March 31, 2017 and 2016

the three months ended March 31, 2017, we had revenue of $10,788,319 from sales of our products, as compared to revenue of $8,267,851

for the same period in 2016.

The increase is due to a new company launch and a major customer expanding our store count and product

line, and is comprised of the following categories:

Nutraceuticals

Over the Counter (OTC)

Consumer Goods

Cosmeceuticals

Cost of Revenue

For the nine months ended

September 30, 2016, our cost of revenue was $7,694,028.

Our cost of revenue for the nine months ended September 30, 2015, was $3,103,244.

This increase is also due to the acquisitions we completed during 2015 and is comprised of the following categories:

September 30, 2016

the three months ended March 31, 2017, our cost of revenue was $2,502,530.

Our cost of revenue for the three months ended March

31, 2016, was $2,036,577.

The increase is due to a new company launch and a major customer expanding our store count and product

line and is comprised of the following categories:

Nutraceuticals

Over the Counter (OTC)

Consumer Goods

Cosmeceuticals

Gross profit was $20,417,866

for the nine months ended September 30, 2016, as compared to gross profit of $4,134,375 for the same period in 2015.

Operating Expenses

Selling and Marketing Expenses

For the nine months ended

September 30, 2016, our selling and marketing expenses were $6,688,663 as compared to $2,228,418 for the same period in 2015, which

is primarily due to marketing our various products in multiple media channels including print, television and online.

This increase

is solely attributable to the acquisitions we completed during 2015.

General and Administrative Expenses

For the nine months ended

September 30, 2016, our general and administrative expenses were $5,359,578.

For the nine months ended September 30, 2015, our

general and administrative expenses were $1,407,458.

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

having general costs now to run and manage each brand.

Depreciation and Amortization Expenses

For the nine months ended

September 30, 2016, our depreciation and amortization expenses were $871,089 as compared to $282,256 for the same period in 2015.

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

Other Income and Expenses

For the nine months ended

September 30, 2016 and 2015, we had other (income) and expense items of the following:

Nine months ended

September 30, 2016

Nine months ended

September 30, 2015

profit was $8,285,789, or 77% for the three months ended March 31, 2017, as compared to gross profit of $6,231,174, or 75% for

the same period in 2016, an increase of $2,054,615, or 33%.

The increase in gross profit margin is directly related to increase

in sales and better negotiated deals with manufacturers, utilizing volume purchasing to avail lower prices and purchasing finished

goods instead of buying components.

and Marketing Expenses

the three months ended March 31, 2017, our selling and marketing expenses were $2,897,197 as compared to $1,447,676 for the same

period in 2016, which is primarily due to marketing our various products in multiple media channels including print, television

and online and the launch of our new product line.

and Administrative Expenses

the three months ended March 31, 2017, our general and administrative expenses were $1,937,643.

For the three months ended March

31, 2016, our general and administrative expenses were $1,868,805.

The increase is primarily due to increased personnel and operations

as our company grew.

and Amortization Expenses

the three months ended March 31, 2017, our depreciation and amortization expenses were $292,318 as compared to $278,637 for the

same period in 2016.

Income and Expenses

the three months ended March 31, 2017 and 2016 we had other (income) and expense items of the following:

March 31, 2017

March 31, 2016

Interest income

Interest expense

Remeasurement gain on translation of foreign subsidiary

Gain on change in fair value of derivative liability

Settlement expenses

Remeasurement loss (gain) on translation

of foreign subsidiary

Gain on change in fair value of derivative

Loss on sale of assets

Amortization of debt discount

Amortization of debt issuance cost

For the nine months ended

September 30, 2016, we had interest expense of $1,265,844 as compared to $612,094 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 led to the amortization of debt discount and debt issuance costs.

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 $1,560,384.

During 2015, we acquired a foreign subsidiary and thus recorded

a remeasurement gain on the foreign currency translation.

