10-Q

U. S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Synergy CHC Corp.

Nevada	000-55098	99-0379440
(State or other jurisdiction	(Commission	(IRS Employer
of Incorporation)	File Number)	Identification Number)

865 Spring Street

Westbrook, Maine 04092

(Address of principal executive offices)

(615) 939-9004

(Issuer’s Telephone Number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every, Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act.

Large accelerated filer [  ]	Accelerated filer [  ]	Non-accelerated filer [  ]	Smaller reporting company [X]
	(Do not check if smaller reporting company)
Emerging Growth Company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of November 12, 2018, 89,862,683 shares of our common stock were issued and outstanding.

SYNERGY CHC CORP.

INDEX

Table of Contents

PART I	FINANCIAL INFORMATION
Item 1.	Condensed consolidated financial statements	3
	Condensed consolidated balance sheets as of September 30, 2018 (unaudited) and December 31, 2017	3
	Condensed consolidated statements of operations and comprehensive (loss) income for the three and nine months ended September 30, 2018 and 2017 (unaudited)	4
	Condensed consolidated statements of cash flows for the nine months ended September 30, 2018 and 2017 (unaudited)	5
	Notes to unaudited condensed consolidated financial statements	6
Item 2.	Management’s discussion and analysis of financial condition and results of operations	23
Item 3.	Quantitative and qualitative disclosures about market risk	28
Item 4.	Controls and procedures	28
PART II	OTHER INFORMATION
Item 1.	Legal proceedings	29
Item 1A.	Risk factors	29
Item 2.	Unregistered sales of equity securities and use of proceeds	29
Item 3.	Defaults upon senior securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other information	29
Item 6.	Exhibits	29
Signatures		30

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Synergy CHC Corp.

Condensed Consolidated Balance Sheets

	September 30, 2018			December 31, 2017
	(Unaudited)
Assets
Current Assets:
Cash and cash equivalents	$	1,605,381		$	1,955,614
Restricted cash		137,096			139,071
Accounts receivable, net		2,024,258			4,333,608
Prepaid expenses		767,456			1,143,251
Inventory, net		3,381,814			2,842,376
Total Current Assets		7,916,005			10,413,920
Fixed assets, net		307,832			293,205
Goodwill		7,793,240			7,793,240
Intangible assets, net		4,348,868			5,532,210
Total Assets	$	20,365,945		$	24,032,575
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable and accrued liabilities	$	2,912,269		$	4,328,548
Deferred revenue		48,041			3,058
Provision for income taxes payable		115,764			94,956
Current portion of long-term debt, net of debt discount and debt issuance cost, related party		1,955,917			2,487,233
Current portion of royalty payable		61,663			221,222
Total Current Liabilities		5,093,654			7,135,017
Long-term Liabilities:
Note payable, net of debt discount and debt issuance cost, related party		6,097,494			7,464,279
Total Long-term Liabilities		6,097,494			7,464,279
Total Liabilities		11,191,148			14,599,296
Commitments and contingencies
Stockholders’ Equity:
Common stock, $0.00001 par value; 300,000,000 shares authorized; 89,862,683 and 89,862,683 shares issued and outstanding, respectively		899			899
Additional paid in capital		18,525,791			18,376,801
Accumulated other comprehensive income (loss)		7,838			(77,988	)
Accumulated deficit		(9,359,731	)		(8,866,432	)
Total stockholders’ equity		9,174,797			9,433,279
Total Liabilities and Stockholders’ Equity	$	20,365,945		$	24,032,575

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

3

Synergy CHC Corp.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

	For the three months ended						For the nine months ended
	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017
Revenue	$	9,190,377		$	9,175,673		$	28,619,950		$	29,282,910
Cost of sales		2,945,389			2,657,623			8,500,057			7,622,577
Gross profit		6,244,988			6,518,050			20,119,893			21,660,333
Operating expenses
Selling and marketing		3,960,131			3,685,513			13,361,490			10,806,422
General and administrative		1,189,681			1,990,743			4,425,826			6,296,355
Depreciation and amortization		455,579			396,857			1,363,016			1,046,286
Total operating expenses		5,605,391			6,073,113			19,150,332			18,149,063
Income from operations		639,597			444,937			969,561			3,511,270
Other (income) expenses
Interest income		(50	)		(784	)		(121	)		(794	)
Interest expense		288,479			272,318			864,342			706,759
Other income		(27,674	)		(111,666	)		(27,674	)		(111,666	)
Remeasurement loss (gain) on translation of foreign subsidiary		66,353			(8,987	)		197,674			(100,718	)
Loss on sale of assets		-			-			-			2,877
Amortization of debt issuance cost		93,089			68,857			171,824			157,429
Total other expenses		420,197			219,738			1,206,045			653,887
Net income (loss) before income taxes		219,400			225,199			(236,484	)		2,857,383
Income tax (benefit) expense		(126,190	)		97,713			256,812			221,424
Net income (loss) after tax	$	345,590		$	127,486		$	(493,296	)	$	2,635,959
Net income (loss) per share – basic	$	0.00		$	0.00		$	(0.01	)	$	0.03
Net income (loss) per share – diluted	$	0.00		$	0.00		$	(0.01	)	$	0.03
Weighted average common shares outstanding
Basic		89,862,683			89,237,683			89,862,683			88,939,470
Diluted		89,862,683			89,362,683			89,862,683			89,064,470
Comprehensive (loss) income:
Net income (loss)		345,590			127,486			(493,296	)		2,635,959
Foreign currency translation adjustment		(17,578	)		(34,152	)		85,826			(63,284	)
Comprehensive income (loss)	$	328,012		$	93,334		$	(407,470	)	$	2,572,675

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

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Synergy CHC Corp.

