What changed in this filing

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Item 1. Financial Statements

2020-06-29 compared with 2019-11-14 · 564 added, 630 removed, 583 unchanged (67% of the section changed)

1 unchanged sentence

Consolidated Balance Sheets

September 30, 2019

December 31, 2018

Current Assets:

Cash and cash equivalents

and cash equivalents

Restricted cash

Accounts receivable, net

Prepaid expenses and other current assets

Accounts receivable,

net (including related party receivable of $470,984 and $277,432, respectively)

Prepaid expenses

Income taxes receivable

Inventory, net

Total Current Assets

Current Assets

Fixed assets, net

Intangible assets, net

Liabilities and Stockholders’

Intangible assets,

and Stockholders’

Current Liabilities:

Accounts payable and accrued liabilities

Accounts payable

and accrued liabilities (including related party payable of $839,124 and $956,438, respectively)

Deferred revenue

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

Total Current Liabilities

Income taxes payable

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

Current Liabilities

Long-term Liabilities:

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

Total Long-term Liabilities

Total Liabilities

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

Long-term Liabilities

Commitments and contingencies

Stockholders’

Common stock, $0.00001 par value;

Common stock, $0.00001

300,000,000 shares authorized;

89,889,074 and 89,862,683 shares issued and outstanding, respectively

Additional paid in capital

Accumulated other comprehensive income

Accumulated deficit

89,889,074 shares issued and outstanding

Additional paid

Accumulated other

comprehensive income

(23,972,266 )

(24,234,569 )

Total stockholders ’

Total Liabilities and Stockholders’

stockholders ’

Liabilities and Stockholders’

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

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

For the three months ended

For the nine months ended

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018

Condensed Consolidated Statements of Operations and Comprehensive Income

the three months ended

Cost of sales

(including related party purchases of $124,008 and $819,633, respectively)

Operating expenses

1 unchanged sentence

General and administrative

Depreciation and amortization

Total operating expenses

and amortization

Total operating

Income from operations

2 unchanged sentences

Interest expense

Remeasurement loss on translation of foreign subsidiary

Amortization of debt issuance cost

Remeasurement loss

(gain) on translation of foreign subsidiary

of debt issuance cost

Total other expenses

Net income (loss) before income taxes

Income tax (benefit) expense

Net income (loss) after tax

Net income (loss) per share –

Net income before income taxes

Income tax expense

Net income after

Net income per share –

Weighted average common shares outstanding

Comprehensive (loss) income:

Net income (loss)

Foreign currency translation adjustment

Comprehensive income (loss)

Comprehensive income:

currency translation adjustment

Comprehensive

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

Condensed Consolidated Statements of Changes in Stockholders’

Additional Paid in

Accumulated Other Comprehensive

Total Stockholders’

Income (Loss)

Balance as of December 31, 2017

$ (8,866,432 )

Fair value of vested stock options

Foreign currency translation gain

Balance as of March 31, 2018

$ (8,921,928 )

Fair value of vested stock options

Foreign currency translation gain

Balance as of June 30, 2018

$ (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

Accumulated Other Comprehensive

Total Stockholders’

Condensed Consolidated Statement of Stockholders’

Equity (Deficit)

Other Comprehensive

Stockholders’

Balance as of December

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Common stock issued for Per-fekt settlement

Balance as of March 31, 2019

Balance as of

March 31, 2019

$ (13,559,835 )

Fair value of vested stock options

Foreign currency translation loss

Balance as of June 30, 2019

Other Comprehensive

Stockholders’

Balance as of December

$ (24,234,569 )

$ (5,203,351 )

Fair value of vested stock options

Foreign currency translation gain

Balance as of September 30, 2019

Balance as of

March 31, 2020

$ (23,972,266 )

$ (4,567,878 )

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

Condensed Consolidated Statements of Cash Flows

For the nine months ended

September 30, 2019

September 30, 2018

For the three months ended

March 31, 2020

March 31, 2019

Cash Flows from Operating Activities

Net income (loss)

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

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

Depreciation and amortization

1 unchanged sentence

Stock based compensation expense

Remeasurement loss on translation of foreign subsidiary

Foreign currency transaction gain

Remeasurement loss (gain) on translation of foreign subsidiary

Foreign currency transaction loss

Non cash implied interest

Reversal of allowance for doubtful accounts

Gain on write-off of payables

Changes in operating assets and liabilities:

