What changed in this filing

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Item 1. Financial Statements

2019-11-14 compared with 2019-08-13 · 370 added, 357 removed, 843 unchanged (46% of the section changed)

1 unchanged sentence

Consolidated Balance Sheets

June 30, 2019

September 30, 2019

December 31, 2018

3 unchanged sentences

Accounts receivable, net

Other current assets

Prepaid expenses and other current assets

Income taxes receivable

28 unchanged sentences

For the three months ended

For the six months ended

June 30, 2019

June 30, 2018

June 30, 2019

June 30, 2018

For the nine months ended

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018

Cost of sales

4 unchanged sentences

Total operating expenses

Income (loss) from operations

Income from operations

Other (income) expenses

5 unchanged sentences

Net income (loss) before income taxes

Income tax expense

Income tax (benefit) expense

Net income (loss) after tax

2 unchanged sentences

Weighted average common shares outstanding

Comprehensive income (loss):

Comprehensive (loss) income:

Net income (loss)

2 unchanged sentences

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

Condensed Consolidated Statement of Stockholders’

Condensed Consolidated Statements of Changes in Stockholders’

Additional Paid in

12 unchanged sentences

$ (9,705,322 )

Fair value of vested stock options

Foreign currency translation gain

Balance as of September 30, 2018

$ (9,359,732 )

Additional Paid in

12 unchanged sentences

$ (13,241,373 )

Fair value of vested stock options

Foreign currency translation gain

Balance as of September 30, 2019

$ (13,133,509 )

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

Condensed Consolidated Statements of Cash Flows

For the six months ended

June 30, 2019

June 30, 2018

For the nine months ended

September 30, 2019

September 30, 2018

Cash Flows from Operating Activities

5 unchanged sentences

Remeasurement loss on translation of foreign subsidiary

Foreign currency transaction loss

Foreign currency transaction gain

Non cash implied interest

39 unchanged sentences

Summary of Significant Accounting Policies

accompanying condensed consolidated financial statements as of June 30, 2019 and December 31, 2018 and for the three and six months

ended June 30, 2019 and 2018 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

six months ended June 30, 2019 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, 2018 and footnotes thereto included in the Company’s Annual

Report on Form 10-K filed with the SEC on March 29, 2019.

accompanying condensed consolidated financial statements as of September 30, 2019 and December 31, 2018 and for the three and

nine months ended September 30, 2019 and 2018 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, 2019 are not necessarily indicative of the results that may be expected for the

fiscal year ending December 31, 2019.

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, 2018 and footnotes thereto included

in the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2019.

of Presentation

12 unchanged sentences

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

As of September

30, 2019, the Company had no cash equivalents.

2 unchanged sentences

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

At June 30, 2019, the uninsured

balance amounted to $770,545.

At September 30, 2019, the

uninsured balance amounted to $981,699.

following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial

position that sum to the total of the same such amounts shown in the statement of cash flows.

June 30, 2019

September 30, 2019

December 31, 2018

June 30, 2018

September 30, 2018

Cash and cash equivalents

12 unchanged sentences

expensed as incurred.

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 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 (“Perfekt”) on June 21, 2017 and $50,000 acquired as an Asset Purchase entered into with Cocowhite

on May 22, 2018.

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 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 part of an Asset Purchase Agreement entered into with Cocowhite on

May 22, 2018.

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

1 unchanged sentence

2018, the Company fully impaired intangible assets related to Perfekt and Cocowhite and charged to operations impairment loss

As of June 30, 2019, our qualitative analysis of intangible assets with indefinite lives did not indicate any impairment.

As of September 30, 2019, our qualitative analysis of intangible assets with indefinite lives did not indicate any

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

14 unchanged sentences

and charged to operations impairment loss of $864,067.

As of June 30, 2019, our qualitative analysis of long-lived assets did

not indicate any impairment.

As of September 30, 2019, our qualitative analysis of long-lived assets

did not indicate any impairment.

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

2 unchanged sentences

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

As of June 30, 2019, our

qualitative analysis of goodwill did not indicate any impairment.

As of September 30, 2019,

our qualitative analysis of goodwill did not indicate any impairment.

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

27 unchanged sentences

that are short term in nature are expensed as incurred.

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

The Company does not have any contract costs capitalized as of September

Liabilities - Deferred Revenue

11 unchanged sentences

against the allowance for doubtful accounts.

As of both June 30, 2019 and December 31, 2018, allowance for doubtful accounts was

As of both September 30, 2019 and December 31, 2018, allowance for doubtful accounts

Company expenses marketing, promotions and advertising costs as incurred.

23 unchanged sentences

in the period in which such determination is made.

CHC Inc., is a wholly-owned foreign subsidiary, is subject to income taxes in the jurisdictions in which it operates.

is a wholly-owned foreign subsidiary, is subject to income taxes in the jurisdictions in which it operates.

judgment is required in determining the provision for income tax.

15 unchanged sentences

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

As of June 30, 2019, and 2018, options to purchase 6,166,667 and 8,666,667 shares of common stock, respectively, were outstanding.

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

As of September 30, 2019, and 2018, options to purchase 6,166,667 and 7,166,667 shares of common stock, respectively, were outstanding.

As of September 30, 2018, 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 and six months ended June 30, 2019, and 2018:

per share for the three and nine months ended September 30, 2019, and 2018:

For the three months ended

For the six months ended

June 30, 2019

June 30, 2018

June 30, 2019

June 30, 2018

For the nine months ended

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018

Net income (loss) after tax

3 unchanged sentences

Dilutive potential common shares

Net earnings per share:

Net earnings (loss) per share:

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

21 unchanged sentences

to the fair value measurement.

of June 30, 2019, the Company has determined that there were no assets or liabilities measured at fair value.

of September 30, 2019, the Company has determined that there were no assets or liabilities measured at fair value.

consists of raw materials, components and finished goods.

