What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2020-04-29 compared with 2019-03-29 · 500 added, 611 removed, 645 unchanged (63% of the section changed)

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FINANCIAL STATEMENTS

of Independent Registered Public Accounting Firm

Balance Sheets

Statements of Operations and Comprehensive Income (Loss)

Statement of Changes in Stockholders’

Statements of Cash Flows

to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Statements of Operations and Comprehensive Loss

Statements of Changes in Stockholders’

(Deficit) Equity

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

of Independent Registered Public Accounting Firm

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and subsidiaries (the Company) as of December 31,

2018 and 2017, and the related statements of operations, comprehensive income (loss), stockholders’

equity, and cash flows

for each of the years in the two year period ended December 31, 2018, and the related notes (collectively referred to as the consolidated

financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial

position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the

years in the two year period ended December 31, 2018, in conformity with accounting principles generally accepted in the United

States of America.

2019 and 2018, and the related statements of operations, comprehensive loss, stockholders’

(deficit) equity, and

cash flows for each of the years in the two year period ended December 31, 2019, and the related notes (collectively referred

to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material

respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash

flows for each of the years in the two year period ended December 31, 2019, in conformity with accounting principles generally

accepted in the United States of America.

consolidated financial statements are the responsibility of the Company’s management.

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have served as the Company’s auditor since 2014.

Henderson, NV

Balance Sheets

and cash equivalents

receivable, net

Income taxes receivable

December 31, 2019

December 31, 2018

Current Assets

and Stockholders’

payable and accrued liabilities

for income taxes payable

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

Cash and cash equivalents

Restricted cash

Accounts receivable, net (including related party receivable of $277,432 and $0, respectively)

Prepaid expenses

Income taxes receivable

Inventory, net

Total Current Assets

Fixed assets, net

Intangible assets, net

Liabilities and Stockholders’

(Deficit) Equity

Current Liabilities:

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

Accounts payable and accrued liabilities (including related party payable of $956,438 and

$1,775,617, respectively)

Deferred revenue

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

Total Current Liabilities

Long-term Liabilities:

and contingencies

Notes payable, net of debt discount and debt issuance cost, related parties

Total long-term liabilities

Total Liabilities

Commitments and contingencies

Stockholders’

stock, $0.00001 par value;

(Deficit) Equity:

Common stock, $0.00001 par value;

300,000,000 shares authorized;

89,862,683 and 89,862,683, shares issued and outstanding, respectively

paid in capital

other comprehensive income (loss)

89,889,074 and 89,862,683, shares

issued and outstanding, respectively

Additional paid in capital

Accumulated other comprehensive income

Accumulated deficit

(24,234,569 )

stockholders’

Liabilities and Stockholders’

(15,027,122 )

Total stockholders’

(deficit) equity

Total Liabilities and Stockholders’

accompanying notes are an integral part of these consolidated financial statements

Statements of Operations and Comprehensive Income (Loss)

and marketing

and administrative

of intangible assets

and amortization

Consolidated Statements of Operations and Comprehensive

For the year Ended

For the year ended

December 31, 2019

December 31, 2018

Cost of Sales (including related party purchases of $4,847,626

and $4,392,245, respectively)

Operating expenses

income from operations

(income) expenses

Remeasurement

loss (gain) on translation of foreign subsidiary

of debt issuance cost

on the sale of assets

other expenses

(loss) income before income taxes

tax benefit (expense)

(loss) income after tax

$ (6,160,690 )

(loss) income per share –

Selling and marketing

General and administrative

Reserve for bad debts

Impairment of intangible assets

Depreciation and amortization

Total operating expenses

Loss from operations

Other (income) expenses

Interest income

Interest expense

Remeasurement loss on translation of foreign subsidiary

Amortization of debt issuance cost

Total other expenses

Net loss before income taxes

Income tax (expense) benefit

Net loss after tax

Net loss per share –

basic and diluted

Weighted average

common shares outstanding

Comprehensive

Weighted average common shares outstanding

Basic and Diluted

Comprehensive loss:

Foreign currency translation adjustment

Comprehensive loss

accompanying notes are an integral part of these consolidated financial statements

Consolidated Statements of Stockholders’

(Deficit) Equity

Additional Paid in

Accumulated Other Comprehensive

Total Stockholders’

Income (Loss)

(loss) income

$ (6,160,690 )

currency translation adjustment

Comprehensive

(loss) income

Balance as of December 31, 2017

$ (8,866,432 )

accompanying notes are an integral part of these consolidated financial statements

Statement of Stockholders’

Other Comprehensive

Stockholders’

as of December 31, 2016

Fair value of vested stock options

Foreign currency translation gain

Balance as of December 31, 2018

$ (15,027,122 )

stock issued for acquisition of Per-fekt Beauty

stock issued as part of employment agreement

of common stock

stock to be issued now issued

value of vested stock options

currency translation loss

as of December 31, 2017

Fair value of vested stock options

Common stock issued for Per-fekt settlement

Foreign currency translation loss

Balance as of December 31, 2019

$ (24,234,569 )

value of vested stock options

currency translation gain

as of December 31, 2018

$ (5,203,351 )

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Statements of Cash Flows

Flows from Operating Activities

(loss) income

$ (6,160,690 )

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

of debt issuance cost

and amortization

based compensation expense

of intangible assets

currency transaction loss

Remeasurement

loss (gain) on translation of foreign subsidiary

cash implied interest

on sale of assets

in operating assets and liabilities:

expense and other current assets

payable and accrued liabilities

cash provided by (used in) operating activities

Flows from Investing Activities

for acquisition of fixed assets

received from sale of assets

for brand development fees

for domain name

cash used in investing activities

Flows from Financing Activities

from notes payable

of notes payable

of debt issuance cost

from sale of common stock

cash (used in) provided by financing activities

of exchange rate on cash, cash equivalents and restricted cash

decrease in cash, cash equivalents and restricted cash

Cash Equivalents and restricted cash, beginning of year

For the year Ended

For the year ended

December 31, 2019

December 31, 2018

Cash Flows from Operating Activities

Adjustments to reconcile net loss to net cash provided by operating activities:

Amortization of debt issuance cost

Depreciation and amortization

Stock based compensation expense

Impairment of intangible assets

Foreign currency transaction loss

Remeasurement loss on translation of foreign subsidiary

Non cash implied interest

Write-off of inventory

Changes in operating assets and liabilities:

Accounts receivable

Accounts receivable, related party

Prepaid expenses

Income taxes receivable

Deferred revenue

Accounts payable and accrued liabilities

Accounts payable, related party

Net cash provided by operating activities

Cash Flows from Investing Activities

Payments for acquisition of fixed assets

Payments for brand development fees

Payments for domain name

Net cash used in investing activities

Cash Flows from Financing Activities

Advances from related party

Repayments of advances to related party

Repayment of notes payable

Net cash used in financing activities

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

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash, Cash Equivalents and restricted cash, beginning of year

accompanying notes are an integral part of these consolidated financial statements

Cash Equivalents and restricted cash ,

Cash Equivalents and restricted cash, end of year

Disclosure of Cash Flow Information:

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Disclosure of Non-cash Investing and Financing Activities:

stock to be issued now issued

stock issued for the acquisition of assets of Per-fekt

accompanying notes are an integral part of these consolidated financial statements

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

is the sole owner of six subsidiaries:

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

Vaunt Corp., and The Queen Pegasus Corp., and the results have been consolidated in these statements.

January 1, 2019 the Company has merged the U.S.

Subsidiaries (Neuragen Corp., Breakthrough Products Inc., Sneaky Vaunt Corp.,

and The Queen Pegasus Corp.) into the parent company.

is the sole owner of two subsidiaries:

NomadChoice Pty Ltd.

And Synergy CHC Inc.

and the results have been consolidated in these

Summary of Significant Accounting Policies

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At December 31, 2019 and 2018 significant estimates included are assumptions about collection of accounts receivable, current

income taxes, deferred income taxes valuation allowance, useful life of fixed and intangible assets, impairment analysis of

goodwill and intangible assets, estimates used in the fair value calculation of stock based compensation, assumptions used in

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

income taxes, deferred income taxes valuation allowance, useful life of fixed and intangible assets, impairment analysis of goodwill

and intangible assets, estimates used in the fair value calculation of stock based compensation, assumptions used in Black-Scholes-Merton,

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

The results of any

changes in accounting estimates are reflected in the financial statements in the period in which the changes become evident.

and assumptions are reviewed periodically, and the effects of revisions are reflected in the period that they are determined to

be necessary.

Reclassification

amounts in prior periods have been reclassified to conform to current period presentation.

These reclassifications had no effect

on the previously reported net loss.

and Cash Equivalents

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cash, cash equivalents, and restricted cash shown in the statement of cash flows

included in restricted cash represent amounts held for credit card collateral.

included in restricted cash represent amount held for credit card collateral.

Capitalization

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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.

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

As of December 31, 2017, our

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

We evaluate the recoverability of intangible

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

that impairment exists.

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

as part of 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.

Intangible assets are amortized

on a straight line basis over the useful lives.

During the year ended December 31, 2018, the Company fully impaired intangible

assets related to Perfekt and Cocowhite and charged to operations impairment loss of $60,000.

During the year ended December

31, 2018, the Company fully impaired intangible assets related to Perfekt and Cocowhite and charged to operations impairment loss

31, 2019, the Company fully impaired intellectual property related to Focus Factor and charged to operations impairment loss of

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

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is not recoverable when compared to undiscounted cash flows expected to result from the use and eventual disposition of the asset.

of impairment include significant underperformance relative to historical or projected future operating results, significant changes

in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry

or economic trends.

When indications of impairment arise for a particular asset or group of assets, we assess the future recoverability

of the carrying value of the asset (or asset group) based on an undiscounted cash flow analysis.

If carrying value exceeds projected,

net, undiscounted cash flows, an additional analysis is performed to determine the fair value of the asset (or asset group), typically

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

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

However, as of December 31,

Indicators of impairment include significant

underperformance relative to historical or projected future operating results, significant changes in our use of the assets or

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

indications of impairment arise for a particular asset or group of assets, we assess the future recoverability of the carrying

value of the asset (or asset group) based on an undiscounted cash flow analysis.

If carrying value exceeds projected, net, undiscounted

cash flows, an additional analysis is performed to determine the fair value of the asset (or asset group), typically a discounted

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

As of December 31,

2018 our review of intangible assets related to two of our subsidiaries did indicate that the carrying amount of the asset may

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to operations impairment loss of $864,067.

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

Under that method, assets and liabilities of the business

acquired are recorded at their estimated fair values as of the date of the acquisition, with any excess of the cost of the acquisition

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

As of December 31, 2018,

and 2017, our qualitative analysis of goodwill did not indicate any impairment.

During the year ended December 31, 2019, the Company fully impaired intangible

assets and charged to operations impairment loss of $471,897.

An asset purchase is accounted for under

the purchase method of accounting.

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

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

the net tangible and intangible assets acquired recorded as goodwill.

As of December 31, 2018 our qualitative analysis of goodwill

did not indicate any impairment.

As of December 31, 2019 our qualitative analysis of goodwill indicated potential impairment,

thus the Company chose to fully impair goodwill and charged to operations impairment loss of $7,793,240.

of ASU 2014-09, Revenue from Contracts with Customers

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if stock is damaged in transit, discounts are only offered with specific promotions and orders will be refilled if lost in transit.

The Company recognizes revenue for its digital products in the month the download by the customer occurs.

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

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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.

As of both December 31, 2018, and 2017, allowance for doubtful accounts was $0.

Accounts receivable are generally unsecured.

The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management’s

evaluation of collectability.

Accounts are written off after all reasonable collection efforts have been exhausted and management

concludes that likelihood of collection is remote.

Any future recoveries are applied against the allowance for doubtful accounts.

As of December 31, 2019 and 2018, allowance for doubtful accounts was $283,971 and $0, respectively.

Company expenses marketing, promotions and advertising costs as incurred.

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As of December 31, 2019, and 2018, options to purchase 6,166,667 and 7,166,667 shares of common stock, respectively, were outstanding.