Accounts receivable

Other current assets

Accounts receivable, related party

Prepaid expense

Income taxes receivable

Income tax payable

Accounts payable and accrued liabilities

Accounts payable, related party

Deferred revenue

Net cash provided by operating activities

Net cash (used in) provided by operating activities

Cash Flows from Investing Activities

Payments for acquisition of fixed assets

Payment for acquisition of domain name

Purchase of intangible assets

Net cash used in investing activities

Cash Flows from Financing Activities

Advances from related party

Repayment of notes payable

Net cash used in financing activities

Net cash provided by (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

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

Cash, Cash Equivalents and restricted cash, beginning of period

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Summary of Significant Accounting Policies

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.

accompanying condensed consolidated financial statements as of March 31, 2020 and December 31, 2019 and for the three months ended

March 31, 2020 and 2019 are unaudited.

These unaudited condensed consolidated financial statements have been prepared in accordance

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

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

and with the instructions to Form 10-Q.

Accordingly, they do not include all the information and footnotes required by generally

accepted accounting principles for complete financial statements.

In the opinion of management, all adjustments (consisting of

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

Operating results for the three months

ended March 31, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31,

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

statements as of and for the year ended December 31, 2019 and footnotes thereto included in the Company’s Annual Report

on Form 10-K filed with the SEC on April 29, 2020.

of Presentation

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significant intercompany balances and transactions have been eliminated in consolidation.

amounts referred to in the notes to the consolidated financial statements are in United States Dollars ($) unless stated otherwise.

consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

All significant intercompany

balances and transactions have been eliminated in consolidation.

preparation of the consolidated financial statements in conformity with U.S.

3 unchanged sentences

Actual results could differ from those estimates.

Significant estimates are assumptions about collection of accounts receivable, useful life of fixed and intangible assets, goodwill

and assumptions used in Black-Scholes-Merton, or BSM, valuation methods, such as expected volatility, risk-free interest rate,

and expected dividend rate.

Significant estimates are assumptions about collection of accounts receivable, current income taxes, deferred income taxes valuation

allowance, useful life of fixed and intangible assets, and 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.

Estimates 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

1 unchanged sentence

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

As of September

31, 2020, the Company had no cash equivalents.

2 unchanged sentences

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

At September 30, 2019, the

uninsured balance amounted to $981,699.

At March 31, 2020, the uninsured

balance amounted to $94,869.

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.

September 30, 2019

December 31, 2018

September 30, 2018

Cash and cash equivalents

Restricted cash

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

Total cash, cash equivalents, and restricted

cash shown in the statement of cash flows

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

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expensed as incurred.

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.

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.

1 unchanged sentence

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

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

During the year ended December 31, 2019, the Company fully impaired intellectual property related to Focus Factor

and charged to operations impairment loss of $1,450,000.

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

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

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

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.

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 September 30, 2019,

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.

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

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that are short term in nature are expensed as incurred.

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

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

Liabilities - Deferred Revenue

11 unchanged sentences

against the allowance for doubtful accounts.

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

As of March 31, 2020 and December 31, 2019, allowance for doubtful accounts was $113,662

and $283,972, respectively.

During the three months ended March 31, 2020, the Company re versed

allowance for doubtful accounts of $170,309.

Company expenses marketing, promotions and advertising costs as incurred.

Such costs are included in selling expense in the accompanying

unaudited condensed consolidated statements of operations.

unaudited condensed consolidated statements of income.

and Development

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

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.

As of March 31, 2020, and 2019, options to purchase 5,666,667 and 7,166,667 shares of common stock, respectively, 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 nine months ended September 30, 2019, and 2018:

For the three months ended

For the nine months ended

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018

Net income (loss) after tax

per share for the three months ended March 31, 2020, and 2019:

the three months ended

income after tax

Weighted average common shares outstanding

Incremental shares from the assumed exercise of dilutive stock options

Incremental shares from the assumed exercise of dilutive stock warrants

Incremental shares from the assumed

exercise of dilutive stock options

Dilutive potential common shares

1 unchanged sentence

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

Options to purchase common stock

Warrants to purchase common stock

Options to purchase common

Value Measurements

18 unchanged sentences

to the fair value measurement.