13 unchanged sentences

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

515-50, “Compensation –

Stock Compensation.”

505-50, “Equity –

Based Payments to Non-Employees.”

Measurement of share-based payment transactions with non-employees

32 unchanged sentences

were as follows:

June 30, 2019

September 30, 2019

December 31, 2018

3 unchanged sentences

USD exchange rate

June 30, 2019

June 30, 2018

September 30, 2019

September 30, 2018

Average Quarterly AUD:

47 unchanged sentences

Concern Evaluation

connection with preparing unaudited condensed consolidated financial statements for the three and six months ended June 30, 2019,

management evaluated whether there were conditions and events, considered in the aggregate, that raised substantial doubt about

the Company’s ability to continue as a going concern within one year from the date that the financial statements are issued.

connection with preparing unaudited condensed consolidated financial statements for the three and nine months ended September

30, 2019, management evaluated whether there were conditions and events, considered in the aggregate, that raised substantial

doubt about the Company’s ability to continue as a going concern within one year from the date that the financial statements

Company considered the following:

At June 30, 2019, the Company had an accumulated deficit of $13,241,374.

At June 30, 2019, the Company had working capital deficit of $46,078.

At September 30, 2019, the Company had an accumulated deficit of $13,133,509.

At September 30, 2019, the Company had working capital deficit of $3,980,990.

Revenue decline in 2019 as compared to 2018 of $5,449,728.

5 unchanged sentences

In 2019, the Company repaid $1,537,500 of loans.

The Company generated net income of $318,462 for the three months ended June 30, 2019 and $1,785,748 for the six months ended

June 30, 2019.

In 2019, the Company generated $1,776,352 of cash from operating activities.

Working capital deficit of $46,078 at June 30, 2019, includes loans payables to related party of $1,979,876, royalty payable to

The Company generated net income of $107,864 for the three months ended September 30, 2019 and $1,893,613 for the nine months

ended September 30, 2019.

In 2019, the Company has generated $2,529,885 of cash from operating activities.

Working capital deficit of $3,980,990 at September 30, 2019, includes loans payable to related party of $5,937,576, payables to

related party of $370,939 and deferred revenue of $9,947.

The Company has line of credit facility of $20 million available from its current lender for future mergers and acquisition.

concluded that above factors alleviates doubts about the Company’s ability to generate enough cash from operations and other

concluded that above factors alleviate doubts about the Company’s ability to generate enough cash from operations and other

available sources to satisfy its obligations for the next twelve months from the issuance date.

1 unchanged sentence

in order to mitigate conditions or events that would raise substantial doubt about its ability to continue as a going concern:

Raise additional capital through line of credit and/or loans financing for future mergers and acquisition.

Raise additional capital through line of credit and/or loan financing for future mergers and acquisition.

Implement additional restructuring and cost reductions.

Raise additional capital through a private placement.

of August 12, 2019 and June 30, 2019, the Company had $875,154 and $1,201,267, respectively, in cash and cash equivalents.

of November 14, 2019 and September 30, 2019, the Company had $684,916 and $1,489,311, respectively, in cash and

cash equivalents.

Accounting Pronouncements

25 unchanged sentences

We are currently evaluating the impact of adopting ASU 2017-13

on our unaudited condensed consolidated financial statements.

on our consolidated financial statements.

December 22, 2017, the U.S.

21 unchanged sentences

Comprehensive Income (Topic 220), which has been deleted.

The adoption of ASU 2018-02 did not have any impact on the Company’s

unaudited condensed consolidated financial statements.

We are currently evaluating the impact of adopting ASU 2017-13 on our

consolidated financial statements.

amendments in this Update provide an optional transition practical expedient to not evaluate under Topic 842 existing or expired

4 unchanged sentences

the adoption of the new lease requirements in Topic 842 to assess whether they meet the definition of a lease.

The effective date

and transition requirements for the amendments are the same as the effective date and transition requirements in Update 2016-02.

The adoption of ASU 2018-01 did not have any impact on the Company’s unaudited condensed consolidated financial statements.

We are currently

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

consists of finished goods, components and raw materials.

2 unchanged sentences

carrying value of inventory consisted of the following:

June 30, 2019

September 30, 2019

December 31, 2018

6 unchanged sentences

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

June 30, 2019

September 30, 2019

December 31, 2018

2 unchanged sentences

Total accounts receivable, net

Other Current Assets

current assets consisted of the following:

June 30, 2019

Prepaid Expenses and Other Current Assets

expenses and other current assets consisted of the following:

September 30, 2019

December 31, 2018

5 unchanged sentences

Miscellaneous

Related Party Receivable

Related party receivables

Capital asset deposit

Concentration of Credit Risk

4 unchanged sentences

its cash deposits with major financial institutions.

At June 30, 2019 and December 31, 2018, the uninsured balances amounted to

$770,545 and $162,729, respectively.

of June 30, 2019, 4 customers accounted for 67% of the Company’s accounts receivable.

As of December 31, 2018, three

customers accounted for 83% of the Company’s accounts receivable.

the six months ended June 30, 2019, two customers accounted for approximately 42% of the Company’s net revenue.

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

For the three

months ended June 30, 2019, two customers accounted for approximately 44% of the Company’s net revenue.

For the three months

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

For the year ended December

31, 2018, two customers accounted for approximately 41% of the Company’s net revenues.