As of December 31, 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 years ending December 31, 2018, and 2017:

the year ending

(loss) income after tax

The following is a reconciliation of the

number of shares used in the calculation of basic and diluted loss per share for the years ending December 31, 2019, and

For the year ending

December 31, 2019

Net loss after tax

$ (9,207,447 )

Weighted average

common shares outstanding

shares from the assumed exercise of dilutive stock options

shares from the assumed exercise of dilutive stock warrants

potential common shares

earnings per share:

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

due to the respective exercise prices being greater than the market price of the Company’s common stock on the dates shown:

to purchase common stock

$ (6,160,690 )

Weighted average common shares outstanding

Net loss per share:

Value Measurements

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

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

505-50, “Equity –

Based Payments to Non-Employees.”

Measurement of share-based payment transactions with non-employees

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

(a) the goods or services received;

or (b) the equity instruments

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

completion date.

Currency Translation

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

The Company’s

foreign subsidiary maintains its records using local currency (Australian Dollar –

The Company’s foreign subsidiary maintains its records using local currency (Australian Dollar –

“AUD”).

assets and liabilities of the foreign subsidiary were translated into U.S.

Dollars at quarter end exchange rates, non-monetary

assets and liabilities of the foreign subsidiary were translated into U.S.

All monetary assets and liabilities of the foreign subsidiary were translated into U.S.

Dollars at period end exchange rates,

non-monetary assets and liabilities of the foreign subsidiary were translated into U.S.

Dollars at transaction day exchange rates.

expense items related to non-monetary items were translated at exchange rates prevailing during the transaction date and other

incomes and expenses were translated using average exchange rate for the period.

The resulting translation adjustments, net of

income taxes, were recorded in statements of operations as Remeasurement gain or loss on translation of foreign subsidiary.

Income and expense items related to non-monetary items were translated at exchange rates prevailing during the transaction date

and other incomes and expenses were translated using average exchange rate for the period.

The resulting translation adjustments,

net of income taxes, were recorded in statements of operations as Remeasurement gain or loss on translation of foreign subsidiary.

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

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

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

including buying and transportation costs.

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

buying and transportation costs and the hosting of our online Application.

Issuance Costs

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to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.

All transactions

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

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

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Company considered the following:

Net loss of $6,160,690 for the year ended December 31, 2018.

At December 31, 2018, the Company had an accumulated deficit of $15,027,122.

At December 31, 2018, the Company had working capital deficit of $1,470,837.

Revenue decline in 2018 of $1,771,540.

● At December 31, 2019, the Company

had an accumulated deficit of $24,234,569.

● At December 31, 2019, the Company

had working capital deficit of $5,099,969.

● Revenue declined in 2019 by $4,466,949.

● The Company had net loss of $9,207,447

in 2019 as opposed to a net loss of $6,160,690 in 2018.

● The Company obtained waiver against

not meeting financial covenants related to loans payable (maintaining minimum cash balance, net debt to EBITDA ratio and minimum

● The Company is required to make repayment of loans payable of $500,000 and

accrued interest during the three months ended March 31, 2020.

not meeting financial covenants related to loans payable (minimum EBITDA).

● The Company is required to make repayment of loans payable

of $500,000 and accrued interest during the three months ended March 31, 2020

conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern relate to the

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In 2019, the Company generated $2.9 million of cash from operating activities.

In 2019, the Company has repaid $500,000 of the loan payable.

● Working capital deficit of $1,470,837

at December 31, 2018, includes loans payables to related party of $1,963,887, royalty payable to related party of $304,434 and

deferred revenue of $49,709.

Revenue declines were largely the result of 2017 being launch year of two new brands and 2018 being normalized revenue of those

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

Management concluded that above factors

alleviates 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.

Working capital deficit of $5,099,969 at December 31, 2019, includes loans payables to related party of $5,465,113, royalty

payable to related party of $94,778 and deferred revenue of $7,887.

Revenue declines were largely the result of not overspending in marketing in 2019.

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

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

Company will take the following actions if it starts to trend unfavorably to its internal profitability and cash flow projections,

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 loans financing for future mergers and acquisition, which may be impacted

by the recent outbreak of COVID-19.

Implement additional restructuring and cost reductions.

Raise additional capital through a private placement.

At March 27, 2019 and December 31, 2018, the Company had $1,372,431 and $459,736, respectively in cash and

cash equivalents.

Raise additional capital through a private placement, which may be impacted by the recent outbreak of COVID-19.

At April 13, 2020 and December

31, 2019, the Company had $949,812 and $1,324,514, respectively in cash and cash equivalents.

Accounting Pronouncements

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Early adoption is permitted.

The adoption of ASU 2018-07 is not

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

Accounting Standards Update adds SEC paragraphs pursuant to the SEC Staff Accounting Bulletin No.

118, which expresses the view

of the staff regarding application of Topic 740, Income Taxes, in the reporting period that includes December 22, 2017 - the date

on which the Tax Cuts and Jobs Act (H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent

Resolution on the Budget for Fiscal Year 2018) was signed into law.

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

on our consolidated financial statements.

December 22, 2017, the U.S.

federal government enacted a tax bill, H.R.1, An Act to Provide for Reconciliation Pursuant to Titles

II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (Tax Cuts and Jobs Act of 2017).

Stakeholders raised

a narrow-scope financial reporting issue that arose as a consequence of the Tax Cuts and Jobs Act of 2017.

The amendments in this

Update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting

from the Tax Cuts and Jobs Act of 2017.

The amendments in this Update affect any entity that is required to apply the provisions

of Topic 220, Income Statement-Reporting Comprehensive Income, and has items of other comprehensive income for which the related

tax effects are presented in other comprehensive income as required by GAAP.

The amendments in this update is effective for all

entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.

Early adoption of

the amendments in this Update is permitted, including adoption in any interim period, (1) for public business entities for reporting

periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which

financial statements have not yet been made available for issuance.

The amendments in this Update should be applied either in

the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S.

federal corporate

income tax rate in the Tax Cuts and Jobs Act is recognized.

Accounting Standards Update is the final version of Proposed Accounting Standards Update 2018-210—Income Statement—Reporting

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

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

land easements that were not previously accounted for as leases under Topic 840, Leases.

An entity that elects this practical

expedient should evaluate new or modified land easements under Topic 842 beginning at the date that the entity adopts Topic 842.