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

of March 31, 2020, the Company has determined that there were no assets or liabilities measured at fair value.

consists of raw materials, components and finished goods.

12 unchanged sentences

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

26 unchanged sentences

were as follows:

September 30, 2019

December 31, 2018

Period-end AUD:

USD exchange rate

Period-end CAD:

USD exchange rate

September 30, 2019

September 30, 2018

Average Quarterly AUD:

1 unchanged sentence

Average Quarterly CAD:

USD exchange rate

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

31 unchanged sentences

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

8 unchanged sentences

Concern Evaluation

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

connection with preparing unaudited condensed consolidated financial statements for the three months ended March 31, 2020, 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.

Company considered the following:

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.

At March 31, 2020, the Company had an accumulated deficit of $23,972,266.

At March 31, 2020, the Company had working capital deficit of $4,444,249.

Revenue decline in 2020 as compared to 2019 of $3,351,669.

During the three months ended March 31, 2020, the Company used cash

in operating activities of $1,302,062.

The Company was 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

3 unchanged sentences

The Company raised $10.0 million via debt financing during the year ended December 31, 2017.

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

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.

● Subsequent to March 31,

2020, the Company raised $2.5 million via debt financing.

the three months ended March 31, 2020, the Company repaid $12,500 of loans.

Subsequent to March 31, 2020, the

Company repaid $500,000 of loans.

The Company generated net income of $262,303 for the three months ended March 31, 2020.

Working capital deficit of $4,444,249 at March 31, 2020, includes loans payables to related party of $5,486,377, payables to related

party of $839,124 and deferred revenue of $17,137.

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

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

Subsequent to March 31, 2020, the Company has secured distribution of a new hand sanitizer product under its Hand MD brand in

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.

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 loan 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.

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

cash equivalents.

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

of June 29, 2020 and March 31, 2020, the Company had $2,098,237 and $414,933, respectively, in cash and cash equivalents.

Accounting Pronouncements

August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework –

Changes in Disclosure

Requirements for Fair Value Measurement, which removes, modifies and adds certain disclosure requirements in Topic 820 “Fair

Value Measurement”.

ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods

within those fiscal years.

Early adoption is permitted.

The adoption of ASU 2018-13 is not expected to have any impact on the

Company’s unaudited condensed consolidated financial statements.

June 2018, the FASB issued ASU 2018-07, Compensation –

Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based

Payment Accounting, which simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting

for share-based payments to employees, with certain exceptions.

ASU 2018-07 is effective for fiscal years beginning after December

15, 2018, including interim periods within those fiscal years.

Early adoption is permitted.

The adoption of ASU 2018-07 did not

have any impact on the Company’s unaudited condensed 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.

June 2016, the FASB issued ASU No.

2016-13, Financial Instruments –

Credit Losses (Topic 326):

Measurement of Credit Losses

on Financial Instruments and subsequent amendment to the initial guidance:

ASU 2018-19 (collectively, Topic 326).

amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit

losses on certain types of financial instruments, including trade receivables.

ASU 2016-13 is effective for fiscal years beginning

after December 15, 2019, with early adoption permitted.

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

unaudited condensed consolidated financial statements.

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 No.

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

“Codification Improvements to Topic 842, Leases”

2018-11, “Leases (Topic 842):

Targeted 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.

new standard 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

to specific industries and are not expected to a have a material impact on the Company’s financial position, results of

operations or cash flows.

consists of finished goods, components and raw materials.

2 unchanged sentences

carrying value of inventory consisted of the following:

September 30, 2019

December 31, 2018

Finished goods

1 unchanged sentence

Raw materials

Total inventory

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

1 unchanged sentence

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

September 30, 2019

December 31, 2018

Trade accounts receivable

(including related party receivable of $470,984 and $277,432, respectively –

Less allowances

Total accounts receivable, net

Prepaid Expenses and Other Current Assets

expenses and other current assets consisted of the following:

September 30, 2019

December 31, 2018

accounts receivable, net

the year ended December 31, 2019, the Company charged $283,972 to bad debt expense.

During the three months ended March 31,

2020, the Company reversed allowance for doubtful accounts of $170,309.