Unaudited Condensed Consolidated Statements of Cash Flows

	For the nine months ended
	September 30, 2018			September 30, 2017
Cash Flows from Operating Activities
Net (loss) income	$	(493,296	)	$	2,635,959
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		1,363,016			1,046,286
Amortization of debt issuance cost		171,824			157,429
Stock based compensation expense		148,990			1,024,630
Remeasurement loss (gain) on translation of foreign subsidiary		197,674			(100,718	)
Foreign currency transaction (gain) loss		(47,887	)		91,203
Non cash implied interest		58,014			56,851
Loss on sale of fixed assets		-			2,877
Changes in operating assets and liabilities:
Accounts receivable		2,309,350			(333,136	)
Inventory		(539,438	)		(710,034	)
Prepaid expense		375,795			(78,650	)
Accounts payable and accrued liabilities		(1,545,260	)		(2,795,274	)
Deferred revenue		44,983			(28,197	)
Net cash provided by operating activities		2,043,765			969,226
Cash Flows from Investing Activities
Payments for acquisition of fixed assets		(129,087	)		(104,380	)
Payment for acquisition of domain name		(15,213	)		-
Proceeds from sale of assets		-			6,199
Payment of development fee		-			(1,761,935	)
Purchase of intangible assets		(50,000	)		-
Net cash used in investing activities		(194,300	)		(1,860,116	)
Cash Flows from Financing Activities
Repayment of notes payable		(2,287,500	)		(5,662,500	)
Proceeds from notes payable		-			10,000,000
Payment of debt issuance costs		-			(452,869	)
Net cash (used in) provided by financing activities		(2,287,500	)		3,884,631
Effect of exchange rate on cash, cash equivalents and restricted cash		85,827			(63,284	)
Net (decrease) increase in cash, cash equivalents and restricted cash		(352,208	)		2,930,457
Cash, Cash Equivalents and restricted cash, beginning of period		2,094,685			2,617,642
Cash, Cash Equivalents and restricted cash, end of period	$	1,742,477		$	5,548,099
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest	$	983,130		$	536,111
Income taxes	$	224,114		$	1,121,509
Supplemental Disclosure of Non-cash Investing and Financing Activities:
Common stock issued for the acquisition of assets of Per-fekt	$	-		$	241,396

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

5

Synergy CHC Corp.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Nature of the Business

Synergy CHC Corp. (“Synergy”, “we”, “us”, “our” or the “Company”) (formerly Synergy Strips Corp.) was incorporated on December 29, 2010 in Nevada under the name “Oro Capital Corporation.” On April 21, 2014, the Company changed its fiscal year end from July 31 to December 31. On April 28, 2014, the Company changed its name to “Synergy Strips Corp.”. On August 5, 2015, the Company changed its name to “Synergy CHC Corp.”

The Company is a consumer health care company that is in the process of building a portfolio of best-in-class consumer product brands. Synergy’s strategy is to grow its portfolio both organically and by further acquisition.

Synergy 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.

Note 2 – Summary of Significant Accounting Policies

General

The accompanying condensed consolidated financial statements as of September 30, 2018 and December 31, 2017 and for the three and nine months ended September 30, 2018 and 2017 are unaudited. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and are presented in accordance with the requirements of Rule S-X of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q. 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, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2018. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2017 and footnotes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on April 2, 2018.

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are assumptions about collection of accounts receivable, useful life of fixed and intangible assets, goodwill and assumptions used in Black-Scholes-Merton, or BSM, valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate.

Cash and Cash Equivalents

The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of September 30, 2018, the Company had no cash equivalents. The Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (FDIC) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. At September 30, 2018, the uninsured balance amounted to $1,040,864.

Restricted Cash

The 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, 2018		December 31, 2017		September 30, 2017
Cash and cash equivalents	$	1,605,381	$	1,955,614	$	5,408,927
Restricted cash		137,096		139,071		139,172
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	1,742,477	$	2,094,685	$	5,548,099

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

Capitalization of Fixed Assets

The Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred.

6

Intangible Assets

We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. All of our intangible assets are subject to amortization except intellectual property of $1,450,000 acquired as part of an Asset Purchase Agreement entered into with Factor Nutrition Labs LLC on January 22, 2015, $10,000 acquired as part of an Asset Purchase Agreement entered into with Perfekt Beauty Holdings LLC and CDG Holdings, LLC on June 21, 2017 and $50,000 acquired as an Asset Purchase entered into with Cocowhite on May 22, 2018. Intangible assets are amortized on a straight line basis over the useful lives. As of September 30, 2018, our qualitative analysis of intangible assets with indefinite lives did not indicate any impairment.

Long-lived Assets

Long-lived assets include equipment and intangible assets other than those with indefinite lives. We assess the carrying value of our long-lived asset groups when indicators of impairment exist and recognize an impairment loss when the carrying amount of a long-lived asset is not recoverable when compared to undiscounted cash flows expected to result from the use and eventual disposition of the asset.

Indicators of impairment include significant underperformance relative to historical or projected future operating results, significant changes in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry or economic trends. 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. As of September 30, 2018, our qualitative analysis of long-lived assets did not indicate any impairment.

Goodwill

An asset purchase is accounted for under the purchase method of accounting. Under that method, assets and liabilities of the business acquired are recorded at their estimated fair values as of the date of the acquisition, with any excess of the cost of the acquisition over the estimated fair value of the net tangible and intangible assets acquired recorded as goodwill. As of September 30, 2018, our qualitative analysis of goodwill did not indicate any impairment.

Revenue Recognition

Adoption of ASU 2014-09, Revenue from Contracts with Customers

On January 1, 2018, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606) using the modified retrospective (cumulative effect) transition method. Under this transition method, results for reporting periods beginning January 1, 2018 or later are presented under ASC 606, while prior period results continue to be reported in accordance with previous guidance. The cumulative effect of the initial application of ASC 606 was immaterial, no adjustment was recorded to the opening balance of retained earnings. The timing of revenue recognition for our various revenue streams was not materially impacted by the adoption of this standard. The Company believes its business processes, systems, and controls are appropriate to support recognition and disclosure under ASC 606. In addition, the adoption has led to increased footnote disclosures. Overall, the adoption of ASC 606 did not have a material impact on the Company’s condensed consolidated balance sheet, statement of operations and comprehensive income and statement of cash flows for the nine months ended September 30, 2018. ASC 606 also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. As described below, the analysis of contracts under ASC 606 supports the recognition of revenue at a point in time, resulting in revenue recognition timing that is materially consistent with the Company’s historical practice of recognizing product revenue when title and risk of loss pass to the customer.

7

Policy

The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s (“FASB”), Accounting Standards Codification (“ASC”) ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied.

The Company recognizes revenue upon shipment from its fulfillment centers. Certain of our distributors may also perform a separate function as a co-packer on our behalf. In such cases, ownership of and title to our products that are co-packed on our behalf by those co-packers who are also distributors, passes to such distributors when we are notified by them that they have taken transfer or possession of the relevant portion of our finished goods. Freight billed to customers is presented as revenues, and the related freight costs are presented as cost of goods sold. Cancelled orders are refunded if not already dispatched, refunds are only paid if stock is damaged in transit, discounts are only offered with specific promotions and orders will be refilled if lost in transit.

Contract Assets

The Company does not have any contract assets such as work-in-process. All trade receivables on the Company’s condensed consolidated balance sheet are from contracts with customers.

Contract Costs

Costs incurred to obtain a contract are capitalized unless short term in nature. As a practical expedient, costs to obtain a contract that are short term in nature are expensed as incurred. The Company does not have any contract costs capitalized as of September 30, 2018.

