What changed in this filing

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Item 1. Financial Statements

2018-08-14 compared with 2018-05-15 · 553 added, 418 removed, 780 unchanged (55% of the section changed)

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Consolidated Balance Sheets

March 31, 2018

June 30, 2018

December 31, 2017

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

Royalties Payable

Current portion of royalty payable

Total Current Liabilities

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Additional paid in capital

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

Accumulated deficit

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

Condensed Consolidated Statements of Operations and Comprehensive Income

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

For the three months ended

March 31, 2018

March 31, 2017

For the six months ended

June 30, 2018

June 30, 2017

June 30, 2018

June 30, 2017

Cost of sales

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Total operating expenses

Income from operations

(Loss) income from operations

Other (income) expenses

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Interest expense

Remeasurement loss on translation of foreign subsidiary

Remeasurement loss (gain) on translation of foreign subsidiary

Loss on sale of assets

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Total other expenses

Net income before income taxes

Income tax expense

Net (loss) income before income taxes

Income tax (benefit) expense

Net (loss) income after tax

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Weighted average common shares outstanding

Comprehensive income:

Comprehensive (loss) income:

Net (loss) income

Foreign currency translation adjustment

Comprehensive income

Comprehensive (loss) income

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

Condensed Consolidated Statements of Cash Flows

For the three months ended

March 31, 2018

March 31, 2017

For the six months ended

June 30, 2018

June 30, 2017

Cash Flows from Operating Activities

Net (loss) income

Adjustments to reconcile net (loss) income to net

cash provided by operating activities:

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

Depreciation and amortization

Amortization of debt issuance cost

Loss on sale of assets

Stock based compensation expense

Remeasurement loss on translation of foreign subsidiary

Remeasurement loss (gain) on translation of foreign subsidiary

Foreign currency transaction loss

Non cash implied interest

Loss on sale of fixed assets

Changes in operating assets and liabilities:

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Proceeds from sale of assets

Restricted cash

Payment of development fee

Purchase of intangible assets

Net cash used in investing activities

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Net cash used in financing activities

Effect of exchange rate on cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and Cash Equivalents, beginning of period

Cash and Cash Equivalents, end of period

Effect of exchange rate on cash, cash equivalents and restricted cash

Net decrease in cash, cash equivalents and restricted cash

Cash, Cash Equivalents and restricted cash, beginning of period

Cash, Cash Equivalents and restricted cash, end of period

Supplemental Disclosure of Cash Flow Information:

Cash paid during the period for:

Supplemental Disclosure of Non-cash Investing and Financing Activities:

Common stock issued for the acquisition of assets of Per-fekt

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

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is the sole owner of six subsidiaries:

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

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

Sneaky Vaunt Corp.

and The Queen Pegasus Corp.

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Summary of Significant Accounting Policies

accompanying condensed consolidated financial statements as of March 31, 2018 and December 31, 2017 and for the three months ended

March 31, 2018 and 2017 are unaudited.

These unaudited condensed consolidated financial statements have been prepared in accordance

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

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

accompanying condensed consolidated financial statements as of June 30, 2018 and December 31, 2017 and for the three and six months

ended June 30, 2018 and 2017 are unaudited.

These unaudited condensed consolidated financial statements have been prepared in

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

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

and with the instructions to Form 10-Q.

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

Operating results for the three months

ended March 31, 2018 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, 2017 and footnotes thereto included in the Company’s Annual Report

on Form 10-K filed with the SEC on April 2, 2018.

Operating results for the three and

six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending December

The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated

financial statements as of and for the year ended December 31, 2017 and footnotes thereto included in the Company’s Annual

Report on Form 10-K filed with the SEC on April 2, 2018.

of Presentation

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30, 2018, the Company had no cash equivalents.

The Company maintains its cash and cash equivalents in banks insured by

the Federal Deposit Insurance Corporation (FDIC) in accounts that at times may be in excess of the federally insured limit of

$250,000 per bank.

The Company maintains its cash and cash equivalents in banks insured by the Federal

Deposit Insurance Corporation (FDIC) in accounts that at times may be in excess of the federally insured limit of $250,000 per

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

2018, the uninsured balance amounted to $1,143,835.

At June 30, 2018, the uninsured

balance amounted to $369,095.

Capitalization

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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 and $10,000 acquired as part of an Asset Purchase Agreement entered into with Perfekt Beauty Holdings LLC and CDG Holdings,

LLC on June 21, 2017.

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

As of March 31, 2018, our

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

intellectual property of $1,450,000 acquired as part of an Asset Purchase Agreement entered into with Factor Nutrition Labs LLC

on January 22, 2015, $10,000 acquired as part of an Asset Purchase Agreement entered into with Perfekt Beauty Holdings LLC and

CDG Holdings, LLC on June 21, 2017 and $50,000 acquired as an Asset Purchase entered into with Cocowhite on May 22, 2018.

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

As of June 30, 2018, 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.

March 31, 2018, our qualitative analysis of long-lived assets did not indicate any impairment.

June 30, 2018, 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 March 31, 2018, our

As of June 30, 2018, our

qualitative analysis of goodwill did not indicate any impairment.

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Overall, the adoption of ASC 606 did not have a material impact on the Company’s

condensed consolidated balance sheet, statement of operations and comprehensive income and statement of cash flows for the three

months ended March 31, 2018.

ASC 606 also requires additional disclosures about the nature, amount, timing and uncertainty of

revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized

condensed consolidated balance sheet, statement of operations and comprehensive income and statement of cash flows for the six

months ended June 30, 2018.

ASC 606 also requires additional disclosures about the nature, amount, timing and uncertainty of revenue

and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized

from costs incurred to fulfill a contract.

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of revenue when or as a performance obligation is satisfied.