Prepaid Expenses

expenses consisted of the following:

Advances for inventory

Media production

License agreement

Promotion - Bloggers

Software subscriptions

Clinical research

Miscellaneous

Related party receivables

Capital asset deposit

Concentration of Credit Risk

4 unchanged sentences

its cash deposits with major financial institutions.

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

At March 31, 2020 and December 31, 2019, the uninsured balances amounted

to $94,869 and $947,312, respectively.

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

of March 31, 2020, five customers accounted for 83% of the Company’s accounts receivable.

As of December 31,

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.

2019, two customers accounted for 52% of the Company’s accounts receivable.

the three months ended March 31, 2020, three customers accounted for approximately 60% of the Company’s net revenue.

For the three months ended March 31, 2019, two customers accounted for approximately 40% of the Company’s net revenue.

the year ended December 31, 2019, two customers accounted for approximately 51% 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.

of March 31, 2020 and December 31, 2019, two vendors accounted for 72% and 73%, respectively, of the Company’s accounts

This includes a related party vendor.

the three months ended March 31, 2020, one supplier accounted for approximately 33% of the Company’s purchases.

For the three months ended March 31, 2019, two suppliers accounted for approximately 41% of the Company’s purchases.

the year ended December 31, 2019, two suppliers accounted for approximately 40% of the Company’s purchases.

Substantially

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

This includes purchases from a related party supplier.

Fixed Assets and Intangible Assets

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

September 30, 2019

December 31, 2018

of March 31, 2020, and December 31, 2019, fixed assets and intangible assets consisted of the following:

Property and equipment

Less accumulated depreciation

Fixed assets, net

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

FOCUS factor intellectual property

Less accumulated

expense for the three months ended March 31, 2020 and 2019 was $26,152 and $38,060, respectively.

FOCUSfactor intellectual

Perfekt intellectual property

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Less accumulated amortization

Less accumulated impairment

Intangible assets, net

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.

Less accumulated

expense for the three months ended March 31, 2020 and 2019 was $694 and $268,215, respectively.

Related Party Transactions

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

Company accrued and paid consulting fees of $82,917 per month to a company owned by Mr.

Jack Ross, Chief Executive Officer of

The Company expensed $258,750 during the three months ended March 31, 2020.

As of March 31, 2020, the total outstanding

balance was $82,917 for consulting fees and reimbursements.

June 26, 2015, the Company entered into a Security Agreement with Knight Therapeutics, Inc., (owner of greater than 10% shares

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

At March 31, 2020 and December 31, 2019, the Company owed Knight $462,500 and $475,000 in relation to this agreement.

recorded present value of future payments of $257,259 as of March 31, 2020 (see Note 10).

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

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

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

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

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

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

As of March 31, 2020, the total outstanding balance was $0.

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

capital loan.

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

At March 31, 2020, the Company owed Knight $5,472,325 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.

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this agreement is $100,000 Canadian dollars.

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

(approximately $152,834 USD).

As of March 31, 2020, the total outstanding balance was $100,000 Canadian dollars.

In US Dollars, the total outstanding balance was $70,295 as of March 31, 2020.

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

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

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.

As of March 31, 2020 the total outstanding balance was

$25,000 Canadian dollars.

In US Dollars, the total outstanding balance was $17,574.

Company expensed royalty of $35,821 during the three months ended March 31, 2020.

At March 31, 2020 NomadChoice Pty

Ltd., a subsidiary of the Company, owed Knight Therapeutics $35,821 in connection with a royalty distribution agreement.

Company expensed royalty of $410 during the three months ended March 31, 2020.

At March 31, 2020 the Company owed

Knight Therapeutics $410 in connection with a royalty distribution agreement for Sneaky Vaunt.

Company paid $934 during the three months ended March 31, 2020 to Hand MD, Corp, related to a royalty agreement.

2020, the Company owed Hand MD Corp.

$0 in minimum future royalties.

member of the Company’s Board of Directors is an executive officer of a supplier to the Company.

During the three months

ended March 31, 2020 the Company acquired $124,008 of products from the supplier and included in cost of sales.

The Company owed

the supplier $559,584 at March 31, 2020.

Company entered into transactions with a related party controlled by the CEO during the three months ended March 31, 2020.

transactions were a pass through of expenses and reimbursements.

During the three months ended March 31, 2020, the Company

received advances of $70,490 ($100,000 Canadian Dollars).