Substantially all of the Company’s

business is with companies in the United States.

of June 30, 2019 and December 31, 2018, two vendors accounted for 72% and 77%, respectively, of the Company’s accounts payable.

the six months ended June 30, 2019, two suppliers accounted for approximately 36% of the Company’s purchases.

months ended June 30, 2018, three suppliers accounted for approximately 46% of the Company’s purchases.

For the three months

ended June 30, 2019, two suppliers accounted for approximately 27% of the Company’s purchases.

For the three months ended

June 30, 2018, two suppliers accounted for approximately 32% of the Company’s purchases.

Substantially all of the Company’s

business is with suppliers in the United States.

At September 30, 2019 and December 31, 2018, the uninsured balances amounted

to $981,699 and $162,729, respectively.

of September 30, 2019, three customers accounted for 57% of the Company’s accounts receivable.

As of December 31, 2018,

three customers accounted for 83% of the Company’s accounts receivable.

the nine months ended September 30, 2019, two customers accounted for approximately 47% of the Company’s net revenue.

the three months ended September 30, 2019, two customers accounted for approximately 58% of the Company’s net revenue.

the nine months ended September 30, 2018, three customers accounted for approximately 50% of the Company’s net revenue.

For the three months ended September 30, 2018, two customers accounted for approximately 58% of the Company’s net revenue.

For the year ended December 31, 2018, two customers accounted for approximately 41% of the Company’s net revenues.

Substantially

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

of September 30, 2019 and December 31, 2018, two vendors accounted for 73% and 77%, respectively, of the Company’s accounts

the nine months ended September 30, 2019, two suppliers accounted for approximately 39% of the Company’s purchases.

For the nine months ended September 30, 2018, three suppliers accounted for approximately 49% of the Company’s purchases.

For the three months ended September 30, 2019, two suppliers accounted for approximately 46% of the Company’s purchases.

For the three months ended September 30, 2018, two suppliers accounted for approximately 48% of the Company’s

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

Fixed Assets and Intangible Assets

of June 30, 2019, and December 31, 2018, fixed assets and intangible assets consisted of the following:

June 30, 2019

of September 30, 2019, and December 31, 2018, fixed assets and intangible assets consisted of the following:

September 30, 2019

December 31, 2018

2 unchanged sentences

Fixed assets, net

expense for the three months ended June 30, 2019 and 2018 was $34,263 and $39,754, respectively.

Depreciation expense for the

six months ended June 30, 2019 and 2018 was $72,323 and $76,162, respectively.

June 30, 2019

expense for the three months ended September 30, 2019 and 2018 was $31,166 and $38,299, respectively.

Depreciation expense for

the nine months ended September 30, 2019 and 2018 was $103,489 and $114,461, respectively.

September 30, 2019

December 31, 2018

FOCUSfactor intellectual property

FOCUS factor intellectual property

Perfekt intellectual property

4 unchanged sentences

Intangible assets, net

expense for the three months ended June 30, 2019 and 2018 was $269,333 and $416,197, respectively.

Amortization expense for the

six months ended June 30, 2019 and 2018 was $537,548 and $831,275, respectively.

These intangible assets were acquired through

an Asset Purchase Agreement and Stock Purchase Agreements.

expense for the three months ended September 30, 2019 and 2018 was $270,222 and $417,280, respectively.

Amortization expense for

the nine months ended September 30, 2019 and 2018 was $807,770 and $1,248,555, respectively.

These intangible assets were acquired

through an Asset Purchase Agreement and Stock Purchase Agreements.

Related Party Transactions

Company accrued and paid consulting fees of $57,917 per month and a management fee of $76,461 to a company owned by Mr.

Company accrued and paid consulting fees of $57,917 per month and management fees of $129,478 to a company owned by Mr.

Chief Executive Officer of the Company.

The Company expensed $185,000 during the three months ended June 30, 2019 and $423,961

during the six months ended June 30, 2019.

As of June 30, 2019, the total outstanding balance was $0 for consulting fees and reimbursements.

As of June 30, 2019, the Company has a receivable of $120,660 related to services the Company performed for a company owned by

The Company expensed $226,515 during the three months ended September 30, 2019 and $650,728

during the nine months ended September 30, 2019.

As of September 30, 2019, the total outstanding balance was $0 for consulting

fees and reimbursements.

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, 2019, the Company owed Knight $500,000

At September 30, 2019, the Company owed Knight $487,500

in relation to this agreement (see Note 10).

The Company recorded present value of future payments of $263,546 and $272,151 as

of June 30, 2019 and December 31, 2018, respectively.

of September 30, 2019 and December 31, 2018, respectively.

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

5 unchanged sentences

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

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

2019 and $60,000 for the six months ended June 30, 2019.

As of June 30, 2019, the total outstanding balance was $0.

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

30, 2019 and $90,000 for the nine months ended September 30, 2019.

As of September 30, 2019, the total outstanding balance was

August 9, 2017, the Company entered into a Loan Agreement with Knight Therapeutics (Barbados) Inc., a related party, for a working

capital loan.

At June 30, 2019, the Company owed Knight $6,393,702 on this loan, net of debt issuance cost (see Note 10).

At September 30, 2019, the Company owed Knight $5,924,522 on this loan, net of debt issuance cost (see Note 10).

December 23, 2016, we entered into an agreement with Knight Therapeutics for the distribution rights of FOCUSFactor in Canada.

3 unchanged sentences

this agreement is $100,000 Canadian dollars.

As of June 30, 2019, the total outstanding balance was $200,000 Canadian dollars (approximately

$152,834 USD).