The Company recognizes revenue upon

shipment from its fulfillment centers.

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

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.

Company recognizes revenue upon shipment from its fulfillment centers.

Certain of our distributors may also perform a separate

function as a co-packer on our behalf.

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.

Company does not have any contract assets such as work-in-process.

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that are short term in nature are expensed as incurred.

The Company does not have any contract costs capitalized as of March 31,

Contract Liabilities - Deferred

The Company’s contract liabilities

consist of advance customer payments and deferred revenue.

Deferred revenue results from transactions in which the Company

has been paid for products by customers, but for which all revenue recognition criteria have not yet been met.

Once all revenue

recognition criteria have been met, the deferred revenues are recognized.

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 income.

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.

The Company does not have any contract costs capitalized as of June 30,

Liabilities - Deferred Revenue

Company’s contract liabilities consist of advance customer payments and deferred revenue.

Deferred revenue results from

transactions in which the Company has been paid for products by customers, but for which all revenue recognition criteria have

not yet been met.

Once all revenue recognition criteria have been met, the deferred revenues are recognized.

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.

Company expenses marketing, promotions and advertising costs as incurred.

Such costs are included in selling expense in the accompanying

unaudited condensed consolidated statements of income.

and Development

incurred in connection with the development of new products and processing methods are charged to general and administrative expenses

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.

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”

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

As of March 31, 2018 and 2017, options to purchase 8,666,667 and 6,300,000 shares of common stock, respectively, were outstanding.

As of both March 31, 2018 and 2017, warrants to purchase 1,000,000 shares of common stock were outstanding.

As of June 30, 2018 and 2017, options to purchase 8,666,667 and 6,300,000 shares of common stock, respectively, were outstanding.

As of both June 30, 2018 and 2017, warrants to purchase 1,000,000 shares of common stock were outstanding.

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, 2018, and 2017:

Net (loss) income after tax

per share for the three and six months ended June 30, 2018, and 2017:

For the three months ended

For the six months ended

June 30, 2018

June 30, 2017

June 30, 2018

June 30, 2017

Net income after tax

Weighted average common shares outstanding

Common stock to be issued

Incremental shares from the assumed exercise of dilutive stock options

Incremental shares from the assumed exercise of dilutive stock warrants

Dilutive potential common shares

Net (loss) earnings per share:

Net earnings per share:

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

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to the fair value measurement.

of March 31, 2018, the Company has determined that there were no assets or liabilities measured at fair value.

of June 30, 2018, 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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items were translated at exchange rates prevailing during the transaction date and other incomes and expenses were translated

using an average exchange rate for the period.

The resulting translation adjustments, net of income taxes, were recorded

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

using average exchange rate for the period.

The resulting translation adjustments, net of income taxes, were recorded in statements

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

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

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equity is translated at the historical rates.

Income and expense items were translated using an 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

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 –

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evaluating the impact of adopting ASU 2017-13 on our consolidated financial statements.

In September 2017, the FASB issued Accounting

Standard Update (ASU) 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic

840), and Leases (Topic 842).

The effective date for ASU 2017-13 is for fiscal years beginning after December 15, 2018.

currently evaluating the impact of adopting ASU 2017-13 on our consolidated financial statements.

September 2017, the FASB issued Accounting Standard Update (ASU) 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts

with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842).

The effective date for ASU 2017-13 is for fiscal years

beginning after December 15, 2018.

We have adopted ASC 606 as disclosed above.

We are currently evaluating the impact of adopting

Leases Topic 840 ASU 2017-13 on our consolidated financial statements.

Board is issuing this Update to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying

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

In January 2017, the

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

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.

In January 2017, the FASB issued ASU No.

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.

This 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.

This new standard was effective for the Company on

January 1, 2018.

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

consolidated financial statements.

In 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.

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, 2017, and interim periods within those fiscal years.

Early adoption is permitted.

We are currently evaluating the impact

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

In 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

adopted ASU 2016-18 effective January 1, 2018.

The adoption of ASU 2016-18 had no impact on our retained earnings, and no impact

to our net income on an ongoing basis.

Adoption of the new standard requires that a statement of cash flows explain the change

during the period in the total of cash, cash equivalents and amounts generally described as restricted cash, or restricted cash

The amounts generally described as restricted cash and restricted cash equivalents should be included with cash and

cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows.

The amendments have been applied using a retrospective transition method to each period presented, as required.

The period ended

June 30, 2017 has been reclassified to reflect this change.

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.

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

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

financial statements.

In January 2016, the FASB issued ASU 2016-01, which amends the guidance in U.S.

GAAP 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.

Adoption of this new standard did not have any

impact on the Company’s consolidated financial statements.

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.

We are currently evaluating the impact of adopting ASU No.

2016-09 on our consolidated financial statements.

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

2016-01, which amends the guidance in U.S.

GAAP 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

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.

consists of finished goods, components and raw materials.

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carrying value of inventory consisted of the following:

March 31, 2018

June 30, 2018

December 31, 2017

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

March 31, 2018

June 30, 2018

December 31, 2017

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expenses consisted of the following:

March 31, 2018

June 30, 2018

December 31, 2017

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its cash deposits with major financial institutions.

At March 31, 2018 and December 31, 2017, the uninsured balances amounted

to $1,143,835 and $1,557,373, respectively.

of March 31, 2018, three customers accounted for 71% of the Company’s accounts receivable.

At June 30, 2018 and December 31, 2017, the uninsured balances amounted to

$369,095 and $1,557,373, respectively.

of June 30, 2018, four customers accounted for 89% of the Company’s accounts receivable.