As of March 31, 2020, there were $70,490 payable and $30,640

Company entered into transactions with a related party controlled by the CEO during the three months ended March 31, 2020.

transactions were a pass through and allocation of expenses and reimbursements.

As of March 31, 2020 the Company was owed $440,343.

Accounts Payable and Accrued Liabilities

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

September 30, 2019

December 31, 2018

Accrued payroll

Manufacturers

Returns allowance

of March 31, 2020, and December 31, 2019, accounts payable and accrued liabilities consisted of the following:

Accrued payroll (included

related party payable of $82,916 and $0, respectively)

Manufacturers (including related

parties of $559,584 and $956,438, respectively)

Accounting fees

Royalties, related party

Severance Accrual

Related Party Reimbursements

party loan and reimbursements

the three months ended March 31, 2020, the Company recorded a gain on write-off of payables of $180,000.

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 $245,717 for the

parent entity as of March 31, 2020.

Notes Payable

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

September 30, 2019

December 31, 2018

Company’s loans payable at March 31, 2020 and December 31, 2019 are as follows:

Loans payable

Unamortized debt issuance cost

Current portion

Unamortized debt

issuance cost

Long-term portion

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total payments of $1.2 million.

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.

Company recorded present value of future payments of $257,259 and $260,461 as of March 31, 2020 and December 31, 2019, respectively.

The Company recorded imputed interest expense of $9,299 for the three months ended March 31, 2020.

the three months ended March 31, 2020, the Company made a payment of $12,500 in connection with this Security Agreement.

August 9, 2017 Loan:

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

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

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

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 covenants.

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 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%.

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.

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 to June 30, 2019.

Effective June 30, 2019 the

interest rate referred back to 10.5%.

(See note 16)

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

The Company recognized amortization

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.

of deferred financing costs of $20,756 during the three months ended March 31, 2020.

Unamortized debt issuance cost as of March

31, 2020 amounted to $27,675.

Company recognized interest expense of $138,542 and paid $138,542 during the three months ended March 31, 2020.

Accrued interest

was $0 as of March 31, 2020.

The loan balance at March 31, 2020 was $5,500,000.

Stockholders’

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stock with $0.00001 par value.

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.

the three months ended March 31, 2019, the Company issued 26,391 shares of its common stock valued at $39,586 in full and final

settlement on the Per-fekt transaction.

of both March 31, 2020 and December 31, 2019, there were 89,889,074 shares of the Company’s common stock issued and

Commitments & Contingencies

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

The Company and Mr.

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

Agreement”) with an initial term of 3 years.

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

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.

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.

(See note 16)

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 the Plan at September 30, 2019:

$ 0.25 - $0.70

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

common stock issued to employees and consultants under a stock option plan at March 31, 2020:

stock option activity for the three months ended March 31, 2020 is as follows:

Exercise Price

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Expired or canceled

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.

Outstanding at March 31, 2020

compensation expense related to vested options was $38,679 during the three months ended March 31, 2020, which is a component

of general and administrative expense in the statement of operations.

The Company determined the value of share-based compensation

for options vesting during the period using the Black-Scholes fair value option-pricing model with the following weighted average

estimated fair value of Company’s common stock of $0.48-0.50, 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 March 31, 2020, as disclosed

in the above table, have an intrinsic value of $0.

As of March 31, 2020, unamortized stock-based compensation costs related to

options was $90,251, and will be recognized over a period of 0.5 years.

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 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 three months ended March 31, 2020 and 2019 were

United States

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countries primarily consist of Australia and Canada.

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

Over the Counter (OTC)

Consumer Goods

Cosmeceuticals

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

Company’s net sales by major sales channel for the 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

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

Company’s net sales by product group for the three months ended March 31, 2020 and 2019 were as follows:

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 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

Company’s net sales by major sales channel for the three months ended March 31, 2020 and 2019 were as follows:

assets (net) attributable to operations in the United States and foreign countries as

of March 31, 2020 and December 31, 2019 were as follows:

United States

Foreign countries

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.

corporate income tax law, was signed

into law by President Trump.

The TCJA contains significant changes to corporate income taxation, including but not limited to

the reduction of the corporate income tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction

for interest expense to 30% of earnings (except for certain small businesses), limitation of the deduction for net operating losses

to 80% of current year taxable income and generally eliminating net operating loss carrybacks, allowing net operating losses to

carryforward without expiration, one-time taxation of offshore earnings at reduced rates regardless of whether they are repatriated,

elimination of U.S.

tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments

instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits (including

changes to the orphan drug tax credit and changes to the deductibility of research and experimental expenditures that will be

effective in the future).