As of September 30, 2019, the total outstanding balance was $200,000 Canadian dollars

(approximately $152,834 USD).

December 23, 2016, we entered into an agreement with Knight Therapeutics for the distribution rights of Hand MD into Canada.

3 unchanged sentences

minimum due to Knight under this agreement is $25,000 Canadian dollars.

As of June 30, 2019 the total outstanding balance was

$25,000 Canadian dollars (approximately $18,325 USD).

Company expensed royalty of $50,445 during the three months ended June 30, 2019 and $139,309 for the six months ended June 30,

At June 30, 2019 the Company, owed Knight Therapeutics $139,309 in connection with a royalty distribution agreement.

Company expensed royalty of $2,100 during the three months ended June 30, 2019 and $3,185 for the six months ended June 30, 2019.

At June 30, 2019 the Company owed Knight Therapeutics $2,100 in connection with a royalty distribution agreement for Sneaky Vaunt.

Company expensed commissions of $4,887 during the three months ended June 30, 2019 and $9,065 for the six months ended June 30,

At June 30, 2019, the Company, owed Founded Ventures, owned by a shareholder in the Company, $4,887 in connection with a

commission agreement for Sneaky Vaunt.

Company expensed commissions of $259 during the three months ended June 30, 2019 and $644 for the six months ended June 30, 2019.

At June 30, 2019, the Company owed Founded Ventures $259 in connection with a commission agreement for The Queen Pegasus.

Company paid $5,826 during the three months ended June 30, 2019 and $8,621 for the six months ended June 30, 2019 to Hand MD,

Corp, related to a royalty agreement.

At June 30, 2019, the Company owed Hand MD Corp.

As of September 30, 2019, the total outstanding balance

was $25,000 Canadian dollars (approximately $18,325 USD).

Company expensed royalty of $36,082 during the three months ended September 30, 2019 and $175,391 during the nine months ended

September 30, 2019.

At September 30, 2019 NomadChoice Pty Ltd., a subsidiary of the Company, owed Knight Therapeutics $36,082

in connection with a royalty distribution agreement.

Company expensed royalty of $1,067 during the three months ended September 30, 2019 and $4,252 for the nine months ended September

At September 30, 2019 the Company owed Knight Therapeutics $1,067 in connection with a royalty distribution agreement

for Sneaky Vaunt.

Company expensed commissions of $0 during the three months ended September 30, 2019 and $9,065 for the nine months ended September

At September 30, 2019, the Company owed Founded Ventures, owned by a shareholder in the Company, $0 in connection with

a commission agreement for Sneaky Vaunt.

Company expensed commissions of $0 during the three months ended September 30, 2019 and $644 for the nine months ended September

At September 30, 2019, the Company owed Founded Ventures $0 in connection with a commission agreement for The Queen

Company paid $6,180 during the three months ended September 30, 2019 and $14,801 for the nine months ended September 30, 2019

to Hand MD, Corp, related to a royalty agreement.

At September 30, 2019, the Company owed Hand MD Corp.

$0 in minimum future royalties.

Accounts Payable and Accrued Liabilities

of June 30, 2019, and December 31, 2018, accounts payable and accrued liabilities consisted of the following:

June 30, 2019

of September 30, 2019, and December 31, 2018, accounts payable and accrued liabilities consisted of the following:

September 30, 2019

December 31, 2018

5 unchanged sentences

Severance Accrual

Charitable Donation

Related Party Reimbursements

Notes Payable

Company’s loans payable at June 30, 2019 and December 31, 2018 are as follows:

June 30, 2019

Company’s loans payable at September 30, 2019 and December 31, 2018 are as follows:

September 30, 2019

December 31, 2018

12 unchanged sentences

total payments of $1.2 million.

Company recorded present value of future payments of $266,521 and $272,151 as of June 30, 2019 and December 31, 2018, respectively.

The Company recorded imputed interest expense of $9,633 for the three months ended June 30, 2019 and $19,370 for the six months

ended June 30, 2019.

the three and six months ended June 30, 2019, the Company made payments of $12,500 and $25,000, respectively, in connection with

this Security Agreement.

Company recorded present value of future payments of $263,546 and $272,151 as of September 30, 2019 and December 31, 2018, respectively.

The Company recorded imputed interest expense of $9,526 for the three months ended September 30, 2019 and $28,896 for the nine

months ended September 30, 2019.

the three and nine months ended September 30, 2019, the Company made payments of $12,500 and $37,500, respectively, in connection

with this Security Agreement.

August 9, 2017 Loan:

38 unchanged sentences

be in effect until the $5 million TTM EDITDA covenant is achieved.

We entered into Loan Amendment Agreement on May 14, 2018, the

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

When we entered into Loan Amendment Agreement on May 14, 2018,

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

Also, Synergy will maintain Focus Factor Net Sales as measured

3 unchanged sentences

we will maintain a minimum EBITDA of $1,900,000 for the twelve months ending on December 31, 2018,

$2,500,000 for the twelve months ending March 31, 2019, $3,500,000 for the twelve months ending June 30, 2019 and $5,000,000 for

the twelve months period ending on last day of each fiscal quarters thereafter.

We shall maintain a net debt to TTM EBITDA ratio

of no more than 8:1 for the twelve month period ending on December 31, 2018 until March 31, 2019 and shall maintain a net debt

to TTM EBITDA ratio of no more than 6:1 thereafter.

We shall maintain at all times a positive cash balance of $575,000 for the

three month period ending December 31, 2018, $750,000 for the three month period ending March 31, 2019 and $1,000,000 thereafter.