An entity that does not elect this practical expedient should evaluate all existing or expired land easements in connection with

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

We are currently

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

September 2017, the FASB issued 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,

We are currently evaluating the impact of adopting 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

the guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment

amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require

an entity to apply modification accounting in Topic 718.

The amendment is Effective for all entities for annual periods, and interim

periods within those annual periods, beginning after December 15, 2017.

Early adoption is permitted, including adoption in any

interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued

and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance.

Update is the final version of Proposed Accounting Standards Update 2016-360—Compensation—Stock Compensation (Topic

718)—Scope of Modification Accounting, which has been deleted.

Adoption of this

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

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.

amendments eliminate Step 2 from the goodwill impairment test.

The annual, or interim, goodwill impairment test is performed by

comparing the fair value of a reporting unit with its carrying amount.

An impairment charge should be recognized for the amount

by which the carrying amount exceeds the reporting unit’s fair value;

however, the loss recognized should not exceed the

total amount of goodwill allocated to that reporting unit.

In addition, income tax effects from any tax deductible goodwill on

the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable.

amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative

assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test.

An entity still has the

option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.

Early adoption is permitted for interim or annual goodwill

impairment tests performed on testing dates after January 1, 2017.

We are currently evaluating the impact of adopting ASU 2017-04

on our consolidated financial statements.

January 2017, the FASB issued ASU No.

2017-01, Business Combinations (Topic 805):

Clarifying the Definition of a Business.

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

is not a business.

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

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

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

however, early adoption is permitted with prospective application

to any business development transaction.

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

financial statements.

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 fiscal years beginning after December 15, 2019.

Early adoption is permitted.

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

December 31, 2017 has been reclassified to reflect this change.

Adoption of this new standard did

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

ASU 2017 - 04, Intangibles - Goodwill

and other (Topic 350)

In January 2017,

the FASB issued Accounting Standards Update ("ASU") 2017-04 Intangibles - Goodwill and other, which simplifies the test

for goodwill impairment.

This Update eliminates Step 2 from the goodwill impairment test.

In computing the implied fair value

of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its

assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining

the fair value of the assets acquired and liabilities assumed in a business combination.

Instead an entity should perform its

annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.

should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, however

the loss recognized should not exceed the total amount of goodwill allocated to the reporting unit.

The amendments in this Update

are effective for the Company for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

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

The Company is in the process of evaluating the impact of

this standard update on its consolidated financial statements and related disclosures.

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

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Early adoption is permitted.

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

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

June 2016, the FASB issued ASU No.

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on its consolidated financial statements.

March 2016, the FASB issued ASU No.

2016-09, Compensation –

Stock Compensation, or ASU No.

The areas for simplification

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

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

For public entities,

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

annual periods.

Early adoption is permitted in any interim or annual period.

If an entity early adopts the amendments in an interim

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

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

Amendments related to the timing of when excess

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

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

in which the guidance is adopted.

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

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

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

expected term should be applied prospectively.

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

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

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

February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) and subsequent amendments to the initial guidance:

ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01 (collectively Topic 842) to increase transparency and comparability of lease

recognition and disclosure.

The update requires lessees to recognize lease contracts with a term greater than one year on the

balance sheet, while recognizing expenses on the income statement in a manner similar to current guidance.

For lessors, the update

makes targeted changes to the classification criteria and the lessor accounting model to align the guidance with the new lessee

model and revenue guidance.

ASU 2016-02, ASU 2017-13, ASU 2018-10, ASU 2018-11 and ASU 2018-20 are effective for annual reporting

periods beginning after December 15, 2018, and interim periods within those annual periods, with early adoption permitted.

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

ASU 2019-01 is effective

for annual reporting periods beginning after December 15, 2019.

The Company is currently assessing the potential impact of ASU

2019-01 on its consolidated financial statements.

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

GAAP on the classification and measurement of financial

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.

November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes.

Currently deferred taxes for each

tax jurisdiction are presented as a net current asset or liability and net noncurrent asset or liability on the balance sheet.

To simplify the presentation, the new guidance requires that deferred tax liabilities and assets for all jurisdictions along with

any related valuation allowances be classified as noncurrent in a classified statement of financial position.

This guidance is

effective for interim and annual reporting periods beginning after December 15, 2016, and early adoption is permitted.

adopted this guidance in the fourth quarter of the year ended December 31, 2015 on a retrospective basis.

The adoption of this

guidance did not have a material impact on the Company’s consolidated financial statements, and did not have any effect

on prior periods due to the full valuation allowance against the Company’s net deferred tax assets.

September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement –Period Adjustments.

the accounting for measurement-period adjustments relate to business combinations.

Currently, an acquiring entity is required

to retrospectively adjust the balance sheet amounts of the acquiree recognized at the acquisition date with a corresponding adjustment

to goodwill as a result of changes made to the balance sheet amounts of the acquiree.

The measurement period is the period after

the acquisition date during which the acquirer may adjust the balance sheet amounts recognized for a business combination (generally

up to one year from the date of acquisition).

The changes eliminate the requirement to make such retrospective adjustments, and,

instead require the acquiring entity to record these adjustments in the reporting period they are determined.

In February 2016, the FASB issued ASU 201602,

“Leases”

(“ASU 201602”).

This guidance, as amended by subsequent ASU’s on the topic, improves transparency

and comparability among companies by recognizing right of use (ROU) assets and lease liabilities on the balance sheet and by disclosing

key information about leasing arrangements.

2016-02 is effective for public business entities for annual periods, including

interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted.

We adopted ASU

2016-02 in our fiscal year beginning January 1, 2019 and used the optional transition method provided by the FASB in ASU No.

2018-10, “Codification Improvements to Topic 842, Leases”

2018-11, “Leases (Topic 842):

Improvements”, with no restatement of comparative periods.

The Company notes there was no impact on adoption as the leases

entered into by the Company were for less than 12 month terms.

The new standard

is effective for both public and private companies for periods beginning after December 15, 2015.

Adoption of this new standard

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

July 2015, the FASB issued ASU No.

2015-11, Simplifying the Measurement of Inventory (Topic 330).

ASU 2015-11 simplifies the accounting

for the valuation of all inventory not accounted for using the last-in, first-out (“LIFO”) method by prescribing that

inventory be valued at the lower of cost and net realizable value.