Net Income (Loss)

For the nine months ended

September 30, 2016, our net income was $5,848,552, as compared to a net loss of ($3,072,148) for the same period in 2015.

Liquidity and Capital

As of September 30, 2016,

we had $4,220,141 cash on hand and a $2,487,840 working capital deficit.

The deficit is largely due to a derivative liability for

stock warrants outstanding of $1,535,795.

In addition, we also had restricted cash of $291,620 which is comprised of $191,620 for

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

Going Concern

The Company’s unaudited condensed consolidated

financial statements are prepared using U.S.

GAAP applicable to a going concern, which contemplates the realization of assets and

liquidation of liabilities in the normal course of business.

The Company had an accumulated deficit at September 30, 2016 of $2,721,289.

The Company had a working capital deficit of $2,487,840 as of September 30, 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.

Management’s plans to continue as a going

concern include growing sales revenue on our existing brands, raising additional capital through borrowing and sales of common

However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a

going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually

secure other sources of financing and attain profitable operations.

The accompanying unaudited condensed consolidated financial

statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Nine months ended September 30, 2016 and

Net Cash Provided by Operating Activities

Net cash provided by operating

activities for the nine months ended September 30, 2016 was $6,247,059, compared to $800,030 for the same period in 2015.

increase in net cash provided by operating activities for the nine months ended September 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.

The $6,247,059 consists of our net income of

$5,848,552 increased by:

Amortization of debt issuance cost

Total other expense (income)

the three months ended March 31, 2017, we had interest expense of $247,364 as compared to $431,264 for the same period in 2016.

The decrease was due to the payoffs and pay downs of the loans.

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 $1,086,498.

In 2016 we cancelled those warrants and issued shares.

the three months ended March 31, 2017, our net income was $2,558,654 as compared to a net income of $2,810,476 for the same period

and Capital Resources

of March 31, 2017, we had $1,714,988 cash on hand and a $2,375,052 working capital deficit.

In addition, we also had restricted

cash of $138,188 which is held for credit card collateral.

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

GAAP applicable to a going concern,

which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The Company had

an accumulated deficit at March 31, 2017 of $6,807,346.

The Company had a working capital deficit of $2,375,052 as of March 31,

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 and has income from operations of $3,158,631.

Management’s

plans to continue as a going concern include growing sales revenue on our existing brands, raising additional capital through

borrowing and sales of common stock.

However, management cannot provide any assurances that the Company will be successful in

accomplishing any of its plans.

ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described

in the preceding paragraph and eventually secure other sources of financing and attain profitable operations.

The accompanying

unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is

unable to continue as a going concern.

months ended March 31, 2017 and 2016

Cash Provided by Operating Activities

cash provided by operating activities for the three months ended March 31, 2017 was $1,676,330, compared to $3,425,171 for the

same period in 2016.

This decrease in net cash provided by operating activities for the three months ended March 31, 2017 was

primarily attributable to an increase in accounts receivable and a decrease in accounts payable.

$1,676,330 consists of our net income of $2,558,654 increased by:

Amortization of debt

issuance cost

Depreciation and amortization

Stock based compensation

Stock issued for services

Settlement expense

Amortization of debt discount

Change in fair value of derivative liability

Remeasurement gain on translation of foreign subsidiary

Loss on sale of assets

Non cash implied interest

Decrease in accounts receivable

Increase in inventory

Increase in prepaid expenses

Decrease in accounts payable and accrued expenses

Net Cash Used in Investing Activities

Net cash used in investing

activities for the nine months ended September 30, 2016 was $2,446,641, compared to net cash used of $4,754,045 for the same period

The decrease in cash used in investing activities during 2016 is attributable to the release of restricted cash and the

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

Payments for acquisition of fixed assets

Payment of earn out liability

Remeasurement loss on translation

of foreign subsidiary

Foreign currency transaction loss

Increase in accounts receivable

Decrease in inventory

Decrease in prepaid expenses

Decrease in deferred revenue

Decrease in accounts payable and

accrued expenses

Cash Used in Investing Activities

cash used in investing activities for the three months ended March 31, 2017 was $85,583, compared to net cash provided of $386,021

for the same period in 2016.