Contract Liabilities - Deferred Revenue

The Company’s contract liabilities consist of advance customer payments and deferred revenue. Deferred revenue results from transactions in which the Company has been paid for products by customers, but for which all revenue recognition criteria have not yet been met. Once all revenue recognition criteria have been met, the deferred revenues are recognized.

Accounts receivable

Accounts receivable are generally unsecured. The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management’s evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote. Any future recoveries are applied against the allowance for doubtful accounts.

Advertising Expense

The Company expenses marketing, promotions and advertising costs as incurred. Such costs are included in selling expense in the accompanying unaudited condensed consolidated statements of income.

Research and Development

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

Income Taxes

The Company utilizes FASB ASC 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

8

The Company generated a deferred tax asset through net operating loss carry-forward. However, a valuation allowance of 100% has been established due to the uncertainty of the Company’s realization of the net operating loss carry forward prior to its expiration.

NomadChoice Pty Ltd, the Company’s wholly-owned foreign subsidiary, is subject to income taxes in the jurisdictions in which it operates. Significant judgment is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The company recognizes liabilities for anticipated tax audit issues based on the Company’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Synergy CHC Inc. is a wholly-owned foreign subsidiary, is subject to income taxes in the jurisdictions in which it operates. Significant judgment is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The company recognizes liabilities for anticipated tax audit issues based on the Company’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Net Earnings (Loss) Per Common Share

The Company computes earnings per share under ASC subtopic 260-10, Earnings Per Share. Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the reporting periods. Diluted earnings per share is computed by increasing the denominator by the weighted average number of additional shares that could have been outstanding from securities convertible into common stock (using the “treasury stock” method), unless their effect on net loss per share is anti-dilutive. As of September 30, 2018, and 2017, options to purchase 7,166,667 and 6,300,000 shares of common stock, respectively, were outstanding. As of both September 30, 2018 and 2017, warrants to purchase 1,000,000 shares of common stock were outstanding.

The 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, 2018, and 2017:

	For the three months ended				For the nine months ended
	September 30, 2018		September 30, 2017		September 30, 2018			September 30, 2017
Net income (loss) after tax	$	345,590	$	127,486	$	(493,296	)	$	2,635,959
Weighted average common shares outstanding		89,862,683		89,237,683		89,862,683			88,939,470
Common stock to be issued		-		125,000		-			125,000
Incremental shares from the assumed exercise of dilutive stock options		-		-		-			-
Incremental shares from the assumed exercise of dilutive stock warrants		-		-		-			-
Dilutive potential common shares		89,862,683		89,362,683		89,862,683			89,064,470
Net earnings (loss) per share:
Basic	$	0.00	$	0.00	$	(0.01	)	$	0.03
Diluted	$	0.00	$	0.00	$	(0.01	)	$	0.03

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

	2018		2017
Options to purchase common stock		7,166,667		6,300,000
Warrants to purchase common stock		1,000,000		1,000,000
		8,166,667		7,300,000

Fair Value Measurements

The Company measures and discloses the fair value of assets and liabilities required to be carried at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value, and enhances fair value measurement disclosure.

9

ASC 825 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices for identical assets or liabilities in active markets to which we have access at the measurement date.

Level 2 - Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 - Unobservable inputs for the asset or liability.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

As of September 30, 2018, the Company has determined that there were no assets or liabilities measured at fair value.

Inventory

Inventory consists of raw materials, components and finished goods. The Company’s inventory is stated at the lower of cost (FIFO cost basis) or net realizable value. Finished goods include the cost of labor to assemble the items.

Stock-Based Compensation

ASC 718, “Compensation – Stock Compensation,” prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

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

Foreign Currency Translation

The functional currency of one of the Company’s foreign subsidiaries (Nomadchoice Pty Ltd.) is the U.S. Dollar. The Company’s foreign subsidiary maintains its records using local currency (Australian Dollar). All monetary assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at quarter end exchange rates, non-monetary assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at transaction day exchange rates. Income and expense items related to non-monetary items were translated at exchange rates prevailing during the transaction date and other incomes and expenses were translated using average exchange rate for the period. The resulting translation adjustments, net of income taxes, were recorded in statements of operations as Remeasurement gain or loss on translation of foreign subsidiary.

The functional currency of the Company’s other foreign subsidiary (Synergy CHC Inc.) is the Canadian Dollar (CAD). The Company’s foreign subsidiary maintains its records using local currency (CAD). All assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at period end exchange rates and stockholders’ equity is translated at the historical rates. Income and expense items were translated using average exchange rate for the period. The resulting translation adjustments, net of income taxes, are reported as other comprehensive income and accumulated other comprehensive income in the stockholder’s equity in accordance with ASC 220 – Comprehensive Income.

Translation gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are translated into either Australian Dollars or Canadian Dollars, as the case may be, at the rate on the date of the transaction and included in the results of operations as incurred.

10

Concentrations of Credit Risk

In the normal course of business, the Company provides credit terms to its customers; however, collateral is not required. Accordingly, the Company performs credit evaluations of its customers and maintains allowances for possible losses which, when realized, were within the range of management’s expectations. From time to time, a higher concentration of credit risk exists on outstanding accounts receivable for a select number of customers due to individual buying patterns.

Warehousing costs

Warehouse costs include all third party warehouse rent fees and are charged to selling and marketing expenses as incurred. Any additional costs relating to assembly or special pack-outs of the Company’s products are charged to cost of sales.

Product display costs

All displays manufactured and purchased by the Company are for placement of product in retail stores. This also includes all costs for display execution and setup and retail services are charged to cost of sales and expensed as incurred.

Cost of Sales

Cost of sales includes the purchase cost of products sold and all costs associated with getting the products into the retail stores including buying and transportation costs.

Debt Issuance Costs

Debt issuance costs consist primarily of arrangement fees, professional fees and legal fees. These costs are netted off with the related loan and are being amortized to interest expense over the term of the related debt facilities.

Shipping Costs

Shipping and handling costs billed to customers are recorded in sales. Shipping costs incurred by the company are recorded in selling and marketing expenses.

Related parties

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. All transactions with related parties are recorded at fair value of the goods or services exchanged.

Segment Reporting

Segment identification and selection is consistent with the management structure used by the Company’s chief operating decision maker to evaluate performance and make decisions regarding resource allocation, as well as the materiality of financial results consistent with that structure. Based on the Company’s management structure and method of internal reporting, the Company has one operating segment. The Company’s chief operating decision maker does not review operating results on a disaggregated basis; rather, the chief operating decision maker reviews operating results on an aggregate basis.