ASU 2015-11 is effective for financial statements issued for

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

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

provides optional practical expedients in transition.

We will only elect the package of practical expedients where, under the

new standard, prior conclusions about lease identification, lease classification and initial direct costs do not need to be reassessed.

The new standard also provides practical expedients for ongoing accounting where we elected the practical expedients on adoption

and did not record any ROU asset with terms of less than 12 months.

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

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operations or cash flows.

Purchase Agreement with Perfekt Beauty Holdings LLC and CDG Holdings, LLC:

June 21, 2017, the Company entered into and simultaneously closed on an Asset Purchase Agreement with Perfekt Beauty Holdings

LLC and CDG Holdings, LLC, which owns 92.3% of the issued and outstanding equity interests of Perfekt Beauty.

Perfekt Beauty is

engaged in the business of developing and selling skincare and cosmetics products under the brand Per-fekt.

acquisition was treated as an acquisition of assets as the transaction involved the acquisition of a brand and a license agreement.

The allocation of the purchase price to the assets acquired and liabilities assumed based on the estimated fair values is as follows:

Consideration

paid in 473,326 shares of common stock

additional consideration, the Company will pay quarterly royalties equal to 5% of net sales for 10 years following the closing

The purchase price was subject to adjustment as provided in the Purchase Agreement, based on the final amounts of accounts

payable, accounts receivable and new and unsold inventory.

Subsequent to December 31, 2018, we have issued 26,931 shares as

full and final payment to Perfekt Beauty Holdings LLC and CDG Holdings, LLC.

2018 the Company wrote off $164,694 worth of inventory to cost of sales as it was determined to be nearing expiration and slow

The Company also determined the $10,000 intellectual property related to the brand may not be recoverable and thus recorded

full impairment of the asset.

Company utilizes FASB ASC 740, “Income Taxes,”

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Such losses may generally not be available for use (limited or eliminated).

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.

The Company has estimated and accrued for its sales tax liability at $180,222 as

of December 31, 2018.

The Company has not filed its State &

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

table below summarizes the differences between the U.S.

statutory federal rate and the Company’s effective tax rate for

the years ended December 31, 2018 and 2017:

statutory federal rate and the Company’s estimated effective

tax rate for the years ended December 31, 2019 and 2018:

December 31, 2019

December 31, 2018

Statutory Rate

Impairment of intangible assets

Amortization of intangible assets

effective rate in excess of AU/CA rate

of Australian tax loss

Carryback of Australian tax loss

Utilization of U.S.

net operating losses

valuation allowance

Tax - Australia/Canada

provision for income taxes

Foreign Tax - Australia/Canada

Total provision for income taxes

Company has deferred tax assets, which have been fully reserved, as follows as of December 31, 2019 and 2018:

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deferred tax assets

expense (benefit) was $(247,694) and $316,012 for 2018 and 2017, respectively.

The effective tax rate is attributable to the Company’s

world wide income/(loss) as it relates to the income tax expense due in Australia.

“TCJA”

added a one-time taxation of offshore earnings for the period ending December 31, 2017 (IRC Sec.

965), regardless

of whether they are repatriated (“Deemed Repatriation”).

The Company anticipates the one-time taxation of offshore

earnings relating to its foreign subsidiaries is applicable for the 2017 year end.

The Company is reviewing its potential tax

liability at December 31, 2017, but has not fully completed the view.

It is anticipated that such amount will not be a material

amount at December 31, 2017.

Company also has net operating loss carryforwards of approximately $40,000,000 and $33,634,744 (United States and Canada)

included in the deferred tax asset table above for 2018 and 2017, respectively, the majority attributable to the acquisition of

Breakthrough Products, Inc.

However, due to limitations of carryover attributes and separate return limitation year rules, it

is unlikely the company will benefit from the NOL’s and thus Management has determined a 100% valuation reserved is required.

Further, the Company has not completed an evaluation of the NOL’s attributable to Breakthrough Products, Inc.

of this report.

total deferred tax asset is calculated by multiplying a domestic (US) 21 percent marginal tax rate for 2018 and 21

percent marginal tax rate for 2017 by the cumulative Net Operating Loss Carryforwards (“NOL”).

currently has net operating loss carryforwards approximately aggregating $40,000,000 and $33,634,744 for 2018 and

2017, respectively, which expire through 2035.

The deferred tax asset related to the NOL carryforwards Management has

determined based on all the available information that a 100% Valuation reserve is required.

Accounts Receivable

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

Tax expense (benefit) was $131,537

and $(247,694) for 2019 and 2018, respectively.

The effective tax rate is attributable to the Company’s world

wide income/(loss) as it relates to the income tax expense due in the United States and Australia.

The “TCJA”

added a one-time

taxation of offshore earnings for the period ending December 31, 2017 (IRC Sec.

965), regardless of whether they are repatriated

(“Deemed Repatriation”).

The Company anticipates the one-time taxation of offshore earnings relating to its foreign

subsidiaries is applicable for the 2017 year end.

The Company is reviewing its potential tax liability at December 31, 2017, but

has not fully completed the review.

It is anticipated that such amount will reduce the foreign tax credits (Australia),

as well as United States NOL’

at December 31, 2017.

The Company also has net operating loss

carryforwards of approximately $27,000,000 and $30,000,000 (United States and Canada) included in the deferred tax

asset table above for 2019 and 2018, respectively, the majority attributable to the acquisition of Breakthrough Products, Inc.

However, due to limitations of carryover attributes and separate return limitation year rules, it is unlikely the company will

benefit from the NOL’s and thus Management has determined a 100% valuation reserved is required.

Further, the Company has

not completed an evaluation of the NOL’s attributable to Breakthrough Products, Inc.

at the date of this report.

The total deferred tax asset is calculated

by multiplying a domestic federal (US) 21 percent marginal tax rate for 2019 and 21 percent marginal tax rate for

2018 by the cumulative Net Operating Loss Carryforwards (“NOL”).

The Company currently has net operating loss

carryforwards approximately aggregating $27,000,000 and $30,000,000 for 2019 and 2018, respectively, which expire

through 2035 (estimated).

The deferred tax asset related to the NOL carryforwards Management has determined based on all

the available information that a 100% Valuation reserve is required.