The increase in cash used in investing activities during 2017 is attributable to the increase in

restricted cash.

Net Cash (Used in) Provided by Financing

Net cash used in financing

activities for the nine months ended September 30, 2016 was $3,225,000, compared to net cash provided of $4,778,625 for the same

period in 2015.

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

Payments for acquisition

of fixed assets

Proceeds from sale of assets

Increase in restricted cash

Cash Used in Financing Activities

cash used in financing activities for the three months ended March 31, 2017 was $2,387,500, compared to net cash used of $3,689,000

for the same period in 2016.

This is attributable to the repayment of notes.

Repayment of notes payable

Key 2016 Initiatives

During 2016, we have plans for organic growth

within our current product lines by developing and launching new products.

We have new marketing campaigns in process and intend

to expand our online presence for each product.

While we intend to grow further through additional acquisitions, we feel it is

important to also develop our existing products.

Contractual Obligations

and Off-Balance Sheet Arrangements

Contractual Obligations

Off-Balance Sheet Arrangements

Summary of Significant

Accounting Policies

Basis of Presentation

The unaudited 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 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 are assumptions

about collection of accounts receivable, useful life of fixed and intangible assets, goodwill and assumptions used in Black-Scholes-Merton,

or BSM, valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate.

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 September 30, 2016, the Company had no cash equivalents.

Capitalization of Fixed Assets

The Company capitalizes expenditures related

to property and equipment, subject to a minimum rule, that have a useful life greater than one year for:

(1) assets purchased;

(2) existing assets that are replaced, improved or the useful lives have been extended;

or (3) all land, regardless of cost.

of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance

and repair costs, including any planned major maintenance activities, are expensed as incurred.

Intangible Assets

We evaluate the recoverability of intangible

assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate

that impairment exists.

All of our intangible assets are subject to amortization except intellectual property of $1,450,000 acquired

as part of Asset Purchase Agreement entered into with Factor Nutrition LLC on January 22, 2015.

Intangible assets are amortized

on a straight line basis over the useful lives.

Long-lived Assets

Long-lived assets include equipment and intangible

assets other than those with indefinite lives.

We assess the carrying value of our long-lived asset groups when indicators of impairment

exist and recognize 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 our use of the assets or

in our business strategy, loss of or changes in customer relationships and significant negative industry or economic trends.

indications of impairment arise for a particular asset or group of assets, we assess 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.

As of September 30,

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

An asset purchase is accounted for under the

purchase method of accounting.

Under that method, assets and liabilities of the business acquired are recorded at their estimated

fair values as of the date of the acquisition, with any excess of the cost of the acquisition over the estimated fair value of

the net tangible and intangible assets acquired recorded as goodwill.

As of September 30, 2016, our qualitative analysis of goodwill

did not indicate any impairment.

Revenue Recognition

The Company recognizes revenue in accordance

with the Financial Accounting Standards Board’s (“FASB”), Accounting Standards Codification (“ASC”)

605, Revenue Recognition (“ASC 605”).

ASC 605 requires that four basic criteria must be met before revenue can be recognized:

(1) persuasive evidence of an arrangement exists;

(2) delivery has occurred and/or service has been performed;

(3) the selling

price is fixed and determinable;

and (4) collectability is reasonably assured.

The Company believes that these criteria are satisfied

upon shipment from its fulfillment centers.

Certain of our distributors may also perform a separate function as a co-packer on

In such cases, ownership of and title to our products that are co-packed on our behalf by those co-packers who are

also distributors, passes to such distributors when we are notified by them that they have taken transfer or possession of the

relevant portion of our finished goods.

Freight billed to customers is presented as revenues, and the related freight costs are

presented as cost of goods sold.

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.

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.