As of December 31, 2017, three

customers accounted for 88% of the Company’s accounts receivable.

the three months ended March 31, 2018, three customers accounted for approximately 41% of the Company’s net revenue.

the year ended December 31, 2017, two customers accounted for approximately 42% of the Company’s net revenues.

Substantially

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

the three months ended March 31, 2018 and the year ended December 31, 2017, our products were made by the following suppliers:

the six months ended June 30, 2018, three customers accounted for approximately 44% of the Company’s net revenue.

three months ended June 30, 2018, three customers accounted for approximately 47% of the Company’s net revenue.

six months ended June 30, 2017, three customers accounted for approximately 35% of the Company’s net revenue.

For the three

months ended June 30, 2017, three customers accounted for approximately 32% of the Company’s net revenue.

For the year ended

December 31, 2017, two customers accounted for approximately 42% of the Company’s net revenues.

Substantially all of the

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

the three and six months ended June 30, 2018 and the year ended December 31, 2017, our products were made by the following suppliers:

Innovations - Pittsburgh, PA

Nutrition, Inc.

Tea Company, LLC - Highland, NY

LLC - Linthicum Heights, MD

Nutrition - Ogden, UT

Flat Tummy Tea

Caraway Tea Company,

LLC - Highland, NY

C-Care, LLC - Linthicum

Capstone Nutrition

HealthSpecialty -

Santa Fe Springs, CA

Jingrui - China

Queen Pegasus

Actives –

Queen Pegasus

Beautiful Daily Cosmetics - Zhejiang, China

Dongguan Jingrui –

The Queen Pegasus

Skin Actives –

Ningbo Beautiful Daily

Cosmetics –

Zhejiang, China

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

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Fixed Assets and Intangible Assets

of March 31, 2018, and December 31, 2017, fixed assets and intangible assets consisted of the following:

March 31, 2018

of June 30, 2018, and December 31, 2017, fixed assets and intangible assets consisted of the following:

June 30, 2018

December 31, 2017

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Fixed assets, net

expense for the three months ended March 31, 2018 and 2017 was $36,408 and $25,065, respectively.

March 31, 2018

expense for the three months ended June 30, 2018 and 2017 was $39,754 and $25,246, respectively.

Depreciation expense for the

six months ended June 30, 2018 and 2017 was $76,162 and $50,311, respectively.

June 30, 2018

December 31, 2017

FOCUSfactor intellectual property

Per-fekt intellectual property

Perfekt intellectual property

Cocowhite intellectual property

Intangible assets subject to amortization

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Intangible assets, net

expense for the three months ended March 31, 2018 and 2017 was $415,078 and $267,253, respectively.

These intangible assets were

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

expense for the three months ended June 30, 2018 and 2017 was $416,197 and $331,866, respectively.

Amortization expense for the

six months ended June 30, 2018 and 2017 was $831,275 and $599,119, respectively.

These intangible assets were acquired through

an Asset Purchase Agreement and Stock Purchase Agreements.

During the current period we purchased intangible assets related to

Cocowhite for $50,000.

Related Party Transactions

Company accrued and paid consulting fees of $57,917 for one month to a company owned by Mr.

Company accrued and paid consulting fees of $57,917 for four months to a company owned by Mr.

Jack Ross, Chief Executive Officer

of the Company.

The Company expensed $57,917 during the three months ended March 31, 2018.

As of March 31, 2018, the total outstanding

balance was $0 for consulting fees and reimbursements.

The Company expensed $171,917 during the three months ended June 30, 2018 and $229,833 during the six months ended

June 30, 2018.

As of June 30, 2018, the total outstanding balance was $0 for consulting fees and reimbursements.

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

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

At March 31, 2018, the Company owed Knight $0 on this loan, net of

At June 30, 2018, the Company owed Knight $0 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.

(“Knight Therapeutics”),

through its wholly owned subsidiary Neuragen Corp., for the purchase of Knight Therapeutics, Inc.’s assets.

2018, the Company owed Knight Therapeutics $279,855 in relation to this agreement (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 June 30, 2018, the Company owed Knight $277,381

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

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

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

As of March 31, 2018, the total outstanding balance was $0.

On November 12, 2015, the Company entered into a Loan Agreement with Knight for the purchase of NomadChoice

Pty Limited and Breakthrough Products, Inc.

At March 31, 2018, the Company owed Knight $0 on this loan, net of debt issuance cost

(see Note 10).

August 9, 2017, the Company entered into a Loan Agreement with Knight for a working capital loan.

At March 31, 2018, the Company

owed Knight $8,647,769 on this loan, net of debt issuance cost (see Note 10).

Company expensed royalty of $147,022 during the three months ended March 31, 2018.

At March 31, 2018 NomadChoice Pty Ltd., a subsidiary

of the Company, owed Knight Therapeutics $143,818 in connection with a royalty distribution agreement.

Company expensed royalty of $5,662 during the three months ended March 31, 2018.

At March 31, 2018 Sneaky Vaunt Corp., a subsidiary

of the Company, owed Knight Therapeutics $5,662 in connection with a royalty distribution agreement.

Company expensed commissions of $13,553 during the three months ended March 31, 2018.

At March 31, 2018 Sneaky Vaunt Corp., a

subsidiary of the Company, owed Founded Ventures, owned by a shareholder in the Company, $11,489 in connection with a commission

Company expensed royalty of $1,564 during the three months ended March 31, 2018.

At March 31, 2018 The Queen Pegasus, a subsidiary

of the Company, owed Knight Therapeutics $1,564 in connection with a royalty distribution agreement.

Company expensed commissions of $2,985 during the three months ended March 31, 2018.

At March 31, 2018, The Queen Pegasus, a subsidiary

of the Company, owed Founded Ventures $1,985 in connection with a commission agreement.

Company paid $62,500 during the three months ended March 31, 2018 to Hand MD, Corp, related to a royalty agreement.