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Recent Accounting Pronouncements

ASU 2018-05

This 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.

ASU 2018-02

On 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.

This 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.

ASU 2018-01

The 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.

ASU 2017-13

In September 2017, the FASB issued Accounting Standard Update (ASU) 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842). The effective date for ASU 2017-13 is for fiscal years beginning after December 15, 2018. We have adopted ASC 606 as disclosed above. We are currently evaluating the impact of adopting Leases Topic 840 ASU 2017-13 on our consolidated financial statements.

ASU 2017-09

The 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 award.

The 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.

This 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.

ASU 2017-04

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350), which simplifies the goodwill impairment test. The effective date for ASU 2017-04 is for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact of adopting ASU 2017-04 on our consolidated financial statements.

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ASU No. 2017-01

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard will be effective for the Company on January 1, 2018; however, early adoption is permitted with prospective application to any business development transaction. We are currently evaluating the impact of adopting ASU 2017-04 on our consolidated financial statements.

ASU 2016-18

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), which requires that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. The effective date for ASU 2016-18 is for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We 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 equivalents. 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 September 30, 2017 has been reclassified to reflect this change.

ASU 2016-15

In August 2016, the FASB issued AS 2016-15, Classification of Certain Cash Receipts and Cash Payments, which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The effective date for ASU 2016-15 is for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. We are currently evaluating the impact of adopting ASU 2016-18 on our consolidated financial statements.

ASU 2016-09

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation, or ASU No. 2016-09. The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. We are currently evaluating the impact of adopting ASU No. 2016-09 on our consolidated financial statements.

ASU 2016-01

In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements.

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Note 3 – Inventory

Inventory consists of finished goods, components and raw materials. The Company’s inventory is stated at the lower of cost (FIFO cost basis) or net realizable value.

The carrying value of inventory consisted of the following:

	September 30, 2018		December 31, 2017
Finished goods	$	2,529,198	$	1,507,344
Components		733,676		1,197,228
Inventory in transit		-		45,188
Raw materials		118,940		92,616
Total inventory	$	3,381,814	$	2,842,376

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

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Note 4 – Accounts Receivable

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

	September 30, 2018		December 31, 2017
Trade accounts receivable	$	2,024,258	$	4,333,608
Less allowances		-		-
Total accounts receivable, net	$	2,024,258	$	4,333,608

Note 5 – Prepaid Expenses

Prepaid expenses consisted of the following:

	September 30, 2018		December 31, 2017
Advances for inventory	$	71,087	$	206,973
Components		-		104,668
Media production		41,583		109,388
Insurance		29,273		41,548
Trade shows		18,295		17,150
Deposits		49,472		44,841
Rent		-		19,500
Promotion - Bloggers		101,700		246,592
License agreement		83,334		158,333
Software subscriptions		54,798		20,513
Rebranding		52,429		32,841
Clinical Research		39,575		47,490
Advertising		75,155		2,500
Promotions		-		37,500
Miscellaneous		150,755		53,414
Total	$	767,456	$	1,143,251

Note 6 – Concentration of Credit Risk

Cash and cash equivalents

The Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (FDIC) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. At September 30, 2018 and December 31, 2017, the uninsured balances amounted to $1,040,864 and $1,557,373, respectively.

Accounts receivable

As of September 30, 2018, four customers accounted for 78% of the Company’s accounts receivable. As of December 31, 2017, three customers accounted for 88% of the Company’s accounts receivable.

Major customers

For 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 nine months ended September 30, 2017, two customers accounted for approximately 34% of the Company’s net revenue. For the three months ended September 30, 2017, two customers accounted for approximately 50% of the Company’s net revenue. For the year ended December 31, 2017, two customers accounted for approximately 42% of the Company’s net revenues. Substantially all of the Company’s business is with companies in the United States.

Major suppliers

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

FOCUSfactor	Atrium Innovations - Pittsburgh, PA	Vit-Best Nutrition, Inc. - Tustin, CA
Flat Tummy Tea	Caraway Tea Company, LLC - Highland, NY	-
Neuragen	C-Care, LLC - Linthicum Heights, MD	-
UrgentRx	Capstone Nutrition - Ogden, UT	-
Hand MD	HealthSpecialty - Santa Fe Springs, CA	-
Sneaky Vaunt	Dongguan Jingrui – China	-
The Queen Pegasus	Skin Actives – Gilbert, AZ	Ningbo Beautiful Daily Cosmetics – Zhejiang, China

It is the opinion of management that the products can be produced by other manufacturers and the choice to utilize these suppliers is not a significant concentration.

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Note 7 – Fixed Assets and Intangible Assets

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

	September 30, 2018			December 31, 2017
Property and equipment	$	566,446		$	437,358
Less accumulated depreciation		(258,614	)		(144,153	)
Fixed assets, net	$	307,832		$	293,205

Depreciation expense for the three months ended September 30, 2018 and 2017 was $38,299 and $27,134, respectively. Depreciation expense for the nine months ended September 30, 2018 and 2017 was $114,461 and $77,445, respectively.

	September 30, 2018			December 31, 2017
FOCUSfactor intellectual property	$	1,450,000		$	1,450,000
Perfekt intellectual property		10,000			10,000
Cocowhite intellectual property		50,000			-
Intangible assets subject to amortization		7,150,165			7,134,952
Less accumulated amortization		(4,311,297	)		(3,062,742	)
Intangible assets, net	$	4,348,868		$	5,532,210

Amortization expense for the three months ended September 30, 2018 and 2017 was $417,280 and $369,722, respectively. Amortization expense for the nine months ended September 30, 2018 and 2017 was $1,248,555 and $968,841, respectively. These intangible assets were acquired through an Asset Purchase Agreement and Stock Purchase Agreements.

Note 8 – Related Party Transactions

The Company accrued and paid consulting fees of $57,917 for seven months to a company owned by Mr. Jack Ross, Chief Executive Officer of the Company. The Company expensed $173,750 during the three months ended September 30, 2018 and $403,583 during the nine months ended September 30, 2018. As of September 30, 2018, the total outstanding balance was $0 for consulting fees and reimbursements.

On January 22, 2015, the Company entered into a Loan Agreement with Knight Therapeutics (Barbados) Inc. (“Knight”), a related party, for the purchase of the Focus Factor assets. At September 30, 2018, the Company owed Knight $0 on this loan, net of debt issuance cost (see Note 10).

On June 26, 2015, the Company entered into a Security Agreement with Knight Therapeutics, Inc., through its wholly owned subsidiary Neuragen Corp., for the purchase of Knight Therapeutics, Inc.’s assets. At September 30, 2018, the Company owed Knight $274,814 in relation to this agreement (see Note 10).