Advertising Expense

The Company expenses marketing, promotions

and advertising costs as incurred.

Such costs are included in selling expense in the accompanying unaudited 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.

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 foreign

wholly-owned subsidiary, is subject to income taxes in 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

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) attributable

to the common stockholders (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

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

As of September 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.

These potential shares

were included in the shares used to calculate diluted earnings per share.

Going Concern

The Company’s unaudited condensed consolidated

financial statements are prepared using U.S.

GAAP applicable to a going concern, which contemplates the realization of assets and

liquidation of liabilities in the normal course of business.

The Company had an accumulated deficit at September 30, 2016 of $2,721,289.

The Company had a working capital deficit of $2,487,840 as of September 30, 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.

Management’s plans to continue as a going

concern include growing sales revenue on our existing brands, raising additional capital through borrowing and sales of common

However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a

going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually

secure other sources of financing and attain profitable operations.

The accompanying unaudited condensed consolidated financial

statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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.

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 we have 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.

As of September 30, 2016, the Company has determined

that there were no assets or liabilities measured at fair value, except for the warrant derivative liability.

Inventory consists of raw materials, components

and finished goods.

The Company’s inventory is stated at the lower of cost (FIFO cost basis) or market.

Finished goods include

the cost of labor to assemble the items.

Stock-Based Compensation

The Company adopted the provisions of ASC 718.

We estimate the fair value of stock options using a binomial model, consistent with the provisions of ASC 718 and SEC Staff Accounting

107, Share-Based Payment.

Option-pricing models require the input of highly subjective assumptions, including the

price volatility of the underlying stock.

We determined that the use of implied volatility is expected to be more reflective of

market conditions and, therefore, could reasonably be expected to be a better indicator of our expected volatility than historical

The expected term assumption used in calculating the estimated fair value of our stock-based compensation awards using

the Black-Scholes-Merton (BSM) model is based on detailed historical data about employees’

exercise behavior, vesting schedules,

and death and disability probabilities.

In addition, we are required to estimate the expected forfeiture rate and only recognize

expense for those shares expected to vest.

We estimate the forfeiture rate based on historical experience of our stock-based awards

that are granted, exercised and cancelled.

We believe the resulting BSM calculation provides a more refined estimate of the fair

value of our employee stock options.

Foreign Currency Translation

The functional currency of one of the Company’s

foreign subsidiaries (Nomadchoice Pty Ltd.) is the U.S.

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.

at quarter end exchange rates, non-monetary assets and liabilities of the foreign subsidiary were translated into U.S.

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 the Company’s

other foreign subsidiary (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

Translation 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 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 any additional costs relating to assembly or special pack-outs of the Company’s products are charged to general

and administrative expenses as incurred.

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 general and administrative expenses as incurred.

Warrant Derivative Liabilities

ASC 815 generally provides three criteria that,

if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative

financial instruments.

These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded

derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the

hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value

under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur

and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument

subject to the requirements of ASC 815.

ASC 815 also provides an exception to this rule when the host instrument is deemed to be

conventional, as described.

A Black-Scholes-Merton option-pricing model,

with dilution effects, was utilized to estimate the fair value of the Warrant Derivative Liabilities as of September 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:

September 30, 2016

Exercise Price

Expected Life (in years)

Stock Volatility

Risk-Free Rate

Dividend Rate

Outstanding Shares of Common Stock

Cost of Sales

Cost of sales includes the purchase cost of

products sold and all costs associated with getting the products into the retail stores including buying and transportation costs.

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.

Impairment of Long-Lived

When facts and circumstances

indicate that the carrying values of long-lived assets, including fixed assets, may be impaired, an evaluation of recoverability

is performed by comparing the carrying value of the assets to projected future cash flows in addition to other quantitative and

qualitative analyses.

Upon indication that the carrying value of such assets may not be recoverable, the Company recognizes an

impairment loss as a charge against current operations.