2018, the Company owed Hand MD Corp.

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

2018 and $60,000 for the six months ended June 30, 2018.

As of June 30, 2018, 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 June 30, 2018, the Company owed Knight $0 on this loan,

net of debt issuance cost (see Note 10).

Company expensed royalty of $132,987 during the three months ended June 30, 2018 and $280,009 during the six months ended June

At June 30, 2018 NomadChoice Pty Ltd., a subsidiary of the Company, owed Knight Therapeutics $268,986 in connection

with a royalty distribution agreement.

Company expensed royalty of $3,954 during the three months ended June 30, 2018 and $9,616 during the six months ended June 30,

At June 30, 2018 Sneaky Vaunt Corp., a subsidiary of the Company, owed Knight Therapeutics $8,954 in connection with a royalty

distribution agreement.

Company expensed commissions of $14,078 during the three months ended June 30, 2018 and $27,631 during the six months ended June

At June 30, 2018, Sneaky Vaunt Corp., a subsidiary of the Company, owed Founded Ventures, owned by a shareholder in

the Company, $9,059 in connection with a commission agreement.

Company expensed royalty of $347 during the three months ended June 30, 2018 and $1,911 during the six months ended June 30, 2018.

At June 30, 2018 The Queen Pegasus, a subsidiary of the Company, owed Knight Therapeutics $678 in connection with a royalty distribution

Company expensed commissions of $2,905 during the three months ended June 30, 2018 and $5,890 during the six months ended June

At June 30, 2018, The Queen Pegasus, a subsidiary of the Company, owed Founded Ventures $1,439 in connection with a

commission agreement.

Company paid $62,500 and $125,000 during the three and six months ended June 30, 2018 to Hand MD, Corp, related to a royalty agreement.

At June 30, 2018, the Company owed Hand MD Corp.

$118,617 in minimum future royalties.

Accounts Payable and Accrued Liabilities

of March 31, 2018, and December 31, 2017, accounts payable and accrued liabilities consisted of the following:

March 31, 2018

of June 30, 2018 and December 31, 2017, accounts payable and accrued liabilities consisted of the following:

June 30, 2018

December 31, 2017

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Accounting fees

Professional Fees

Manufacturers

Professional Fees

Royalties, related party

Notes Payable

Company’s loans payable at March 31, 2018 and December 31, 2017 are as follows:

March 31, 2018

Company’s loans payable at June 30, 2018 and December 31, 2017 are as follows:

June 30, 2018

December 31, 2017

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to January 20, 2018.

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

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.

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The Company recognized and

paid interest expense of $4,611 during the three months ended March 31, 2018.

Accrued interest expense was $0 as of March 31,

to certain restrictions, the Company could 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,

paid interest expense of $0 and $4,611, respectively during the three and six months ended June 30, 2018.

Accrued interest expense

was $0 as of June 30, 2018.

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.

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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 Knight loan.

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

The Company recognized amortization

of deferred financing costs of $3,257 during the three months ended March 31, 2018.

Unamortized debt issuance cost as of March

31, 2018 amounted to $0.

of deferred financing costs of $0 and $3,257 during the three and six months ended June 30, 2018, respectively.

Unamortized debt

issuance cost as of June 30, 2018 amounted to $0.

June 26, 2015 Security Agreement:

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The Company recognized amortization

of deferred financing costs of $0 during the three months ended March 31, 2018.

Unamortized debt issuance cost as of March 31,

of deferred financing costs of $0 during the three and six months ended June 30, 2018.

Unamortized debt issuance cost as of June

30, 2018 amounted to $0.

The Company recorded present value of future payments of $279,855 and $282,240 as of March 31, 2018 and December

31, 2017, respectively.

The Company recorded imputed interest expense of $10,115 for the three months ended March 31, 2018.

the three months ended March 31, 2018, the Company made payments of $12,500 in connection with this Security Agreement.

The Company recorded present value of future payments of $277,381 and $282,240 as of June 30, 2018 and

December 31, 2017, respectively.

The Company recorded imputed interest expense of $10,026 and $20,141 for the three and six months

ended June 30, 2018, respectively.

the three and six months ended June 30, 2018, the Company made payments of $12,500 and $25,000, respectively, in connection with

this Security Agreement.

November 12, 2015 Loan:

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

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

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.

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August 9, 2017 Loan:

9, 2017, we entered into a Second Amendment to Loan Agreement (“Second Amendment”) with Knight, pursuant to which

Knight agreed to loan us an additional $10 million, and an ongoing credit facility of up to $20 million, and which amount was

borrowed at closing (the “Financing”) for working capital purposes.

At closing, we paid Knight an origination fee

of $200,000 and a work fee of $100,000 and also paid $100,000 of Knight’s expenses associated with the Loan.

The Loan bears

interest at 10.5% per annum.

August 9, 2017, we entered into a Second Amendment to Loan Agreement (“Second Amendment”) with Knight, pursuant to

which Knight agreed to loan us an additional $10 million, and an ongoing credit facility of up to $20 million, and which amount

was borrowed at closing (the “Financing”) for working capital purposes.

At closing, we paid Knight an origination

fee of $200,000 and a work fee of $100,000 and also paid $100,000 of Knight’s expenses associated with the Loan.

bears interest at 10.5% per annum.

The amended Loan Agreement matures on August 8, 2020.

We have met all the covenants except for

the TTM EBITDA of $5 million during the current period and accordingly, Default Interest rate of 5% (from 10.5% to 15.5%) applies

in accordance to our current agreement and will be in effect starting April 1, 2018 and will be in effect until the $5 million

TTM EDITDA covenant is achieved.

Also, Synergy will maintain Focus Factor Net Sales as measured on a year-end basis of at least

USD $15 million for each fiscal year starting with December 31, 2017.