On August 18, 2015, the Company entered into a Consulting Agreement with Kara Harshbarger, the co-founder of Hand MD, LLC, pursuant to which she will provide marketing and sales related service. The Company pays Ms. Harshbarger $10,000 a month for one year unless the Consulting Agreement is terminated earlier by either party. The Company has extended this agreement on a month to month basis. Hand MD, LLC is a 50% owner in Hand MD Corp. The Company expensed $30,000 through payroll for the three months ended September 30, 2018 and $90,000 for the nine months ended September 30, 2018. As of September 30, 2018, the total outstanding balance was $0.

On November 12, 2015, the Company entered into a Loan Agreement with Knight Therapeutics (Barbados) Inc., a related party, for the purchase of NomadChoice Pty Limited and Breakthrough Products, Inc. At September 30, 2018, the Company owed Knight $0 on this loan, net of debt issuance cost (see Note 10).

On 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, 2018, the Company owed Knight $8,053,411 on this loan, net of debt issuance cost (see Note 10).

On December 23, 2016, we entered into an agreement with Knight Therapeutics for the distribution rights of FOCUSFactor in Canada. In conjunction with this agreement, we are required to pay Knight a distribution fee equal to 30% of gross sales for sales achieved through a direct sales channel and 5% of gross sales for sales achieved through retail sales. The minimum due to Knight under this agreement is $100,000 Canadian dollars. As of September 30, 2018, the total outstanding balance was $100,000 Canadian dollars.

The Company expensed royalty of $62,306 during the three months ended September 30, 2018 and $342,315 during the nine months ended September 30, 2018. At September 30, 2018 NomadChoice Pty Ltd., a subsidiary of the Company, owed Knight Therapeutics $50,310 in connection with a royalty distribution agreement.

The Company expensed royalty of $4,663 during the three months ended September 30, 2018 and $14,279 during the nine months ended September 30, 2018. At September 30, 2018 Sneaky Vaunt Corp., a subsidiary of the Company, owed Knight Therapeutics $3,948 in connection with a royalty distribution agreement.

The Company expensed commissions of $10,898 during the three months ended September 30, 2018 and $38,529 during the nine months ended September 30, 2018. At September 30, 2018, Sneaky Vaunt Corp., a subsidiary of the Company, owed Founded Ventures, owned by a shareholder in the Company, $5,734 in connection with a commission agreement.

The Company expensed royalty of $386 during the three months ended September 30, 2018 and $2,297 during the nine months ended September 30, 2018. At September 30, 2018 The Queen Pegasus, a subsidiary of the Company, owed Knight Therapeutics $129 in connection with a royalty distribution agreement.

The Company expensed commissions of $1,228 during the three months ended September 30, 2018 and $7,118 during the nine months ended September 30, 2018. At September 30, 2018, The Queen Pegasus, a subsidiary of the Company, owed Founded Ventures $649 in connection with a commission agreement.

The Company paid $62,500 and $187,500 during the three and nine months ended September 30, 2018 to Hand MD, Corp, related to a royalty agreement. At September 30, 2018, the Company owed Hand MD Corp. $61,663 in minimum future royalties.

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Note 9 – Accounts Payable and Accrued Liabilities

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

	September 30, 2018		December 31, 2017
Accrued payroll	$	228,545	$	296,491
Accrued legal fees		16,319		96,017
Accounting fees		36,041		19,681
Commissions		186,666		178,286
Manufacturers		2,022,187		2,147,751
Promotions		99,181		897,925
Professional Fees		30,000		45,921
Rent		20,085		19,500
Customers		177		106,395
Interest		-		147,000
Royalties, related party		138,585		138,143
Warehousing		8,640		10,388
Others		125,843		225,050
Total	$	2,912,269	$	4,328,548

Note 10 – Notes Payable

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

	September 30, 2018			December 31, 2017
Loans payable	$	8,274,814		$	10,344,739
Unamortized debt issuance cost		(221,403	)		(393,227	)
Total		8,053,411			9,951,512
Less: Current portion		(1,955,917	)		(2,487,233	)
Long-term portion	$	6,097,494		$	7,464,279

$6,000,000 January 22, 2015 Loan:

On January 22, 2015, the Company entered into a Loan and Security Agreement (“Loan Agreement”) with Knight Therapeutics (Barbados) Inc. (“Knight”), pursuant to which Knight agreed to loan the Company $6.0 million (the “Loan”), and which amount was borrowed at closing (the “Financing”) for the purpose of acquiring the Focus Factor Business (defined below). At closing, the Company paid Knight an origination fee of $120,000 and a work fee of $60,000 and also paid $40,000 of Knight’s expenses associated with the Loan. The Loan bears interest at a rate of 15% per year; provided, however, that upon the occurrence of an equity or convertible equity offering by the Company of at least $1.0 million, the interest rate will drop to 13% per year. Interest accrues quarterly and is payable in arrears on March 31, June 30, September 30 and December 31 in each year, beginning on March 31, 2015.

All outstanding principal and accrued and unpaid interest is due on the earliest to occur of either January 20, 2017 (the “Maturity Date”), or the date that Knight, in its discretion, accelerates the Company’s obligations due to an event of default. The Company may extend the Maturity Date for two successive additional 12-month periods if at March 31, 2016 and March 31, 2017, respectively, the Company’s revenues exceed $13.0 million and its EBITDA exceeds $2.0 million for the respective 12-month period then ending. These covenants were achieved, therefore the Company chose to extend the loan for the first 12-month period to January 20, 2018. Principal payments under the Loan Agreement commenced on June 30, 2015 and continue quarterly as set forth on the Repayment Schedule to the Loan Agreement. This Loan was repaid in full on January 20, 2018. The Company recognized and paid interest expense of $0 and $4,611, respectively during the three and nine months ended September 30, 2018. Accrued interest expense was $0 as of September 30, 2018.

Subject to certain restrictions, the Company may prepay the outstanding principal of the Loan (in whole but not in part) at any time if the Company pays a concurrent prepayment fee equal to the greater of (i) the total unpaid annual interest that would have been payable during the year in which the prepayment is made if the prepayment is made prior to the first anniversary of the closing, and (ii) $300,000. The Company’s obligations under the Loan Agreement are secured by a first priority security interest in all present and future assets of the Company. The Company also agreed to not pledge or otherwise encumber its intellectual property assets, subject to certain customary exceptions.