Notwithstanding the reduction in the corporate income tax rate, the overall impact of the new federal

tax law is uncertain, including to what extent various states will conform to the newly enacted federal tax law.

Company has not recorded the necessary provisional adjustments in the financial statements in accordance with its current understanding

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

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

carryforwards (“NOL”).

The domestic marginal tax rate does not include any state & local marginal tax rate attributable

to the Company.

tax expense (benefit) was $285,540 for the three months ended March 31, 2020, compared to $(5,908) for the same periods

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

response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed

into law on March 27, 2020.

The CARES Act, among other things, includes tax provisions relating to refundable payroll tax credits,

deferment of employer’s social security payments, net operating loss utilization and carryback periods and modifications

to the net interest deduction limitations.

At this time, the Company does not believe that the CARES Act will have a material

impact on its income tax provision for 2020.

The Company will continue to evaluate the impact of the CARES Act on its financial

position, results of operations and cash flows.

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

loss carryforwards (“NOL”).

The domestic marginal tax rate does not include any state & local marginal tax rate

attributable to the Company.

The Company currently has estimated NOLs, which expire through 2035.

Management has determined based on all the

available information that a 100% valuation reserve is required.

Management has determined based

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

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

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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, but the Company does not believe such amounts are material

so such returns and liability remain open.

Subsequent Events

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

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

condensed consolidated financial statements.

statements and concluded that except as noted below, no subsequent events have occurred that would require adjustment or disclosure

into the unaudited condensed consolidated financial statements.

May 8, 2020, the Company entered into a Third Amendment Agreement (the “Third Amendment”) to the Amended and Restated

Loan Agreement (the “Loan Agreement”) with Knight Therapeutics (Barbados) Inc.

(“Knight”), pursuant to

which Knight agreed to loan the Company an additional $2.5 million (the “Additional Loan”).

That same day (the “Closing”),

the Company paid Knight a work fee of $36,000, and $25,000 for Knight’s legal costs and expenses incurred in connection

with the Third Amendment.

The Third Amendment amends the original loan agreement that the Company and Knight entered into in January

2015 and subsequently amended (as amended, the “Original Loan Agreement”).

The Additional Loan matures on May 8, 2021

(the “TA Maturity Date”) and bears interest at 12.5% per annum compounding quarterly.

On the TA Maturity Date, the

Company will pay Knight a success fee (the “Success Fee”) of $83,250.

The Success Fee is payable in cash or stock

as set forth in the Loan Agreement.

The Third Amendment includes customary representations, warranties, and affirmative and restrictive

covenants, including covenants to attain and maintain certain financial metrics, including an undertaking to maintain at all times

a cash balance of $600,000 and EBITDA of $3,000,000.

of the $10,000,000 August 9, 2017 loan (Third Tranche) (see note 10) was modified in the Third amendment.

Third tranche shall

bear interest from May 8, 2020 at a rate equal to 12.5% per annum compounded quarterly.

The Company shall pay success fee in the

amount of $1,000,000 with respect to the Third Tranche, which shall be fully earned on May 8, 2020 and payable no later than August

Third Tranche success fee shall bear interest at 12.5% per annum compounding quarterly.

McCullough, and the Company are in a contractual services relationship till November 2020.

On May 5, 2020, Patrick McCullough

and the Company mutually agreed that Mr.

McCullough would step down as President but remain a consultant under such contract with

This mutual decision was not due to any disagreement on any matter relating to the Company’s operations, policies

or practices.

thereafter, the Company’s Chief Executive Officer, assumed the role as President of the Company.

to March 31, 2020 the Company has secured distribution of a new hand sanitizer product under its Hand MD brand in Canada.

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.

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.

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 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,

such as our plans, objectives, expectations and intentions.

Actual results and the timing of events could differ materially from

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

caption, “Cautionary Notice Regarding Forward-Looking Statements”

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

31, 2020 and 2019, should be read in conjunction with the unaudited condensed consolidated financial statements of Synergy, and

the notes to those unaudited condensed consolidated financial statements that are included elsewhere in this Form 10-Q.