Accounts Receivable

accounts receivable, net

the years ended December 31, 2018 and 2017, the Company charged $69,070 and $0, respectively to bad debt expense.

Accounts receivable, net of allowances for doubtful accounts, consisted

of the following:

December 31, 2019

December 31, 2018

Trade accounts receivable (including related party

receivable of $277,432 and $0, respectively –

Less allowances

Total accounts receivable, net

During the years ended December 31, 2019

and 2018, the Company charged $283,972 and $69,070, respectively to bad debt expense.

Prepaid Expenses

December 31, 2019 and 2018, prepaid expenses consisted of the following:

for inventory

subscriptions

December 31, 2019

December 31, 2018

Advances for inventory

Media production

Promotion - Bloggers

License agreement

Software subscriptions

Clinical research

Miscellaneous

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and $162,729, respectively.

of December 31, 2018 and 2017, three customers accounted for 83% and 88%, respectively, of the Company’s accounts receivable.

As of December 31, 2019 and 2018, two

and three customers accounted for 52% and 83%, respectively, of the Company’s accounts receivable.

the year ended December 31, 2019, two customers accounted for approximately 51% of the Company’s net revenue.

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

the year ended December 31, 2018, two suppliers accounted for approximately 45% of the Company’s purchases.

ended December 31, 2017, three suppliers accounted for approximately 46% of the Company’s purchases.

Substantially all of

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

includes a related party vendor.

For the year ended December 31, 2019,

two suppliers accounted for approximately 40% of the Company’s purchases.

For the year ended December 31,

2018, two suppliers accounted for approximately 45% of the Company’s purchases.

Substantially all of the Company’s

business is with suppliers in the United States.

This includes purchases from related party supplier.

consists of finished goods, components and raw materials.

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carrying value of inventory consisted of the following:

of January 22, 2015, inventory was pledged to Knight under the Loan Agreement (see note 12).

As of December 31, 2018 and 2017,

$256,051 and $45,188, respectively, of the Company’s inventory was in transit.

During the year ended December 31,

2018, $1,056,209 of expiring and slow moving inventory was written off to cost of sales.

December 31, 2019

December 31, 2018

Finished goods

Inventory in transit

Raw materials

Total inventory

As of January 22, 2015, inventory was

pledged to Knight under the Loan Agreement (see note 12).

As of December 31, 2019, and 2018, $42,507 and $256,051, respectively,

of the Company’s inventory was in transit.

During the years ended December 31, 2019 and 2018, $257,111 and $1,056,209,

respectively, of expiring and slow-moving inventory was written off to cost of sales.

Fixed Assets and Intangible Assets

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accumulated impairment

expense for the years ended December 31, 2018 and 2017 was $1,669,542 and $1,385,159, respectively.

Impairment of intangible

assets for the year ended December 31, 2018 related to branding payments made during 2017.

Amortization expense for the years ended

December 31, 2019 and 2018 was $1,077,987 and $1,669,542, respectively.

Impairment of intangible assets for the year ended December

31, 2018 related to branding payments made during 2017.

Impairment of intangible assets for the year ended December 31, 2019

related to intangible assets from brands purchased in 2015.

During the year ended December 31, 2019,

the Company fully impaired goodwill of $7,793,240.

estimated aggregate amortization expense over each of the next five years is as follows:

Related Party Transactions

Company accrued and paid consulting fees of $41,250 per month through April 2017 and $57,917 per month through December 2018

to a company owned by Mr.

The Company accrued and paid consulting

fees of $57,917 per month through December 2019 to a company owned by Mr.

Jack Ross, Chief Executive Officer of the Company.

The Company also paid three months of a vehicle

allowance of $1,500 per month.

The Company expensed $648,944 and $796,336, respectively during 2018 and 2017 as consulting

fees, and made payments totaling $648,944 and $796,336 towards services to an entity owned and controlled by an officer

and shareholder of the Company for the year ended December 31, 2018 and 2017, respectively.

The Company also paid out a bonus

of $525,000 during 2017.

Company also paid thirteen months of a vehicle allowance of $1,500 per month.

The Company expensed $824,413 and $648,944,

respectively during 2019 and 2018 as consulting fees, and made payments totaling $852,626 and $648,944 towards services

to an entity owned and controlled by an officer and shareholder of the Company for the year ended December 31, 2019 and 2018,

respectively.

As of December 31, 2019 and 2018, the total outstanding balance was $0 and $28,213, respectively.

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

purchase of the Focus Factor assets.

At December 31, 2017, the Company owed Knight $559,243 on this loan, net of discount, which

was paid-off during 2018 (see Note 12).

On January 22, 2015, the Company entered

into a Loan Agreement with Knight Therapeutics (Barbados) Inc., a related party (owner of greater than 10% shares of the Company)

(“Knight”), for the purchase of the Focus Factor assets.

At December 31, 2017, the Company owed Knight $559,243

on this loan, net of discount, which was paid-off during 2018 (see Note 11).

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

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Knight $475,000 and $525,000 in relation to this agreement (see Note 11).

The Company recorded present value of future

payments of $260,461 and $272,151 as of December 31, 2019 and 2018, respectively.

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

As of December 31, 2018 the total outstanding balance

was $25,000 Canadian dollars.

In US Dollars, the total outstanding balance was $18,325.

As of December 31, 2019 and 2018, the total outstanding

balance was $25,000 and $25,000 Canadian dollars, respectively.

In US Dollars, the total outstanding balance was $17,574 and $18,325

as of December 31, 2019 and 2018, respectively.

Company expensed royalty of $4,867 and $16,066 for the years ended December 31, 2019 and 2018, respectively.

At December 31, 2019

2018 and 2017, Sneaky Vaunt Corp., a subsidiary of the Company, owed Knight Therapeutics $5,906 and $4,608, respectively in connection

with a royalty distribution agreement.

and 2018, the Company owed Knight Therapeutics $246 and $5,906, respectively in connection with a royalty distribution agreement.

Company expensed commissions of $9,065 and $43,374 for the years ended December 31, 2019 and 2018, respectively.

31, 2018 and 2017, Sneaky Vaunt Corp., a subsidiary of the Company, owed Founded Ventures, owned by a shareholder in the Company,

$10,579 and $2,581, respectively in connection with a commission agreement.