Long-lived assets to be disposed of are reported at the lower of the carrying

amount or fair value, less estimated costs to sell.

The Company makes judgments related to the expected useful lives of long-lived

assets and its ability to realize undiscounted cash flows in excess of the carrying amounts of such assets which are affected by

factors such as the ongoing maintenance and improvements of the assets, changes in economic conditions and changes in operating

As the Company assesses the ongoing expected cash flows and carrying amounts of its long-lived assets, these factors

could cause the Company to realize a material impairment charge.

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, 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.

All transactions with related

parties shall be recorded at fair value of the goods or services exchanged.

Property purchased from a related party is recorded

at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as a distribution

to the related party.

Segment Reporting

Segment identification

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

performance and make decisions regarding resource allocation, as well as the materiality of financial results consistent with that

Based on the Company’s management structure and method of internal reporting, the Company has one operating segment.

The Company’s chief operating decision maker does not review operating results on a disaggregated basis;

rather, the chief

operating decision maker reviews operating results on an aggregate basis.

Reclassification of Prior Period Presentation

Certain reclassifications have been made to

conform the prior period data to the current presentations.

These reclassifications had no effect on the reported results.

Recent Accounting Pronouncements

In 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.

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

In 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.

An entity 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.

Amendments 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.

In 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.

In January 2016, the Financial Accounting Standards

Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-01, which amends the guidance in U.S.

on the classification and measurement of financial instruments.

Changes to the current guidance primarily affect the accounting

for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for

financial instruments.

In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred

tax assets resulting from unrealized losses on available-for-sale debt securities.

The new standard is effective for fiscal years

and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect

adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective.

Early adoption

is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting

from instrument-specific credit risk in other comprehensive income.

The Company is currently evaluating the impact of adopting

this guidance on its consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17,

Balance Sheet Classification of Deferred Taxes.

Currently deferred taxes for each tax jurisdiction are presented as a net current

asset or liability and net noncurrent asset or liability on the balance sheet.

To simplify the presentation, the new guidance requires

that deferred tax liabilities and assets for all jurisdictions along with any related valuation allowances be classified as noncurrent

in a classified statement of financial position.

This guidance is effective for interim and annual reporting periods beginning

after December 15, 2016, and early adoption is permitted.

The Company adopted this guidance in the fourth quarter of the year ended

December 31, 2015 on a retrospective basis.

The adoption of this guidance did not have a material impact on the Company’s

consolidated financial statements, and did not have any effect on prior periods due to the full valuation allowance against the

Company’s net deferred tax assets.

In September 2015, the FASB issued ASU 2015-16,

Simplifying the Accounting for Measurement–Period Adjustments.

Changes to the accounting for measurement-period adjustments

relate to business combinations.

Currently, an acquiring entity is required to retrospectively adjust the balance sheet amounts

of the acquiree recognized at the acquisition date with a corresponding adjustment to goodwill as a result of changes made to the

balance sheet amounts of the acquiree.

The measurement period is the period after the acquisition date during which the acquirer

may adjust the balance sheet amounts recognized for a business combination (generally up to one year from the date of acquisition).

The changes eliminate the requirement to make such retrospective adjustments, and, instead require the acquiring entity to record

these adjustments in the reporting period they are determined.

The new standard is effective for both public and private companies

for periods beginning after December 15, 2015.

Adoption of this new standard did not have any material on the Company’s consolidated

financial statements.

In August 2015, the FASB issued ASU No.

Revenue From Contracts With Customers (Topic 606).

The amendments in this ASU defer the effective date of ASU 2014-09.

Public business

entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim

reporting periods within that reporting period.

Earlier application is permitted only as of annual reporting periods beginning

after December 15, 2016, including interim reporting periods within that reporting period.

We are still evaluating the effect of

the adoption of ASU 2014-09 on our consolidated financial statements.

In July 2015, the FASB issued ASU No.

Simplifying the Measurement of Inventory (Topic 330).