Our discussion

includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives,

expectations and intentions.

Actual results and the timing of events could differ materially from those anticipated in these forward-looking

statements as a result of a number of factors, including those set forth under the caption, “Cautionary Note Regarding Forward-Looking

Statements”

and the “Business”

section in our Form

10-K filed on March 29, 2019.

section in our Form 10-K filed on April 29, 2020.

We use words such as “anticipate,”

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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 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 unaudited condensed consolidated financial statements.

Key factors affecting

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

Financial Measures

9 unchanged sentences

GAAP”), provides useful information to investors.

For the three

September 30, 2019

Net income after tax

Interest income

Interest expense

Stock-based compensation

One-time expenses

Loss on foreign currency translation and transaction

Adjusted EBITDA

September 30, 2019

Net income after taxes

March 31, 2020

income after tax

Interest income

Interest expense

Stock-based compensation

One-time expenses

Loss on foreign currency translation and transaction

One Time Expenses –

Bad debts recovery

Accounts payable write off

on foreign currency translation and transaction

Adjusted EBITDA

2 unchanged sentences

and amortization.

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 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.

The revenue is comprised of the following categories:

September 30, 2019

September 30, 2018

Nutraceuticals

Over the Counter (OTC)

Consumer Goods

Cosmeceuticals

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.

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:

September 30, 2019

September 30, 2018

Nutraceuticals

Over the Counter (OTC)

Consumer Goods

Cosmeceuticals

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

September 30, 2019

September 30, 2018

Interest income

Interest expense

Remeasurement loss on translation of foreign subsidiary

Amortization of debt issuance cost

Total other expense

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 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 an decrease in Cosmeceuticals in 2019 as

compared to 2018 due to a shift in business focus.

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

stock-based compensation;

one-time expenses/incomes;

and the gain/loss on foreign currency translation and transaction.

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

other companies.

of Operations for the Three months Ended March 31, 2020 and 2019

For the three months

ended March 31, 2020, we had revenue of $6,117,286 from sales of our products, as compared to revenue of $9,468,955 for the same

period in 2019.

We had a decrease in Nutraceuticals in 2020 as compared to 2019 due to lower online sales due to the shift

from online to retail and 2019 being the launch year of some new products.

We had an increase in Over the Counter in 2020

as compared to 2019 due to regular business fluctuations.

We had an increase in Consumer Goods in 2020 as compared to 2019

due to a shift in business focus.

We had a decrease in Cosmeceuticals in 2020 as compared to 2019 due to a shift in business focus.

The revenue is comprised of the following categories:

September 30, 2019

September 30, 2018

Nutraceuticals

2 unchanged sentences

Cosmeceuticals

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

the three months ended March 31, 2020, our cost of revenue was $1,497,779.

Our cost of revenue for the three months ended March

31, 2019, was $2,540,450.

1 unchanged sentence

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 decreased revenue.

The cost of revenue is comprised of the following categories:

September 30, 2019

September 30, 2018

We had an increase in Consumer Goods in 2020 as compared to 2019 due to an increase in revenue.

a decrease in Cosmeceuticals in 2020 as compared to 2019 due to a shift in business focus.

The cost of revenue is comprised of

the following categories:

Nutraceuticals

2 unchanged sentences

Cosmeceuticals

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.

profit was $4,619,507, or 76% for the three months ended March 31, 2020, as compared to gross profit of $6,928,505, or 73% for

the same period in 2019, a decrease of $2,308,998, or 33%.

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

of products being sold.

and Marketing Expenses

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

the three months ended March 31, 2020, our selling and marketing expenses were $2,253,956 as compared to $3,311,867 for the same

period in 2019, which is primarily due to decreased personnel in our advertising and marketing departments.

and Administrative Expenses

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

For the nine months ended September

the three months ended March 31, 2020, our general and administrative expenses were $1,333,524.

For the three months ended March

31, 2019, our general and administrative expenses were $1,487,107.

1 unchanged sentence

and Amortization Expenses

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.

the three months ended March 31, 2020, our depreciation and amortization expenses were $26,845 as compared to $306,275 for the

same period in 2019.

The decrease is due to impairment of intangible assets in 2019.