The Company paid a development fee for the brand,

Sneaky Vaunt, in the amount of $761,935 for the year ended December 31, 2017.

At December 31,

2019 and 2018, the Company owed Founded Ventures, owned by a shareholder in the Company, $0 and $10,579, respectively in connection

with a commission agreement.

Company expensed commissions of $644 and $10,016 for the years ended December 31, 2019 and 2018, respectively.

paid a development fee for the brand, The Queen Pegasus, in the amount of $1,000,000 for the year ended December 31, 2017.

December 31, 2018 and 2017, The Queen Pegasus, a subsidiary of the Company, owed Founded Ventures $3,547 and $1,462, respectively

in connection with a commission agreement.

Company expensed royalty of $2,361 and $24,227 for the years ended December 31, 2018 and 2017, respectively.

At December 31,

and 2017, The Queen Pegasus, a subsidiary of the Company, owed Knight Therapeutics $193 and $10,274, respectively in connection

with a royalty distribution agreement.

Company paid $250,000 and $125,000 for the years ended December 31, 2018 and 2017, respectively, to Hand MD, Corp, related to

a royalty agreement.

At December 31, 2018 and 2017, the Company owed Hand MD Corp.

$0 and $250,000, respectively in minimum future

2019 and 2018, the Company owed Founded Ventures $0 and $3,547, respectively in connection with a commission agreement.

Company expensed royalty of $0 and $2,361 for the years ended December 31, 2019 and 2018, respectively.

At December 31, 2019 and

2018, the Company owed Knight Therapeutics $0 and $193, respectively in connection with a royalty distribution agreement.

Company paid $14,801 and $250,000 for the years ended December 31, 2019 and 2018, respectively, to Hand MD, Corp,

related to a royalty agreement.

As of both December 31, 2019 and 2018, the Company owed Hand MD Corp.

$0 in minimum future royalties.

Company expensed royalty of $192,700 and $392,589 for the years ended December 31, 2019 and 2018, respectively.

At December 31,

2018 and 2017, NomadChoice Pty Ltd., a subsidiary of the Company owed Knight Therapeutics $109,329 and $39,682, respectively,

in connection with a royalty distribution agreement (see Note 3).

2019 and 2018, the Company owed Knight Therapeutics $5,528 and $109,329, respectively, in connection with a royalty distribution

A member of the Company’s Board of

Directors is an executive officer of a supplier to the Company.

During the years ended December 31, 2019 and 2018, the Company

acquired $4,847,626 and $4,392,245, of products from the supplier, respectively, and included in cost of sales.

The Company owed

the supplier $956,438 and $1,775,617, respectively at December 31, 2019 and 2018.

The Company entered into

transactions with a related party controlled by the CEO during the year ended December 31, 2019.

The transactions were a pass

through of expenses and reimbursements.

During the year ended December 31, 2019, the Company received advances of $324,102

($430,000 Canadian Dollars), which were fully repaid.

As of December 31, 2019, there was $0 due or payable.

The Company entered into

transactions with a related party controlled by the CEO during the year ended December 31, 2019.

The transactions were a pass

through and allocation of expenses and reimbursements.

As of December 31, 2019 the Company was owed $277,432.

Accounts Payable and Accrued Liabilities

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Manufacturers

(including related party payable of $956,438 and $1,775,617, respectively)

related party

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Company has accounted for a severance accrual in the amount of $506,250 as of December 31, 2018 relating to the termination of

This liability will be paid out in three remaining equal installments of $168,750 during 2019.

This liability was paid out in three remaining equal installments of $168,750, net of taxes, during 2019.

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 has estimated and accrued for its sales tax liability at $273,855 for the parent entity as of December 31, 2019.

Notes Payable

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The Company recognized amortization

of deferred financing costs of $3,257 and $56,605 during the years ended December 31, 2018 and 2017, respectively.

debt issuance cost as of December 31, 2018 amounted to $0.

of deferred financing costs of $3,257 during the year ended December 31, 2018.

Unamortized debt issuance costs were fully amortized

as of December 31, 2018.

Company recognized and paid interest expense of $0 and $4,611 during the years ended December 31, 2019 and 2018, respectively.

Accrued interest expense was $0 as of both December 31, 2019 and 2018.

Loan payable balance was $0 and $562,500 as of December

31, 2018 and 2017, respectively.

January 22, 2015 Loan:

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

Agreement (see note 1).

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

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

Loan payable balance was $0 as of December 31, 2019 and

The loan was paid in full in January 2017.

June 26, 2015 Security Agreement:

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(“Neuragen”), issued a 0% promissory

note in a principal amount of $950,000 in connection with an Asset Purchase Agreement (see note 1).

The note requires $250,000

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

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

The note requires $250,000 to be paid on

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

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

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net sales of Neuragen for 60 months thereafter.

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

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

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

The Company recognized amortization

of deferred financing costs of $0 and $2,600 during the years ended December 31, 2018 and 2017, respectively.

Unamortized debt

issuance cost as of December 31, 2017 amounted to $0.

The Company recorded present value of future payments of $272,151 and $282,240

as of December 31, 2018 and 2017, respectively.

At December 31, 2018 and 2017, the Company owed Knight $525,000 and $575,000 in

relation to this agreement.

The Company recorded interest expense of $39,911 and $41,292 for the year ended December 31, 2018

and 2017, respectively.

The Company made payments of $50,000 during both 2018 and 2017.

November 12, 2015 Loan:

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

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

for the purpose of acquiring Breakthrough Products, Inc.

and NomadChoice Pty Limited through Stock Purchase Agreements.

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

with the Loan.

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

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

The New Loan Agreement matured on November 11, 2017 and was fully paid.

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

The Company recognized amortization

of deferred financing costs of $101,088 during the year ended December 31, 2017.

Unamortized debt issuance cost as of December

31, 2017 amounted to $0.

Company recognized interest expense of $252,515 during the year ended December 31, 2017.

The principal balance outstanding at

both December 31, 2018 and 2017 was $0.

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

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

recorded present value of future payments of $260,461 and $272,151 as of December 31, 2019 and 2018, respectively.

31, 2019 and 2018, the Company owed Knight $475,000 and $525,000 in relation to this agreement.

The Company recorded interest

expense of $38,310 and $39,911 for the year ended December 31, 2019 and 2018, respectively.