ASU 2015-11 simplifies the accounting for the valuation of all inventory

not accounted for using the last-in, first-out (“LIFO”) method by prescribing that inventory be valued at the lower

of cost and net realizable value.

ASU 2015-11 is effective for financial statements issued for fiscal years, and interim periods

within those fiscal years, beginning after December 15, 2016 on a prospective basis.

We do not expect the adoption of ASU 2015-11

to have a material effect on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-05,

Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40).

ASU 2015-05 provides guidance regarding the accounting

for a customer’s fees paid in a cloud computing arrangement;

specifically about whether a cloud computing arrangement includes

a software license, and if so, how to account for the software license.

ASU 2015-05 is effective for public companies’

periods, including interim periods within those fiscal years, beginning after December 15, 2015 on either a prospective or retrospective

Early adoption is permitted.

Adoption of this new standard did not have any impact on the Company’s consolidated financial

In May 2015, the FASB issued ASU No.

Fair Value Measurement (Topic 820):

Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or

Its Equivalent) (“ASU 2015-07”).

This guidance eliminates the requirement to categorize investments within the fair

value hierarchy if their fair value is measured using the net asset value (“NAV”) per share practical expedient in

the FASB’s fair value measurement guidance.

The new standard is effective for fiscal years and interim periods within those

fiscal years, beginning after December 15, 2015.

Adoption of this new standard did not have any impact on the Company’s consolidated

financial statements.

In April 2015, the FASB issued ASU No.

Interest - Imputation of Interest (Subtopic 835-30):

Simplifying the Presentation of Debt Issuance Costs.

The amendments in this

ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction

from the carrying amount of that debt liability, consistent with debt discounts.

The recognition and measurement guidance for debt

issuance costs are not affected by the amendments in this ASU.

The amendments are effective for financial statements issued for

fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.

The amendments are to be applied

on a retrospective basis, wherein the balance sheet of each individual period presented is adjusted to reflect the period-specific

effects of applying the new guidance.

The Company reclassified debt issuance cost of $208,569 and $378,852 from other assets to

liabilities and netted off with the related loans in the liabilities as of September 30, 2016 and December 31, 2015, respectively.

In February 2015, the FASB issued ASU No.

Consolidation (Topic 810):

Amendments to the Consolidation Analysis, which is intended to improve targeted areas of consolidation

guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized

debt obligations, collateralized loan obligations, and mortgage-backed security transactions).

The ASU focuses on the consolidation

evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities.

addition to reducing the number of consolidation models from four to two, the new standard simplifies the FASB Accounting Standards

Codification and improves current U.S.

GAAP by placing more emphasis on risk of loss when determining a controlling financial interest,

reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable

interest entity (“VIE”), and changing consolidation conclusions for companies in several industries that typically

make use of limited partnerships or VIEs.

The ASU will be effective for fiscal years, and interim periods within those fiscal years,

beginning after December 15, 2015.

Early adoption is permitted, including adoption in an interim period.

Adoption of this new standard

did not have any impact on the Company’s consolidated financial statements.

In January 2015, the FASB issued ASU No.

Income Statement - Extraordinary and Unusual Items (Subtopic 225-20):

Simplifying Income Statement Presentation by Eliminating

the Concept of Extraordinary Items.

This ASU eliminates from U.S.

GAAP the concept of extraordinary items.

ASU 2015-01 is effective

for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.

A reporting entity may apply

the amendments prospectively.

Adoption of this new standard did not have any impact on the Company’s consolidated financial

In November 2014, the FASB issued ASU No.

Business Combinations (Topic 805):

Pushdown Accounting.

This ASU provides an acquired entity with an option to apply pushdown accounting

in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity.

acquired entity may elect the option to apply pushdown accounting in the reporting period in which the change-in-control event

If pushdown accounting is applied to an individual change-in-control event, that election is irrevocable.

ASU 2014-17 was

effective on November 18, 2014.