Income and Expenses

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

the three months ended March 31, 2020 and 2019 we had other (income) and expense items of the following:

March 31, 2020

March 31, 2019

Interest income

Interest expense

Remeasurement loss on translation of foreign subsidiary

Amortization of debt issuance cost

Total other expense

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 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

Remeasurement

loss (gain) on translation of foreign subsidiary

of debt issuance cost

the three months ended March 31, 2020, we had interest expense of $158,522 as compared to $340,128 for the same period in 2019.

The decrease was due to decrease in the interest rate of Loan 3 from 15.5% to 13% and decrease in the outstanding principal

the three months ended March 31, 2020, our net income was $262,303 as compared to a net income of $1,467,287 for the same period

and Capital Resources

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 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.

of March 31, 2020, we had $314,933 cash on hand and a $4,444,249 working capital deficit.

In addition, we also had restricted

cash of $100,000 which is held for credit card collateral.

of Financial Statements –

Going Concern

Concern Evaluation

connection with preparing unaudited condensed consolidated financial statements for the three months ended March 31, 2020, 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.

Company considered the following:

At March 31, 2020, the Company had an accumulated deficit of $23,972,266.

At March 31, 2020, the Company had working capital deficit of $4,444,249.

Revenue decline in 2020 as compared to 2019 of $3,351,669.

During the three months ended March 31, 2020, the Company used cash in operating activities of $1,302,062.

● 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

entity’s ability to meet its obligations as they become due.

Company evaluated its ability to meet its obligations as they become due within one year from the date that the financial statements

are issued by considering the following:

● The Company raised $10.0 million

via debt financing during the year ended December 31, 2017.

● Subsequent to March 31, 2020, the

Company raised $2.5 million via debt financing.

● During the three months ended March

31, 2020, the Company repaid $12,500 of loans.

Subsequent to March 31, 2020, the Company repaid $500,000 of loans.

● The Company generated net income

of $262,303 for the three months ended March 31, 2020.

● Working capital deficit of $4,444,249

at March 31, 2020, includes loans payables to related party of $5,486,377, payables to related party of $839,124 and

deferred revenue of $17,137.

● The Company has line of credit

facility of $20 million available from its current lender for future mergers and acquisition.

● Subsequent to March 31, 2020, the

Company has secured distribution of a new hand sanitizer product under its Hand MD brand in Canada.

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, which may be impacted

by the recent outbreak of COVID-19.

Implement additional restructuring and cost reductions.

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

of June 29 , 2020 and March 31, 2020, the Company had $2,098,237 and $414,933, respectively, in cash and cash equivalents.

months ended March 31, 2020 and 2019

Cash Used in Operating Activities

cash used in operating activities for the three months ended March 31, 2020 was $(1,302,062), compared to net cash provided by

operating activities of $813,711 for the same period in 2019.

This decrease in net cash provided by operating activities for the

three months ended March 31, 2020 was primarily attributable to an increase in accounts receivable and decrease in accounts payable

and accrued expenses.

$(1,302,062) consists of our net income of $262,303 adjusted by:

4 unchanged sentences

Remeasurement loss on translation of foreign subsidiary

Foreign currency transaction gain

Decrease in accounts receivable

Foreign currency transaction loss

Reversal of allowance for doubtful accounts

Gain on write-off of payables

Increase in accounts receivable

Increase in accounts receivable, related party

Decrease in inventory

Decrease in other current assets

Decrease in deferred revenue

Decrease in accounts payable and accrued expenses

Decrease in prepaid expenses

Decrease in income tax receivable

Increase in income tax payable

Decrease in accounts payable and accrued liabilities

Decrease in accounts payable and accrued liabilities, related party

Increase in deferred revenue

Cash Used in Investing Activities

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 investing activities for the three months ended March 31, 2020 was $0, compared to net cash used of $0 for the same

period in 2019.

Cash Used in Financing Activities

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

Net cash provided by

financing activities for the three months ended March 31, 2020 was $57,990, compared to net cash used of $512,500

for the same period in 2019.

This is attributable to the payoff of a loan in 2018.

Repayment of notes payable

$ (1,537,500 )

Advances from related party

2020 Initiatives

2020, we have plans for organic growth within our current product lines by developing and launching new products.

Our technology

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

We have new marketing campaigns

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

While we intend to grow further through additional acquisitions,

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

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

While we intend to grow further through

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