The default interest rate of 2.5% applies (from 13% to 15.5%) in accordance to our current agreement and will be in effect as

of October 1, 2018.

$2,500,000 for the twelve months ending March 31, 2019, $3,500,000 for the twelve months ending September 30, 2019 and

$5,000,000 for the twelve months period ending on last day of each fiscal quarters thereafter.

We shall maintain a net debt to

TTM EBITDA ratio of no more than 8:1 for the twelve month period ending on December 31, 2018 until March 31, 2019 and shall maintain

a net debt to TTM EBITDA ratio of no more than 6:1 thereafter.

We shall maintain at all times a positive cash balance of $575,000

for the three month period ending December 31, 2018, $750,000 for the three month period ending March 31, 2019 and $1,000,000

The default interest rate of 2.5% applies (from 13% to 15.5%) in accordance to our current agreement and will be in

effect from October 1, 2018 to June 30, 2019.

Effective June 30, 2019 the interest rate referred back to 10.5%.

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

The Company recognized amortization

of deferred financing costs of $34,594 and $72,962 during the three and six months ended June 30, 2019, respectively.

debt issuance cost as of June 30, 2019 amounted to $106,298.

Company recognized interest expense of $263,069 and paid $263,069 during the three months ended June 30, 2019 and $592,236 and

paid $542,930 during the six months ended June 30, 2019.

Accrued interest was $49,306 as of June 30, 2019.

The loan balance at

June 30, 2019 was $6,500,000.

of deferred financing costs of $30,820 and $103,782 during the three and nine months ended September 30, 2019, respectively.

debt issuance cost as of September 30, 2019 amounted to $75,478.

Company recognized interest expense of $166,833 and paid $166,833 during the three months ended September 30, 2019 and $759,069

and paid $709,763 during the nine months ended September 30, 2019.

Accrued interest was $49,306 as of September 30, 2019.

loan balance at September 30, 2019 was $6,000,000.

Stockholders’

1 unchanged sentence

stock with $0.00001 par value.

the six months ended June 30, 2019, the Company issued 26,391 shares of its common stock valued at $39,585 in full and final settlement

on the Per-fekt transaction.

of June 30, 2019 and December 31, 2018, there were 89,889,074 and 89,862,683, respectively, shares of the Company’s common

stock issued and outstanding.

the nine months ended September 30, 2019, the Company issued 26,391 shares of its common stock valued at $39,585 in full and final

settlement on the Perfekt transaction.

of September 30, 2019 and December 31, 2018, there were 89,889,074 and 89,862,683, respectively, shares of the Company’s

common stock issued and outstanding.

Commitments & Contingencies

2 unchanged sentences

no current legal matters that would have a material effect on the Company’s financial position or results of operations.

Company and Mr.

McCullough entered into an employment agreement on October 17, 2017 (the “Employment Agreement”) with

an initial term of 3 years.

The Company and Mr.

McCullough entered into an employment agreement on October 17, 2017 (the “Employment

Agreement”) with an initial term of 3 years.

In exchange for his service as President, Mr.

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

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

McCullough will be eligible for an annual bonus of up to twenty-five percent (25%) of his base salary.

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 Officer.

McCullough will also be eligible for additional bonus compensation

based on the Company’s achievement of certain annual earnings and retail sales goals established each year by the Company’s

Chief Executive Officer.

Subject to the Company’s achievement of an annual overall earnings goal and certain adjustments

in the event of future acquisitions by the Company, Mr.

McCullough will be eligible to receive five percent (5%) of all retail

sales by the Company in excess of the annual retail sales goal set by the Chief Executive Officer.

Company granted Mr.

McCullough an option to purchase 1,000,000 shares of the Company’s common stock, subject to the approval

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

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

on the first three anniversaries of Mr.

McCullough will receive an annual

base salary of $340,000.

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

of $37,500 paid on July 1, 2018.

McCullough will be eligible for an annual bonus of up to twenty-five percent (25%) of his

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 Officer.

McCullough will also be eligible for additional

bonus compensation based on the Company’s achievement of certain annual earnings and retail sales goals established each

year by the Company’s Chief Executive Officer.

Subject to the Company’s achievement of an annual overall earnings goal

and certain adjustments in the event of future acquisitions by the Company, Mr.

McCullough will be eligible to receive five percent

(5%) of all retail sales by the Company in excess of the annual retail sales goal set by the Chief Executive Officer.

The Company granted Mr.

McCullough an option to purchase 1,000,000 shares of the Company’s common stock

(the “Option Grant”).

The Option Grant vests in three (3) equal annual installments on the first three anniversaries

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

the six months ended June 30, 2019 the Company received a 60 day Proposition 65 letter that one of its products did not have California’s

prop 65 label.

The Company is in the process of finalizing the settlement of this case and should be notified on our about

August 15, 2019.

McCullough remains employed by the Company on each such

The Option Grant was granted under the Company’s 2014 Stock Incentive Plan pursuant to a stock grant agreement between

the Company and Mr.

the nine months ended September 30, 2019 the Company received a 60 day Proposition 65 letter that one of its products did not

have California’s Proposition 65 label.

The Company has settled the matter and made a one-time payment of

$85,000 in full satisfaction of the matter.

Stock Options

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

common stock issued to employees and consultants under a stock option plan at June 30, 2019:

stock option activity for the six months ended June 30, 2019 is as follows:

Weighted Average

common stock issued to employees and consultants under the Plan at September 30, 2019:

$ 0.25 - $0.70

stock option activity for the nine months ended September 30, 2019 is as follows:

Exercise Price

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Expired or canceled

Outstanding at June 30, 2019

compensation expense related to vested options was $38,679 and $84,212 during the three and six months ended June 30, 2019, respectively,

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 assumptions:

estimated fair value of Company’s common stock of $0.48-.050, risk-free interest

rate of 1.95-1.99%, volatility of 116-117%, expected lives of 10 years, and dividend yield of 0%.