The adoption of ASU 2014-17 did not have any effect on our consolidated financial statements.

In November 2014, the FASB issued ASU 2014-16,

Derivatives and Hedging (Topic 815).

ASU 2014-16 addresses whether the host contract in a hybrid financial instrument issued in

the form of a share should be accounted for as debt or equity.

ASU 2014-16 is effective for fiscal years, and interim periods within

those fiscal years, beginning after December 15, 2015.

We have not previously issued and do not currently have issued, nor were

we or are we investors in, hybrid financial instruments.

Accordingly, we do not expect the adoption of ASU 2014-16 to have any

effect on our consolidated financial statements.

In August 2014, the FASB issued ASU No.

Presentation of Financial Statements - Going Concern (Subtopic 205-40).

ASU 2014-15 provides guidance related to management’s

responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and

to provide related footnote disclosure.

ASU 2014-15 is effective for annual periods ending after December 15, 2016, and for interim

and annual periods thereafter.

Early application is permitted.

We do not expect the adoption of ASU 2014-15 to have a material

effect on our consolidated financial statements.

In June 2014, the FASB issued ASU No.

Compensation –

Stock Compensation (Topic 718):

Accounting for Share-Based Payments When the Terms of an Award Provide That

a Performance Target Could Be Achieved after the Requisite Service Period.

This ASU requires that a performance target that affects

vesting and that could be achieved after the requisite service period be treated as a performance condition.

ASU 2014-12 is effective

for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.

Adoption of this new standard

did not have any impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU No.

Revenue from Contracts with Customers (Topic 606).

ASU 2014-09 affects any entity using U.S.

GAAP that either enters into contracts

with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts

are within the scope of other standards (e.g., insurance contracts or lease contracts).

ASU 2014-09 is effective for fiscal years,

and interim periods within those fiscal years, beginning after December 15, 2016.

In August 2015, the FASB issued ASU 2015-14,

which defers the effective date of ASU 2014-09 by one year for all entities and permits early adoption on a limited basis.

2014-09 will be effective for the Company in the first quarter of 2018, and early adoption permitted in the first quarter of 2017.

We are still evaluating the effect of the adoption of ASU 2014-09 on our consolidated financial statements.

In April 2014, the FASB issued ASU No.

Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) and Reporting Discontinued Operations

and Disclosures of Disposals of Components of an Entity.

ASU 2014-08 amends the definition for what types of asset disposals are

to be considered discontinued operations, as well as amending the required disclosures for discontinued operations and assets held

ASU 2014-08 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December

The adoption of ASU 2014-08 did not have any effect on our consolidated financial statements.

There were various updates recently issued,

most of which represented technical corrections to the accounting literature or application to specific industries and are not

expected to a have a material impact on the Company’s consolidated financial statements.

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting

company”

as defined by Item 10 of Regulation S-K, we are not required to provide the information required by this item.

$ (2,387,500 )

2017 Initiatives

2017, we have plans for organic growth within our current product lines by developing and launching new products.

Our technology

center in Halifax, Nova Scotia is in full operation providing marketing services to all of our brands.

We have new marketing campaigns

in process and intend to expand our online presence for each product.

While we intend to grow further through additional acquisitions,

we feel it is important to also develop our existing products.

Obligations and Off-Balance Sheet Arrangements

Sheet Arrangements

effect of inflation on the Company’s operating results was not significant.

of Significant Accounting Policies

preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect

the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of

revenue and expenses during the reported periods.

The more critical accounting estimates include estimates related to revenue

recognition and accounts receivable allowances.

We also have other key accounting policies, which involve the use of estimates,

judgments and assumptions that are significant to understanding our results, which are described in Note 2 to our unaudited condensed

consolidated financial statements appearing elsewhere in this report.

Accounting Pronouncements

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

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

a “smaller reporting company”

as defined by Item 10 of Regulation S-K, we are not required to provide the information

required by this item.

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

What changed 10-Q

Item 1. Financial Statements