We have met all the covenants except

for the TTM EBITDA of $5 million during the period ending March 31, 2018.

On May 14, 2018, we entered into Loan Amendment Agreement

and reduced the TTM EBITA from a minimum of $5 million to $2 million for each twelve months period ending on the last day of each

fiscal quarter until September 30, 2018 and we shall maintain a minimum EBITDA of $5 million for the twelve month period ending

on the last day of each Fiscal Quarter thereafter, provided that the minimum EBITDA amount shall be increased by an amount equal

to 50% of any Additional Tranche advanced to Borrower hereunder.

An additional default interest rate of 5% (from 10.5% to

15.5%) applies from April 1, 2018 up to later of i) September 30, 2018;

or ii) when Event of Default is cured.

Interest Rate will be reduced to 13% if Synergy amends its employment agreement for each and every employee earning $250,000 or

more annually through a reduction of individual salary by at least $60,000 in exchange for bonus of no more than $75,000 payable

upon Synergy achieving an EBITDA of $13.887 million for calendar year 2018.

During the period ending June 30, 2018 the interest

rate was reduced to 13% due to reducing payroll expenses.

Also, Synergy will maintain Focus Factor Net Sales as measured on a

year-end basis of at least USD $15 million for each fiscal year starting with December 31, 2017.

Company also recorded deferred financing costs of $452,869 with respect to the above loan.

The Company recognized amortization

of deferred financing costs of $37,739 during the three months ended March 31, 2018.

Unamortized debt issuance cost as of March

31, 2018 amounted to $352,231.

Company recognized and paid interest expense of $242,083 during the three months ended March 31, 2018.

Accrued interest

was $0 as of March 31, 2018.

The loan balance at March 31, 2018 was $9,000,000.

of deferred financing costs of $37,739 and $78,735 during the three and six months ended June 30, 2018, respectively.

debt issuance cost as of June 30, 2018 amounted to $314,492.

Company recognized and paid interest expense of $286,361 and $528,444 during the three and six months ended June 30, 2018, respectively.

Accrued interest was $0 as of June 30, 2018.

The loan balance at June 30, 2018 was $8,500,000.

Stockholders’

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stock with $0.00001 par value.

of March 31, 2018, and December 31, 2017, there were 89,862,683 shares of the Company’s common stock issued and outstanding.

of both June 30, 2018 and December 31, 2017, there were 89,862,683 shares of the Company’s common stock issued and outstanding.

Commitments & Contingencies

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Kadanoff will receive an annual base salary of $450,000.

He will receive a signing

He received a signing

bonus consisting of:

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shares of the Company’s common stock based on a price of $0.55 per share.

He will receive an annual bonus for calendar year

He received an annual bonus for calendar year

2017 of $37,500.

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connection with his employment, Mr.

Kadanoff has committed to purchasing 400,000 shares of our common stock from the Company for

a price of $0.55 per share.

Kadanoff purchased 400,000 shares of our common stock from the Company for a price of $0.55

per share during the year ended December 31, 2017.

The Company granted Mr.

Kadanoff an option to purchase 1,500,000 shares of the Company’s common

stock at an exercise price of $0.55 (the “Initial Option”).

The Initial Option will vest in three (3) equal annual

installments on the first three anniversaries of Mr.

Kadanoff’s Start Date with the Company, provided that Mr.

remains employed by the Company on each such date.

The Initial Option will expire on the tenth anniversary of the grant date.

Kadanoff an option to purchase 1,500,000 shares of

the Company’s common stock at an exercise price of $0.55 (the “Initial Option”).

The Initial Option vests in

three (3) equal annual installments on the first three anniversaries of Mr.

Kadanoff’s Start Date with the Company, provided

Kadanoff remains employed by the Company on each such date.

The Initial Option expires on the tenth anniversary of the

Subject to the approval by the Board, during each calendar year of Mr.

Kadanoff’s employment with the Company beginning

with 2018, the Company will grant to him an option to purchase 500,000 shares of the Company’s common stock (such options

collectively the “Additional Options”).

The exercise price of each Additional Option will be the Fair Market Value

of the common stock on the date each such Additional Option is granted.

Each Additional Option will expire on the tenth anniversary

of the date of grant of such Additional Option.

The Additional Options will vest in three (3) equal annual installments on the

first three anniversaries of the date of grant of such Additional Option, provided that Mr.

Kadanoff remains employed by the Company

on each such date.

Kadanoff’s employment with the Company

beginning with 2018, the Company will grant to him an option to purchase 500,000 shares of the Company’s common stock (such

options collectively the “Additional Options”).

The exercise price of each Additional Option will be the Fair Market

Value of the common stock on the date each such Additional Option is granted.

Each Additional Option will expire on the tenth

anniversary of the date of grant of such Additional Option.

The Additional Options will vest in three (3) equal annual installments

on the first three anniversaries of the date of grant of such Additional Option, provided that Mr.

Kadanoff remains employed by

the Company on each such date.

Upon the occurrence of a Change in Control, the vesting of stock options granted to Mr.

Kadanoff will be accelerated

subject to his continued service to the Company as of such date and provided further that Mr.

Kadanoff’s stock options will

be treated no less favorably than those of any other senior executive or Chairman of the Company.

will be accelerated subject to his continued service to the Company as of such date and provided further that Mr.

Kadanoff’s

stock options will be treated no less favorably than those of any other senior executive or Chairman of the Company.

Company and Mr.

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McCullough will receive an annual base salary of $340,000.

He will receive a cash signing bonus of $37,500, to be paid on January 1, 2018, and an additional cash signing bonus of $37,500,

to be paid on July 1, 2018, provided that he is employed by the Company through such dates.