Stock options outstanding as

of June 30, 2019, as disclosed in the above table, have an intrinsic value of $0.

As of June 30, 2019, unamortized stock-based

compensation costs related to options was $206,287, and will be recognized over a period of 1.33 years.

Outstanding at September 30, 2019

compensation expense related to vested options was $38,679 and $122,891 during the three and nine months ended September 30, 2019,

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 $0.48-0.50, risk-free

interest rate of 1.95-1.99%, volatility of 116-117%, expected lives of 10 years, and dividend yield of 0%.

Stock options outstanding

as of September 30, 2019, as disclosed in the above table, have an intrinsic value of $0.

As of September 30, 2019, unamortized

stock-based compensation costs related to options was $167,608, and will be recognized over a period of 1 year.

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

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

sales attributed to customers in the United States and foreign countries for the three months ended June 30, 2019 and 2018 were

June 30, 2019

June 30, 2018

sales attributed to customers in the United States and foreign countries for the three months ended September 30, 2019 and 2018

were as follows:

September 30, 2019

September 30, 2018

United States

Foreign countries

countries primarily consist of Australia and Canada.

Company’s net sales by product group for the three months ended June 30, 2019 and 2018 were as follows:

June 30, 2019

June 30, 2018

Company’s net sales by product group for the three months ended September 30, 2019 and 2018 were as follows:

September 30, 2019

September 30, 2018

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 June 30, 2019 and 2018 were as follows:

June 30, 2019

June 30, 2018

sales attributed to customers in the United States and foreign countries for the six months ended June 30, 2019 and 2018 were

June 30, 2019

June 30, 2018

Company’s net sales by major sales channel for the three months ended September 30, 2019 and 2018 were as follows:

September 30, 2019

September 30, 2018

sales attributed to customers in the United States and foreign countries for the nine months ended September 30, 2019 and 2018

were as follows:

September 30, 2019

September 30, 2018

United States

Foreign countries

countries primarily consist of Australia and Canada.

Company’s net sales by product group for the six months ended June 30, 2019 and 2018 were as follows:

June 30, 2019

June 30, 2018

Company’s net sales by product group for the nine months ended September 30, 2019 and 2018 were as follows:

September 30, 2019

September 30, 2018

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 six months ended June 30, 2019 and 2018 were as follows:

June 30, 2019

June 30, 2018

assets (net) attributable to operations in the United States and foreign countries as of June 30, 2019 and December 31, 2018 were

June 30, 2019

Company’s net sales by major sales channel for the nine months ended September 30, 2019 and 2018 were as follows:

September 30, 2019

September 30, 2018

assets (net) attributable to operations in the United States and foreign countries as of September 30, 2019 and December 31, 2018

were as follows:

September 30, 2019

December 31, 2018

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Foreign countries

tax expense was $40,456 and $34,548 for the three and six months ended June 30, 2019, respectively, compared to $222,389 and $383,002,

respectively for the same periods in 2018.

The current provision is attributable to Australian operations and the current tax

rate in effect in that country.

tax (benefit) expense was ($57,421) and ($22,873) for the three and nine months ended September 30, 2019, respectively, compared

to ($126,190) and $256,812, respectively, for the same periods in 2018.

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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of the TCJA and guidance currently available as of this filing.

But is reviewing the TCJA’s potential ramifications.

The Company is reviewing the TCJA’s potential

ramifications.

total deferred tax asset is calculated by multiplying a domestic (US) 21% marginal tax rate by the cumulative net operating loss

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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 open.

so such returns and liability remain open, but the Company does not believe such amounts are material

Subsequent Events

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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 and six months

ended June 30, 2019 and 2018, 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

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

ended September 30, 2019 and 2018, 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,

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those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the

caption, “Cautionary Note Regarding Forward-Looking Statements”

caption, “Cautionary Notice Regarding Forward-Looking Statements”

and the “Business”

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

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

Key factors affecting

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

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

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For the three

June 30, 2019

September 30, 2019

Net income after tax

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Stock-based compensation

One-time expenses

Loss on foreign currency translation and transaction

One-time expense

Adjusted EBITDA

June 30, 2019

Net income after tax

September 30, 2019

Net income after taxes

Interest income

1 unchanged sentence

Stock-based compensation

One-time expenses

Loss on foreign currency translation and transaction

One-time Expense

Adjusted EBITDA

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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 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, 2019 and 2018

the three months ended June 30, 2019, we had revenue of $6,336,721 from sales of our products, as compared to revenue of $9,728,712

Adjusted EBITDA represents EBITDA, further adjusted to exclude the impact of certain expenses and transactions

that we believe are not representative of our core operating results, including stock-based compensation;

one-time expenses;

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.

of Operations for the Three months Ended September 30, 2019 and 2018

the three months ended September 30, 2019, we had revenue of $7,364,546 from sales of our products, as compared to revenue of

$9,190,377 for the same period in 2018.

We had a decrease in Nutraceuticals in 2019 as compared to 2018 due to not overspending on marketing.

We had a decrease in Nutraceuticals in 2019 as compared to 2018 due to not overspending

on marketing.

We had a decrease in Over the Counter in 2019 as compared to 2018 due to an out of stock product.

We had a decrease in Consumer

Goods in 2019 as compared to 2018 due to a shift in business focus.