The Loan Agreement includes customary representations, warranties, and affirmative and restrictive covenants, including covenants to attain and maintain certain financial metrics, and to not merge or dispose of assets, acquire other businesses (except for businesses substantially similar or complementary to the Company’s business and the aggregate consideration to be paid does not exceed $100,000) or make capital expenditures in excess of $100,000 over the Company’s annual business plan in any year. The Loan Agreement also includes customary events of default, including payment defaults, breaches of covenants, change of control and material adverse effect default. Upon the occurrence of an event of default and during the continuation thereof, the principal amount of the Loan will bear a default interest rate of an additional 5%.

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In connection with the Loan Agreement, the Company issued to Knight a warrant that entitled Knight to purchase 4,595,187 shares of common stock of the Company (“Common Stock”) on or prior to close of business on January 30, 2015 (the “ST Warrant”). The aggregate exercise price of the Common Stock under the ST Warrant is $1.00. Knight exercised the ST Warrant on January 22, 2015. Also in connection with the Loan Agreement, the Company issued to Knight a warrant to purchase 3,584,759 shares of Common Stock on or prior to the close of business of January 22, 2025 (the “LT Warrant”). The exercise price per share of the Common Stock under the LT Warrant is $0.34. The LT Warrant provides for cashless exercise. The LT Warrant also provides that in the event the closing price of the Common Stock remains above $1.00 for six consecutive months, Knight will forfeit the difference between the number of shares acquired under the LT Warrant prior to 90 days after such six-month period, and 25% of the shares purchasable under the LT Warrant.

The beneficial conversion feature of the warrants issued to Knight amounted to $1,952,953 (ST warrants) and $1,462,560 (LT warrants), respectively, and was recorded as debt discount of the corresponding debt.

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

The Company also recorded deferred financing costs of $289,045 with respect to the above loan. The Company recognized amortization of deferred financing costs of $0 and $3,257 during the three and nine months ended September 30, 2018, respectively. Unamortized debt issuance cost as of September 30, 2018 amounted to $0.

$950,000 June 26, 2015 Security Agreement:

On June 26, 2015, the Company, through its wholly owned subsidiary, Neuragen Corp. (“Neuragen”), issued a 0% promissory note in a principal amount of $950,000 in connection with an Asset Purchase Agreement. The note requires $250,000 to be paid on or before June 30, 2016, and $700,000 to be paid in quarterly installments (beginning with the quarter ended September 30, 2015) equal to the greater of $12,500 or 5% of U.S. net sales, and 2% of U.S. net sales of Neuragen for 60 months thereafter. The payment of such amounts is secured by a security interest in certain assets, undertakings and property (“Collateral”) pursuant to the Security Agreement, which will be released upon receipt of total payments of $1.2 million.

The Company also recorded deferred financing costs of $10,486 with respect to the above agreement. The Company recognized amortization of deferred financing costs of $0 during the three and nine months ended September 30, 2018. Unamortized debt issuance cost as of September 30, 2018 amounted to $0. The Company recorded present value of future payments of $274,814 and $282,240 as of September 30, 2018 and December 31, 2017, respectively. The Company recorded imputed interest expense of $9,933 and $30,074 for the three and nine months ended September 30, 2018, respectively.

During the three and nine months ended September 30, 2018, the Company made payments of $12,500 and $37,500, respectively, in connection with this Security Agreement.

$5,500,000 November 12, 2015 Loan:

On November 12, 2015, we entered into a First Amendment to Loan Agreement (“First Amendment”) with Knight, pursuant to which Knight agreed to loan us an additional $5.5 million, and which amount was borrowed at closing (the “Financing”) for the purpose of acquiring Breakthrough Products, Inc. and NomadChoice Pty Limited through Stock Purchase Agreements. At closing, we paid Knight an origination fee of $110,000 and a work fee of $55,000 and also paid $24,000 of Knight’s expenses associated with the Loan. The Loan bears interest at a rate of 15% per year. The interest rate will decrease to 13% if we meet certain equity-fundraising targets. The amended Loan Agreement matured on November 11, 2017 and was fully paid.

In connection with the First Amendment, we issued Knight a warrant that entitles Knight to purchase 5,550,625 shares of our common stock (“Knight Warrant Shares”) representing approximately 6.5% of our fully diluted capital, which Knight exercised in full on November 12, 2015. Knight also received a 10-year warrant entitling Knight to purchase up to 4,547,243 shares of our common stock at $0.49 per share (“Knight Warrants”).

The beneficial conversion feature of the warrants issued to Knight amounted to $2,553,287 (5,550,625 warrants) and $2,067,258 (4,547,243 warrants), respectively, and was recorded as debt discount of the corresponding debt in 2015.

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

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$10,000,000 August 9, 2017 Loan:

On August 9, 2017, we entered into a Second Amendment to Loan Agreement (“Second Amendment”) with Knight, pursuant to which Knight agreed to loan us an additional $10 million, and an ongoing credit facility of up to $20 million, and which amount was borrowed at closing (the “Financing”) for working capital purposes. At closing, we paid Knight an origination fee of $200,000 and a work fee of $100,000 and also paid $100,000 of Knight’s expenses associated with the Loan. The Loan bears interest at 10.5% per annum. The amended Loan Agreement matures on August 8, 2020. We have met all the covenants except for the TTM EBITDA of $5 million during the 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. During the period ending June 30, 2018 the interest rate was reduced to 13% due to reducing payroll expenses. Also, Synergy will maintain Focus Factor Net Sales as measured on a year-end basis of at least USD $15 million for each fiscal year starting with December 31, 2017.

The Company also recorded deferred financing costs of $452,869 with respect to the above loan. The Company recognized amortization of deferred financing costs of $93,090 and $168,568 during the three and nine months ended September 30, 2018, respectively. Unamortized debt issuance cost as of September 30, 2018 amounted to $221,403.

The Company recognized and paid interest expense of $273,000 and $801,444 during the three and nine months ended September 30, 2018, respectively. Accrued interest was $0 as of September 30, 2018. The loan balance at September 30, 2018 was $8,000,000.

Note 11 – Stockholders’ Equity

The total number of shares of all classes of capital stock which the Company is authorized to issue is 300,000,000 shares of common stock with $0.00001 par value.

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

Note 12 – Commitments & Contingencies

Litigation:

From time to time the Company may become a party to litigation in the normal course of business. Management believes that there are no current legal matters that would have a material effect on the Company’s financial position or results of operations.

Employee Commitments

The Company and Mr. McCullough entered into an employment agreement on October 17, 2017 (the “Employment Agreement”) with an initial term of 3 years. In exchange for his service as President, Mr. McCullough will receive an annual base salary of $340,000. He received a cash signing bonus of $37,500, to be paid on January 1, 2018, and an additional cash signing bonus of $37,500, to be paid on July 1, 2018, provided that he is employed by the Company through such dates. Mr. McCullough will be eligible for an annual bonus of up to twenty-five percent (25%) of his base salary. The annual bonus will be determined at the discretion of our Board or compensation committee based upon the achievement of financial goals established by the Company’s Chief Executive Officer. Mr. 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, 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 date. The Option Grant will be granted under the Company’s 2014 Stock Incentive Plan pursuant to a stock grant agreement between the Company and Mr. McCullough.