McCullough will be eligible for

an annual bonus of up to twenty-five percent (25%) of his base salary.

The annual bonus will be determined at the discretion of

our Board or compensation committee based upon the achievement of financial goals established by the Company’s Chief Executive

He received a cash signing bonus of $37,500, to be paid on January 1, 2018, and an additional cash signing bonus of $37,500, to

be paid on July 1, 2018, provided that he is employed by the Company through such dates.

McCullough will be eligible for an

annual bonus of up to twenty-five percent (25%) of his base salary.

The annual bonus will be determined at the discretion of our

Board or compensation committee based upon the achievement of financial goals established by the Company’s Chief Executive

McCullough will also be eligible for additional bonus compensation based on the Company’s achievement of certain

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of the Company’s Board of Directors (the “Option Grant”).

The Option Grant will vest in three (3) equal annual

installments on the first three anniversaries of Mr.

The Option Grant vests in three (3) equal annual installments

on the first three anniversaries of Mr.

McCullough’s start date with the Company, provided that Mr.

remains employed by the Company on each such date.

The Option Grant will be granted under the Company’s 2014 Stock Incentive

Plan pursuant to a stock grant agreement between the Company and Mr.

McCullough remains employed

by the Company on each such date.

The Option Grant will be granted under the Company’s 2014 Stock Incentive Plan pursuant

to a stock grant agreement between the Company and Mr.

August 16, 2017, the Company entered into a sublease for office space, effective October 1, 2017 through May 2021.

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

non-cancelable lease terms in excess of one year as of March 31, 2018:

non-cancelable lease terms in excess of one year as of June 30, 2018:

Year ending December 31:

remaining nine months

remaining six months

Stock Options

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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, 2018:

Options Outstanding

Options Exercisable

stock option activity for the three months ended March 31, 2018 is as follows:

common stock issued to employees and consultants under the Plan at June 30, 2018:

stock option activity for the six months ended June 30, 2018 is as follows:

Exercise Price

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Expired or canceled

Outstanding at March 31, 2018

compensation expense related to vested options was $119,617 during the three months ended March 31, 2018 which is a component

of general and administrative expense in the statement of operations.

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, 2018, as disclosed

in the above table, have an intrinsic value of $150,000.

As of March 31, 2018, unamortized stock-based compensation costs related

to options was $1,070,768, and will be recognized over a period of 2.5 years.

Outstanding at June 30, 2018

compensation expense related to vested options was $119,769 and $239,386 during the three and six months ended June 30, 2018,

respectively, 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 assumptions:

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 June 30, 2018, as disclosed in the above table, have an intrinsic value of $300,000.

As of June 30, 2018, unamortized stock-based

compensation costs related to options was $950,997, and will be recognized over a period of 2.25 years.

Stock Warrants

following table summarizes the warrants outstanding, warrant exercisability and the related exercise prices for the shares

of the Company’s common stock at March 31, 2018:

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

common stock at June 30, 2018:

Warrants Outstanding

Warrants Exercisable

warrant activity for the three months ended March 31, 2018 is as follows:

warrant activity for the six months ended June 30, 2018 is as follows:

Outstanding at December 31, 2017

Expired or canceled

Outstanding at March 31, 2018

outstanding as of March 31, 2018, 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 management 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

The Company’s management does not review operating results on a disaggregated basis;

rather, management

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, 2018 and 2017 were

March 31, 2018

March 31, 2017

Outstanding at June 30, 2018

outstanding as of June 30, 2018, 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 June 30, 2018 and 2017 were

June 30, 2018

June 30, 2017

United States

Foreign countries

Foreign countries primarily consist of Australia and Canada.

Company’s net sales by product group for the three months ended March 31, 2018 and 2017 were as follows:

March 31, 2018

March 31, 2017

countries primarily consist of Australia and Canada.

Company’s net sales by product group for the three months ended June 30, 2018 and 2017 were as follows:

June 30, 2018

June 30, 2017

Nutraceuticals

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

Company’s net sales by major sales channel for the three months ended March 31, 2018 and 2017 were as follows:

assets (net) attributable to operations in the United States and foreign countries as of March 31, 2018 and December 31, 2017

were as follows:

March 31, 2018

Company’s net sales by major sales channel for the three months ended June 30, 2018 and 2017 were as follows:

June 30, 2018

June 30, 2017

sales attributed to customers in the United States and foreign countries for the six months ended June 30, 2018 and 2017 were

June 30, 2018

June 30, 2017

United States

Foreign countries

Company’s net sales by product group for the six months ended June 30, 2018 and 2017 were as follows:

June 30, 2018

June 30, 2017

Nutraceuticals

Over the Counter (OTC)

Consumer Goods

Cosmeceuticals

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

Company’s net sales by major sales channel for the six months ended June 30, 2018 and 2017 were as follows:

June 30, 2018

June 30, 2017

assets (net) attributable to operations in the United States and foreign countries as of June 30, 2018 and December 31, 2017 were

June 30, 2018

December 31, 2017

1 unchanged sentence

Foreign countries

countries consist of Australia and Canada.

Note 16 –

Income tax expense was $160,613 for the three

months ended March 31, 2018, respectively, compared to $291,467 for the same period in 2017.

The current provision is attributable

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

tax (benefit) expense was $222,389 and $383,002 for the three and six months ended June 30, 2018, respectively, compared to $167,756

and ($123,711), respectively, for the same periods in 2017.

The current provision is attributable to Australian operations

and the current tax rate in effect in that country.

December 22, 2017, the Tax Cuts and Jobs Act (the TCJA), which significantly modified U.S.

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the Company acts to bring tax compliance up to day.

total deferred tax asset is calculated by multiplying a domestic (US) 21% 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 382/383, 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.