The Company made payments of $50,000

during both 2019 and 2018.

August 9, 2017 Loan:

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Loan bears interest at 10.5% per annum.

The amended Loan Agreement matures on August 8, 2020 and (b) the date that Knight,

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

The amended Loan Agreement matures on August 8, 2020 and (b) the date that Knight, in

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

the Maturity Date of the Third Tranche and every Additional Tranche (or upon the acceleration of each such loan), the Company

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the Company’s wholly-owned subsidiaries as provided in the Loan Agreement.

We have met all the covenants except for

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

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.

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 on a year-end basis of at least

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

have amended our covenants under our loan agreement on March 27, 2019 and are currently in compliance with all

have met all the covenants except for the TTM EBITDA of $5 million during the period ending March 31, 2018.

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.

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

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

have amended our covenants under our loan agreement on March 27, 2019.

The new covenants are as follows:

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

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.

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%)

15.5%) in accordance to our current agreement and will be in effect as of October 1, 2018.

in accordance to our current agreement and was in effect as of 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.

1 unchanged sentence

of deferred financing costs of $130,829 and $210,710 during the years ended December 31, 2019 and 2018, respectively.

debt issuance cost as of December 31, 2018 amounted to $179,261.

debt issuance cost as of December 31, 2019 and 2018 amounted to $48,432 and $179,261, respectively.

Company recognized interest expense of $912,486 and $1,057,833 during the years ended December 31, 2019 and 2018, respectively.

Accrued interest was $0 and $147,000 as of December 31, 2018 and 2017, respectively.

The loan balance at December 31, 2018 and

2017 was $7,500,000 and $9,500,000, respectively.

Accrued interest was $0 as of both December 31, 2019 and 2018.

The loan balance at December 31, 2019 and 2018 was $5,500,000 and

$7,500,000, respectively.

Stockholders’

the year ended December 31, 2017, the Company issued 473,326 shares of its common stock valued at $0.51 per share in accordance

with an asset purchase agreement entered into with Perfekt Beauty Holdings, LLC and CDG Holdings, LLC, in exchange for assets

and liabilities related to the Per-fekt brand.

the year ended December 31, 2017, the Company sold 400,000 shares of its common stock valued at $220,000 to an employee of the

the year ended December 31, 2017, the Company issued 100,000 shares of its common stock valued at $55,000 to an employee of the

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

total number of shares of all classes of capital stock which the Company is authorized to issue is 300,000,000 shares of common

stock with $0.00001 par value.

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

issued and outstanding.

Commitments and Contingencies

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

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

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 base salary.

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Effective January 31, 2019 this sublease was cancelled.

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 December 31, 2018:

ending December 31:

Other Commitments

During the year ended

December 31, 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

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

2017, 333,333 unvested options were cancelled due to termination of employee.

October 10, 2017, the Company granted 1,000,000 options with an exercise price of $0.70 per share to an employee of the Company.

October 16, 2017, the Company granted 1,500,000 options with an exercise price of $0.55 per share to an employee of the Company.

During 2018, 1,500,000 unvested options were cancelled due to termination of employee.

October 18, 2017, the Company granted 200,000 options with an exercise price of $0.70 per share to an employee of the Company.

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

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at December 31, 2019

compensation expense related to vested options was $440,999 and $1,458,850 during the years ended December 31, 2018 and 2017,

respectively.

The Company determined the value of share-based compensation for options vesting during the year ended December

31, 2017 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 December 31, 2018, as disclosed in the above table, have

an intrinsic value of $0.

As of December 31, 2018, unamortized stock-based compensation costs related to options was $290,499,

and will be recognized over a period of 2 years.

compensation expense related to vested options was $161,570 and $440,999 during the years ended December 31, 2019 and 2018, respectively.

The Company determined the value of share-based compensation for options vesting during the year ended December 31, 2017 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

Stock options outstanding as of December 31, 2019, as disclosed in the above table, have an intrinsic value of $0.

As of December 31, 2019, unamortized stock-based compensation costs related to options was $128,929, and will be recognized over

a period of one year.

Stock Warrants

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

at December 31, 2018:

Average Remaining Contractual Life (Years)

Average Exercise Price ($)

warrant activity for the year ended December 31, 2019 is as follows:

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Subsequent Events

2019, the Company made an additional $500,000 payment on Loan 3.

January 1, 2019 the Company has merged its U.S.

subsidiaries into the parent company.

On January 28, 2019 the Company issued

26,391 shares of stock in full and final settlement of Per-fekt transaction.

January 31, 2019, the sublease for office space entered into on October 1, 2017 was cancelled.

March 2019 the Company received a 60 day Proposition 65 letter that one of its products did not have California’s Prop 65

The Company is taking action to correct the oversight.

The Company evaluated its December 31,

2019 consolidated financial statements for subsequent events through the date the consolidated financial statements were issued.

During 2020, the

Company received an advance of $100,000 Canadian Dollars from a related party.

The recent outbreak

of COVID-19, which has been declared by the World Health Organization to be a pandemic, has spread across the globe and is impacting

worldwide economic activity.

A pandemic, including COVID-19, or other public health epidemic poses the risk that the Company or

its employees, suppliers, and other partners may be prevented from conducting business activities at full capacity for an indefinite

period of time, including due to spread of the disease within these groups or due to shutdowns that may be requested or mandated

by governmental authorities.

While it is not possible at this time to estimate the impact that COVID-19 could have on the Company’s

business, the continued spread of COVID-19 and the measures taken by the governments of countries affected and in which the Company

operates could disrupt the operation of the Company’s business.

The COVID-19 outbreak and mitigation measures may also have

an adverse impact on global economic conditions, which could have an adverse effect on the Company’s business and financial

condition, including on its potential to conduct financings on terms acceptable to the Company, if at all.

In addition, the Company

may take temporary precautionary measures intended to help minimize the risk of the virus to its employees, including temporarily

requiring all employees to work remotely, and discouraging employee attendance at in-person work-related meetings, which could

negatively affect the Company’s business.

The extent to which the COVID-19 outbreak impacts the Company’s results

will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge

concerning the severity of the virus and the actions to contain its impact.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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-K

Item 8. Financial Statements and Supplementary Data