Operating leases

On August 16, 2017, the Company entered into a sublease for office space, effective October 1, 2017 through May 2021. Rent expense under this lease will be $19,500 per month, and increasing annually on June 1.

The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of September 30, 2018:

Year ending December 31:
2018 – remaining three months	$	60,255
2019		245,234
2020		252,591
2021		106,540
2022		-
Total	$	664,620

Note 13 – Stock Options

On July 4, 2016, the Company granted 500,000 options with an exercise price of $0.70 per share to an employee of the Company. During 2017, 333,333 unvested options were cancelled due to termination of employee.

On 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.

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

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

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The following table summarizes the options outstanding, option exercisability and the related prices for the shares of the Company’s common stock issued to employees and consultants under the Plan at September 30, 2018:

		Options Outstanding						Options Exercisable
Exercise Prices ($)		Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price ($)		Number Exercisable		Weighted Average Exercise Price ($)
$	0.25 - $0.70		7,166,667		5.93	$	0.50		6,341,667	$	0.47

The stock option activity for the nine months ended September 30, 2018 is as follows:

	Options Outstanding			Weighted Average Exercise Price
Outstanding at December 31, 2017		8,666,667		$	0.51
Granted		-			-
Exercised		-			-
Expired or canceled		(1,500,000	)		(0.55	)
Outstanding at September 30, 2018		7,166,667		$	0.50

Stock-based compensation expense related to vested options was ($90,396) and $148,990 during the three and nine months ended September 30, 2018, respectively, which is a component of general and administrative expense in the statement of income. The Company determined the value of share-based compensation for options vesting during the period using the Black-Scholes fair value option-pricing model with the following weighted average assumptions: estimated fair value of Company’s common stock of $0.40-0.74, risk-free interest rate of 0.90-2.23%, volatility of 135-160%, expected lives of 3-10 years, and dividend yield of 0%. Stock options outstanding as of September 30, 2018, as disclosed in the above table, have an intrinsic value of $30,000. As of September 30, 2018, unamortized stock-based compensation costs related to options was $353,065, and will be recognized over a period of 2 years.

Note 14 – Stock Warrants

The following table summarizes the warrants outstanding, warrant exercisability and the related prices for the shares of the Company’s common stock at September 30, 2018:

		Warrants Outstanding						Warrants Exercisable
Exercise Prices ($)		Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price ($)		Number Exercisable		Weighted Average Exercise Price ($)
	5.00		1,000,000		0.21		5.00		1,000,000		5.00

The warrant activity for the nine months ended September 30, 2018 is as follows:

	Warrants Outstanding		Weighted Average Exercise Price
Outstanding at December 31, 2017		1,000,000	$	5
Granted		-		-
Exercised		-		-
Expired or canceled		-		-
Outstanding at September 30, 2018		1,000,000	$	5

Warrants outstanding as of September 30, 2018, as disclosed in the above table, have an intrinsic value of $0.

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Note 15 – Segments

Segment identification and selection is consistent with the management structure used by the Company’s chief operating decision maker to evaluate performance and make decisions regarding resource allocation, as well as the materiality of financial results consistent with that structure. Based on the Company’s management structure and method of internal reporting, the Company has one operating segment. The Company’s chief operating decision maker does not review operating results on a disaggregated basis; rather, the chief operating decision maker reviews operating results on an aggregate basis.

Net sales attributed to customers in the United States and foreign countries for the three months ended September 30, 2018 and 2017 were as follows:

	September 30, 2018		September 30, 2017
United States	$	8,944,970	$	8,472,498
Foreign countries		245,407		703,175
	$	9,190,377	$	9,175,673

Foreign countries primarily consist of Australia and Canada.

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

	September 30, 2018		September 30, 2017
Nutraceuticals	$	8,540,044	$	7,961,616
Over the Counter (OTC)		125,878		169,403
Consumer Goods		260,027		733,744
Cosmeceuticals		264,428		310,910
	$	9,190,377	$	9,175,673

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

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

	September 30, 2018		September 30, 2017
Online	$	4,902,161	$	3,236,124
Retail		4,288,216		5,939,549
	$	9,190,377	$	9,175,673

Net sales attributed to customers in the United States and foreign countries for the nine months ended September 30, 2018 and 2017 were as follows:

	September 30, 2018		September 30, 2017
United States	$	27,215,818	$	26,926,114
Foreign countries		1,404,132		2,356,796
	$	28,619,950	$	29,282,910

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

	September 30, 2018		September 30, 2017
Nutraceuticals	$	26,450,312	$	24,126,323
Over the Counter (OTC)		459,980		1,245,096
Consumer Goods		822,959		3,506,378
Cosmeceuticals		886,699		405,113
	$	28,619,950	$	29,282,910

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

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

	September 30, 2018		September 30, 2017
Online	$	13,926,758	$	14,696,177
Retail		14,693,192		14,586,733
	$	28,619,950	$	29,282,910

Long-lived assets (net) attributable to operations in the United States and foreign countries as of September 30, 2018 and December 31, 2017 were as follows:

	September 30, 2018		December 31, 2017
United States	$	12,436,714	$	13,613,043
Foreign countries		13,226		5,612
	$	12,449,940	$	13,618,655

Note 16 – Income Taxes

Income tax (benefit) expense was ($126,190) and $256,812 for the three and nine months ended September 30, 2018, respectively, compared to $97,713 and $221,424, respectively, for the same periods in 2017. The current provision is attributable to Australian operations and the current tax rate in effect in that country.

On 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.

The 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. But is reviewing the TCJA’s potential ramifications, as the Company acts to bring tax compliance up to date.

The 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. 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.

For U.S. purposes, the Company has not completed its evaluation of NOL utilization limitations under Internal Revenue Code, as amended (the “Code”) Section 382/383, change of ownership rules. If the Company has had a change in ownership, the NOL’s would be limited or eliminated, as to the amount that could be utilized each year, based on the Code. NOL’s attributable to Breakthrough Products, Inc., which are the majority of the Company’s domestic NOL’s are Separate Return Limitation Year (SRLY) NOL’s. Such losses may generally not be available for use (limited or eliminated).

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 open. Such liability, if any, has not yet been quantified by the Company, as of the reporting date. The Company is currently assessing the requirements to file these returns in states to determine any potential liability, which the Company believes is immaterial.