We had a decrease in Cosmeceuticals in 2019 as compared to

2018 due to a shift in business focus.

We had a decrease in Consumer Goods in 2019 as compared to 2018 due to a shift in business focus.

We had a decrease in Cosmeceuticals

in 2019 as compared to 2018 due to a shift in business focus.

The revenue is comprised of the following categories:

June 30, 2019

June 30, 2018

September 30, 2019

September 30, 2018

Nutraceuticals

2 unchanged sentences

Cosmeceuticals

the three months ended June 30, 2019, our cost of revenue was $1,607,587.

Our cost of revenue for the three months ended June

30, 2018, was $2,744,760.

We had a decrease in Nutraceuticals in 2019 as compared to 2018 due to lower sales and a different mix

of products being sold.

the three months ended September 30, 2019, our cost of revenue was $2,490,444.

Our cost of revenue for the three months ended

September 30, 2018, was $2,945,389.

We had a decrease in Nutraceuticals in 2019 as compared to 2018 due to lower sales and a different

mix of products being sold.

We had a decrease in Over the Counter in 2019 as compared to 2018 due to an out of stock product.

a decrease in Consumer Goods in 2019 as compared to 2018 due to a decrease in revenue.

We had a decrease in Cosmeceuticals in

2019 as compared to 2018 due to a decrease in revenue.

We had a decrease in Consumer Goods in 2019 as compared to 2018 due to a decrease in revenue.

We had a decrease in Cosmeceuticals

in 2019 as compared to 2018 due to a decrease in revenue.

The cost of revenue is comprised of the following categories:

June 30, 2019

June 30, 2018

September 30, 2019

September 30, 2018

Nutraceuticals

2 unchanged sentences

Cosmeceuticals

profit was $4,729,434, or 75% for the three months ended June 30, 2019, as compared to gross profit of $6,983,952, or 72% for

the same period in 2018, a decrease of $2,254,818, or 32%.

The increase in gross profit margin is directly related to the mix

of products being sold.

profit was $4,874,102, or 66% for the three months ended September 30, 2019, as compared to gross profit of $6,244,988, or 68%

for the same period in 2018, a decrease of $1,370,886, or 22%.

The decrease in gross profit margin is directly related to the

mix of products being sold.

and Marketing Expenses

the three months ended June 30, 2019, our selling and marketing expenses were $2,647,379 as compared to $5,148,656 for the same

period in 2018, which is primarily due to decreased personnel in our advertising and marketing departments and decreased advertising.

the three months ended September 30, 2019, our selling and marketing expenses were $2,771,884 as compared to $3,960,131 for the

same period in 2018, which is primarily due to decreased personnel in our advertising and marketing departments and decreased

and Administrative Expenses

the three months ended June 30, 2019, our general and administrative expenses were $1,072,705.

For the three months ended June

30, 2018, our general and administrative expenses were $1,475,289.

The decrease is primarily due to better management of operating

the three months ended September 30, 2019, our general and administrative expenses were $1,437,624.

For the three months ended

September 30, 2018, our general and administrative expenses were $1,189,681.

The increase is primarily due to one-time expenses

and listing fees.

and Amortization Expenses

the three months ended June 30, 2019, our depreciation and amortization expenses were $303,596 as compared to $455,951 for the

same period in 2018.

The decrease is due to impairment of intangible assets in 2018.

the three months ended September 30, 2019, our depreciation and amortization expenses were $301,388 as compared to $455,579 for

the same period in 2018.

The decrease is due to the impairment of assets owned at the end of 2018.

Income and Expenses

the three months ended June 30, 2019 and 2018 we had other (income) and expense items of the following:

June 30, 2019

June 30, 2018

the three months ended September 30, 2019 and 2018 we had other (income) and expense items of the following:

September 30, 2019

September 30, 2018

Interest income

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Total other expense

the three months ended June 30, 2019, we had interest expense of $284,285 as compared to $305,687 for the same period in 2018.

The decrease was due to the paying down of debt.

Income (Loss)

the three months ended June 30, 2019, our net income was $318,462 as compared to a net loss of $783,393 for the same period in

of Operations for the Six Months Ended June 30, 2019 and 2018

the six months ended June 30, 2019, we had revenue of $15,805,676 from sales of our products, as compared to revenue of $19,429,573

the three months ended September 30, 2019, we had interest expense of $180,759 as compared to $288,479 for the same period in

The decrease was due to decrease in the interest rate of one of the loans from 13% to 10.5% offset by repayment of

certain other indebtedness.

the three months ended September 30, 2019, our net income was $107,864 as compared to a net income of $345,590 for the same period

of Operations for the Nine months Ended September 30, 2019 and 2018

the nine months ended September 30, 2019, we had revenue of $23,170,222 from sales of our products, as compared to revenue of

$28,619,950 for the same period in 2018.

We had a decrease in Nutraceuticals in 2019 as compared to 2018 due to not overspending on marketing.

We had a decrease in Nutraceuticals in 2019 as compared to 2018 due to not overspending

on marketing.

We had a decrease in Over the Counter in 2019 as compared to 2018 due to an out of stock product.

We had a decrease in Consumer

Goods in 2019 as compared to 2018 due to a shift in business focus.

We had a decrease in Cosmeceuticals in 2019 as compared to

2018 due to a shift in business focus.

We had a decrease

in Consumer Goods in 2019 as compared to 2018 due to a shift in business focus.

We had an decrease in Cosmeceuticals in 2019 as

compared to 2018 due to a shift in business focus.