The total deferred tax asset is calculated

by multiplying a domestic (US) 25% marginal effective tax rate (estimated state rate of 4%) by the cumulative

net operating loss carryforwards (“NOL”).

The Company estimates currently it has NOLs, which expire through

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 382/383,

change of ownership rules.

If the Company has had a change in ownership, the NOL’s would be limited or eliminated,

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

The Company has not filed its State &

Local Income/Franchise tax returns in States it is required to file for the last few years, so such returns and liability remain

The Company is currently assessing the requirements to file these returns in states to determine any potential liability,

which the Company feels is immaterial.

Subsequent Events

2 unchanged sentences

into the unaudited condensed consolidated financial statements.

to March 31, 2018, the Company made an additional $500,000 payment on $10,000,000 loan.

to June 30, 2018, the Company made an additional $500,000 payment on $10,000,000 loan.

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, 2018 and 2017, 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 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 caption, “Cautionary Notice Regarding

Forward-Looking Statements”

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

ended June 30, 2018 and 2017, 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 Form

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”

and the “Business”

section in our Form 10-K filed on April 2, 2018.

such as “anticipate,”

section in our Form

10-K filed on April 2, 2018.

We use words such as “anticipate,”

“estimate,”

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For the three

March 31, 2018

June 30, 2018

Net loss after tax

Interest income

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Adjusted EBITDA

June 30, 2018

Net loss after taxes

Interest income

Interest expense

Stock-based compensation

One-time expenses

Loss on foreign currency translation and transaction

Adjusted EBITDA

and Adjusted EBITDA are considered non-GAAP financial measures.

3 unchanged sentences

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;

and the loss 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, 2018 and 2017

the three months ended March 31, 2018, we had revenue of $9,700,861 from sales of our products, as compared to revenue

of $10,788,319 for the same period in 2017.

The decrease is due to regular fluctuations in business, and is comprised

of the following categories:

March 31, 2018

March 31, 2017

one-time expenses for acquisitions;

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 June 30, 2018 and 2017

the three months ended June 30, 2018, we had revenue of $9,728,712 from sales of our products, as compared to revenue of $9,318,918

for the same period in 2017.

We had an increase in Nutraceuticals in 2018 as compared to 2017 due to new customers.

We had a decrease

in Over the Counter in 2018 as compared to 2017 as 2017 was high due to a sell in to a new customer.

We had a decrease in Consumer

Goods in 2018 as compared to 2017 as 2017 was the launch of a new product.

We had an increase in Cosmeceuticals in 2018 as compared

to 2017 due to new customers and new products.

The revenue is comprised of the following categories:

June 30, 2018

June 30, 2017

Nutraceuticals

2 unchanged sentences

Cosmeceuticals

For the three months

ended March 31, 2018, our cost of revenue was $2,809,908.

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

The increase is due to a different mix of products being sold and is comprised of the following categories:

March 31, 2018

March 31, 2017

the three months ended June 30, 2018, our cost of revenue was $2,744,760.

Our cost of revenue for the three months ended June

30, 2017, was $2,462,424.

We had an increase in Nutraceuticals in 2018 as compared to 2017 due to higher sales and a different

mix of products being sold.

We had an increase in Over the Counter in 2018 as compared to 2017 due to a different mix of product

We had a decrease in Consumer Goods in 2018 as compared to 2017 due to a decrease in revenue.

We had an increase in

Cosmeceuticals in 2018 as compared to 2017 due to an increase in revenue.

The cost of revenue is comprised of the following categories:

June 30, 2018

June 30, 2017

Nutraceuticals

2 unchanged sentences

Cosmeceuticals

profit was $6,890,953, or 71% for the three months ended March 31, 2018, as compared to gross profit of $8,285,789, or 77% for

the same period in 2017, a decrease of $1,394,836, or 17%.

The decrease in gross profit margin is directly related

to a decrease in sales and promotions run online.

profit was $6,983,952, or 72% for the three months ended June 30, 2018, as compared to gross profit of $6,856,494, or 74% for

the same period in 2017, an increase of $127,458, or 1.9%.

The decrease in gross profit margin is directly related to increase

in sales and selling products with a higher unit cost, thus reducing our margin.

and Marketing Expenses

the three months ended March 31, 2018, our selling and marketing expenses were $4,252,703 as compared to $2,897,197 for the same

the three months ended June 30, 2018, our selling and marketing expenses were $5,148,656 as compared to $4,223,712 for the same

period in 2017, which is primarily due to increased personnel in our advertising and marketing departments.

and Administrative Expenses

the three months ended March 31, 2018, our general and administrative expenses were $1,760,856.

For the three months ended March

the three months ended June 30, 2018, our general and administrative expenses were $1,475,289.

For the three months ended June

30, 2017, our general and administrative expenses were $2,367,969.

The decrease is primarily due to better management of

operating costs.

The decrease is primarily due to better management of operating

and Amortization Expenses

the three months ended March 31, 2018, our depreciation and amortization expenses were $451,486 as compared to $292,318 for the

the three months ended June 30, 2018, our depreciation and amortization expenses were $455,951 as compared to $357,111 for the

same period in 2017.

1 unchanged sentence

Income and Expenses

the three months ended March 31, 2018 and 2017 we had other (income) and expense items of the following:

March 31, 2018

March 31, 2017

the three months ended June 30, 2018 and 2017 we had other (income) and expense items of the following:

June 30, 2018

June 30, 2017

Interest income

Interest expense

Remeasurement loss on translation of foreign subsidiary

Remeasurement loss (gain) on translation of foreign subsidiary

Amortization of debt issuance cost

Total other expense

the three months ended June 30, 2018, we had interest expense of $305,687 as compared to $187,077 for the same period in 2017.

The increase was due to increase in the interest rate of Loan 3 from 10% to 13% offset by repayment of Loan 1 and Loan 2.

the three months ended June 30, 2018, our net loss was $783,393 as compared to a net loss of $50,181 for the same period in 2017.

of Operations for the Six months Ended June 30, 2018 and 2017

the six months ended June 30, 2018, we had revenue of $19,429,573 from sales of our products, as compared to revenue of $20,107,237

for the same period in 2017.

We had an increase in Nutraceuticals in 2018 as compared to 2017 due to new customers.

We had a decrease

in Over the Counter in 2018 as compared to 2017 as 2017 was high due to a sell in to new customers.

We had a decrease in Consumer

Goods in 2018 as compared to 2017 as 2017 was the launch of a new product.

We had an increase in Cosmeceuticals in 2018 as compared

to 2017 due to new customers and new products.

The decrease is comprised of the

following categories:

June 30, 2018

June 30, 2017

Nutraceuticals

Over the Counter (OTC)

Consumer Goods

Cosmeceuticals

For the six months ended

June 30, 2018, our cost of revenue was $5,554,668.

Our cost of revenue for the six months ended June 30, 2017, was $4,964,954.

We had an increase in Nutraceuticals in 2018 as compared to 2017 due to higher sales and a different mix of products being sold.

We had a decrease in Over the Counter in 2018 as compared to 2017 due to a different mix of product being sold.

We had a decrease

in Consumer Goods in 2018 as compared to 2017 due to a decrease in revenue.

We had an increase in Cosmeceuticals in 2018 as compared

to 2017 due to an increase in revenue.

The cost of revenue is comprised of the following categories:

June 30, 2018

June 30, 2017

Nutraceuticals

Over the Counter (OTC)

Consumer Goods

Cosmeceuticals

profit was $13,874,905, or 71% for the six months ended June 30, 2018, as compared to gross profit of $15,142,283, or 75% for

the same period in 2017, a decrease of $1,267,378, or 8.4%.

The decrease in gross profit margin is directly related to a different

mix of products being sold, with higher costs which reduces profit margin.

and Marketing Expenses

the six months ended June 30, 2018, our selling and marketing expenses were $9,401,359 as compared to $7,120,909 for the same

period in 2017, which is primarily due to increased personnel in our advertising and marketing departments.

and Administrative Expenses

the six months ended June 30, 2018, our general and administrative expenses were $3,236,145.

For the six months ended June 30,

2017, our general and administrative expenses were $4,305,612.

The decrease is primarily due to better management of operating

and Amortization Expenses

the six months ended June 30, 2018, our depreciation and amortization expenses were $907,437 as compared to $649,429 for the same

period in 2017.

The increase is due to more assets owned in 2018.

Income and Expenses

the six months ended June 30, 2018 and 2017 we had other (income) and expense items of the following:

June 30, 2018

June 30, 2017

Interest income

Interest expense

Remeasurement gain (loss) on translation of foreign subsidiary

Loss on sale of assets

1 unchanged sentence

Total other expense

the three months ended March 31, 2018, we had interest expense of $270,176 as compared to $247,364 for the same period in 2017.

The increase was due to Loan 3.

the six months ended June 30, 2018, we had interest expense of $575,863 as compared to $434,441 for the same period in 2017.

increase was due to increase in the interest rate of Loan 3 from 10% to 13% offset by repayment of Loan 1 and Loan 2.

(Loss) Income

the three months ended March 31, 2018, our net (loss) was ($55,493) as compared to a net income of $2,558,654 for

the same period in 2017.

the six months ended June 30, 2018, our net loss was $838,886 as compared to a net income of $2,508,473 for the same period in

and Capital Resources

of March 31, 2018, we had $1,686,181 cash on hand and a $3,249,449 working capital surplus.

In addition, we also had restricted

cash of $139,439, which is primarily held for credit card collateral.

months ended March 31, 2018 and 2017

of June 30, 2018, we had $865,812 cash on hand and a $2,557,687 working capital surplus.

In addition, we also had restricted cash

of $138,023 which is held for credit card collateral.

months ended June 30, 2018 and 2017

Cash Provided by Operating Activities

cash provided by operating activities for the three months ended March 31, 2018 was $944,647, compared to $1,676,330 for the same

cash provided by operating activities for the six months ended June 30, 2018 was $712,546, compared to $3,301,371 for the same

period in 2017.

This decrease in net cash provided by operating activities for the three months ended March 31, 2018 was primarily

attributable to an increase in inventory and a decrease in accounts payable.

$944,647 consists of our net loss of $55,493 adjusted by:

This decrease in net cash provided by operating activities for the six months ended June 30, 2018 was primarily

attributable to net loss during the period, an increase in inventory, a decrease in accounts payable and a decrease in accounts

$712,546 consists of our net loss of $838,886 increased by:

Amortization of debt issuance cost

10 unchanged sentences

Cash Used in Investing Activities

cash used in investing activities for the three months ended March 31, 2018 was $137,093, compared to net cash used of $85,583

for the same period in 2017.

The increase in cash used in investing activities during 2018 is attributable to the purchase of

fixed assets.

cash used in investing activities for the six months ended June 30, 2018 was $194,300, compared to net cash used of $832,270 for

the same period in 2017.

The decrease in cash used in investing activities during 2018 is attributable to the payout of a development

Payments for acquisition of fixed assets

Payment for acquisition of domain name

Increase in restricted cash

Purchase of intangible assets

Cash Used in Financing Activities

cash used in financing activities for the three months ended March 31, 2018 was $1,137,500, compared to net cash used of $2,387,500

cash used in financing activities for the six months ended June 30, 2018 was $1,712,500, compared to net cash used of $4,025,000

for the same period in 2017.

30 unchanged sentences

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