The revenue is comprised of the following categories:

June 30, 2019

June 30, 2018

September 30, 2019

September 30, 2018

Nutraceuticals

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Cosmeceuticals

the six months ended June 30, 2019, our cost of revenue was $4,148,037.

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

the nine months ended September 30, 2019, our cost of revenue was $6,638,481.

Our cost of revenue for the nine months ended September

30, 2018, was $8,500,057.

We had a decrease in Nutraceuticals in 2019 as compared to 2018 due to lower sales and a different mix of

products being sold.

We had a decrease in Nutraceuticals in 2019 as compared to 2018 due to lower sales and a different mix

of products being sold.

We had a decrease in Over the Counter in 2019 as compared to 2018 due to an out of stock product.

3 unchanged sentences

The cost of revenue is comprised of the following categories:

June 30, 2019

June 30, 2018

September 30, 2019

September 30, 2018

Nutraceuticals

2 unchanged sentences

Cosmeceuticals

profit was $11,657,639, or 74% for the six months ended June 30, 2019, as compared to gross profit of $13,874,905, or 71% for

the same period in 2018, a decrease of $2,217,266, or 16%.

The increase in gross profit margin is directly related to the mix

of products being sold.

profit was $16,531,741, or 71% for the nine months ended September 30, 2019, as compared to gross profit of $20,119,893, or 70%

for the same period in 2018, a decrease of $3,588,152, or 18%.

The increase in gross profit margin is directly related to the

mix of products being sold.

and Marketing Expenses

the six months ended June 30, 2019, our selling and marketing expenses were $5,959,245 as compared to $9,401,359 for the same

period in 2018, which is primarily due to decreased personnel in our advertising and marketing departments and decreased advertising.

the nine months ended September 30, 2019, our selling and marketing expenses were $8,731,129 as compared to $13,361,490 for the

same period in 2018, which is primarily due to decreased personnel in our advertising and marketing departments and decreased

and Administrative Expenses

the six months ended June 30, 2019, our general and administrative expenses were $2,559,813.

For the six months ended June 30,

the nine months ended September 30, 2019, our general and administrative expenses were $3,997,437.

For the nine months ended September

30, 2018, our general and administrative expenses were $4,425,826.

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and Amortization Expenses

the six months ended June 30, 2019, our depreciation and amortization expenses were $609,871 as compared to $907,437 for the same

period in 2018.

The decrease is due to impairment of intangible assets in 2018.

the nine months ended September 30, 2019, our depreciation and amortization expenses were $911,259 as compared to $1,363,016 for

the same period in 2018.

The decrease is due to the impairment of intangible assets in 2018.

Income and Expenses

the six months ended June 30, 2019 and 2018 we had other (income) and expense items of the following:

June 30, 2019

June 30, 2018

the nine months ended September 30, 2019 and 2018 we had other (income) and expense items of the following:

September 30, 2019

September 30, 2018

Interest income

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Total other expense

the six months ended June 30, 2019, we had interest expense of $624,413 as compared to $575,863 for the same period in 2018.

increase was due to increase in the interest rate of Loan 3 from 13% to 15.5%.

the nine months ended September 30, 2019, we had interest expense of $805,172 as compared to $864,342 for the same period in 2018.

The decrease was due to decrease in the interest rate of one of our loans from 13% to 10% offset by repayment of certain

other indebtedness.

Income (Loss)

the six months ended June 30, 2019, our net income was $1,785,748 as compared to a net loss of $838,886 for the same period in

the nine months ended September 30, 2019, our net income was $1,893,613 as compared to a net loss of $(493,296) for the same period

and Capital Resources

of June 30, 2019, we had $1,064,301 cash on hand and a $46,078 working capital deficit.

In addition, we also had restricted cash

of $136,966 which is held for credit card collateral.

months ended June 30, 2019 and 2018

of September 30, 2019, we had $1,389,311 cash on hand and a $3,980,990 working capital deficit, which includes a balloon payment

on our loan of $4,500,000.

In addition, we also had restricted cash of $100,000 which is held for credit card collateral.

months ended September 30, 2019 and 2018

Cash Provided by Operating Activities

cash provided by operating activities for the six months ended June 30, 2019 was $1,776,352, compared to $712,546 for the same

period in 2018.

This increase in net cash provided by operating activities for the six months ended June 30, 2019 was primarily

attributable to a decrease in accounts payable and accrued expenses.

cash provided by operating activities for the nine months ended September 30, 2019 was $2,529,885, compared to $2,043,765 for

the same period in 2018.

This increase in net cash provided by operating activities for the nine months ended September 30, 2019

was primarily attributable to having net income, a decrease in accounts payable and accrued expenses and fewer inventory purchases.

$2,529,885 consists of our net income of $1,893,613 adjusted by:

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Remeasurement loss on translation of foreign subsidiary

Foreign currency transaction loss

Foreign currency transaction gain

Decrease in accounts receivable

4 unchanged sentences

Cash Used in Investing Activities

cash used in investing activities for the six months ended June 30, 2019 was $0, compared to net cash used of $194,300 for the

same period in 2018.

The decrease in cash used in investing activities during 2019 is attributable to the purchase of assets in

cash used in investing activities for the nine months ended September 30, 2019 was $0, compared to net cash used of $194,300 for

the same period in 2018.

The decrease in cash used in investing activities during 2019 is attributable to the purchase of assets

Cash Used in Financing Activities

cash used in financing activities for the six months ended June 30, 2019 was $1,025,000, compared to net cash used of $1,712,500

cash used in financing activities for the nine months ended September 30, 2019 was $1,537,500, compared to net cash used of $2,287,500

for the same period in 2018.

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

What changed 10-Q

Item 1. Financial Statements