Note 17 – Subsequent Events

Management evaluated all activities of the Company through the issuance date of the Company’s unaudited condensed consolidated financial statements and concluded that no subsequent events except as disclosed below have occurred that would require adjustments or disclosure into the unaudited condensed consolidated financial statements.

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

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the results of operations and financial condition of Synergy for the three and nine months ended September 30, 2018 and 2017, should be read in conjunction with the unaudited condensed consolidated financial statements of Synergy, and the notes to those unaudited condensed consolidated financial statements that are included elsewhere in this Form 10-Q. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the caption, “Cautionary Notice Regarding Forward-Looking Statements” and the “Business” section in our Form 10-K filed on April 2, 2018. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

Overview

The Company is in the business of marketing and distributing consumer branded products through various distribution channels primarily in the health and wellness industry. The Company’s strategy is to grow both organically and by future acquisition.

Our 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.

Non-GAAP Financial Measures

We currently focus on Adjusted EBITDA to evaluate our business relationships and our resulting operating performance and financial position. Adjusted EBITDA is defined as EBITDA (net income plus interest expense, income tax expense, depreciation and amortization), further adjusted to exclude certain non-cash expenses and other adjustments as set forth below. We present Adjusted EBITDA because we consider it an important measure of our performance and it is a meaningful financial metric in assessing our operating performance from period to period by excluding certain items that we believe are not representative of our core business, such as certain non-cash items and other adjustments.

We believe that Adjusted EBITDA, viewed in addition to, and not in lieu of, our reported results in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), provides useful information to investors.

	For the three months ended September 30, 2018
Net income after tax	$	345,590
Interest income		(50	)
Interest expense		288,479
Taxes		(126,190	)
Depreciation		38,298
Amortization		510,371
EBITDA	$	1,056,498
Stock-based compensation		(90,396	)
One-time expenses		92,436
Loss on foreign currency translation and transaction		(12,465	)
Adjusted EBITDA	$	1,046,073

	For the nine months ended September 30, 2018
Net loss after taxes	$	(493,296	)
Interest income		(121	)
Interest expense		864,342
Taxes		256,812
Depreciation		114,461
Amortization		1,417,123
EBITDA	$	2,159,321
Stock-based compensation		148,990
One-time expenses		273,979
Loss on foreign currency translation and transaction		149,787
Adjusted EBITDA	$	2,732,077

EBITDA and Adjusted EBITDA are considered non-GAAP financial measures. EBITDA represents earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA represents EBITDA, further adjusted to exclude the impact of higher-than-normal revenue change other activity and certain expenses and transactions that we believe are not representative of our core operating results, including gain on change in fair value of derivative liability; stock-based compensation; one-time expenses for acquisitions; and the gain on foreign currency translation and transaction. The Company’s definitions of EBITDA and adjusted EBITDA might not be comparable to similarly titled measures reported by other companies.

Results of Operations for the Three months Ended September 30, 2018 and 2017

Revenue

For the three months ended September 30, 2018, we had revenue of $9,190,377 from sales of our products, as compared to revenue of $9,175,673 for the same period in 2017. We had an increase in Nutraceuticals in 2018 as compared to 2017 due to new customers. We had a decrease in Over the Counter in 2018 as compared to 2017 as 2017 was high due to a sell in to a new customer. We had a decrease in Consumer Goods in 2018 as compared to 2017 as 2017 was the launch of a new product. We had a decrease in Cosmeceuticals in 2018 as compared to 2017 due to a promotion in 2017 that did not reoccur in 2018. The revenue is comprised of the following categories:

	September 30, 2018		September 30, 2017
Nutraceuticals	$	8,540,044	$	7,961,616
Over the Counter (OTC)		125,878		169,403
Consumer Goods		260,027		733,744
Cosmeceuticals		264,428		310,910
	$	9,190,377	$	9,175,673

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Cost of Revenue

For the three months ended September 30, 2018, our cost of revenue was $2,945,389. Our cost of revenue for the three months ended September 30, 2017, was $2,657,623. We had an increase in Nutraceuticals in 2018 as compared to 2017 due to higher sales and a different mix of products being sold. We had an increase in Over the Counter in 2018 as compared to 2017 due to a different mix of product being sold. We had a decrease in Consumer Goods in 2018 as compared to 2017 due to a decrease in revenue. We had an increase in Cosmeceuticals in 2018 as compared to 2017 due to promotions being run. The cost of revenue is comprised of the following categories:

	September 30, 2018		September 30, 2017
Nutraceuticals	$	2,850,628	$	2,541,539
Over the Counter (OTC)		23,906		19,908
Consumer Goods		33,481		70,357
Cosmeceuticals		37,374		25,819
	$	2,945,389	$	2,657,623

Gross Profit

Gross profit was $6,244,988, or 68% for the three months ended September 30, 2018, as compared to gross profit of $6,518,050, or 71% for the same period in 2017, a decrease of $273,062, or 4%. The decrease in gross profit margin is directly related to increase in sales and selling products with a higher unit cost, thus reducing our margin.

Operating Expenses

Selling and Marketing Expenses

For the three months ended September 30, 2018, our selling and marketing expenses were $3,960,131 as compared to $3,685,313 for the same period in 2017, which is primarily due to increased personnel in our advertising and marketing departments.

General and Administrative Expenses

For the three months ended September 30, 2018, our general and administrative expenses were $1,189,681. For the three months ended September 30, 2017, our general and administrative expenses were $1,990,743. The decrease is primarily due to better management of operating costs.

Depreciation and Amortization Expenses

For the three months ended September 30, 2018, our depreciation and amortization expenses were $455,579 as compared to $396,857 for the same period in 2017. The increase is due to more assets owned in 2018.

Other Income and Expenses

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

	Three months ended September 30, 2018			Three months ended September 30, 2017
Interest income	$	(50	)	$	(784	)
Interest expense		288,479			272,318
Other income		(27,674	)		(111,666	)
Remeasurement loss (gain) on translation of foreign subsidiary		66,353			(8,987	)
Amortization of debt issuance cost		93,089			68,857
Total other expense	$	420,197		$	219,738

For the three months ended September 30, 2018, we had interest expense of $288,479 as compared to $272,318 for the same period in 2017. The increase was due to increase in the interest rate of Loan 3 from 10% to 13% offset by repayment of Loan 1 and Loan 2.

Net Income

For the three months ended September 30, 2018, our net income was $345,590 as compared to a net income of $127,486 for the same period in 2017.

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Results of Operations for the Nine months Ended September 30, 2018 and 2017

Revenue

For the nine months ended September 30, 2018, we had revenue of $28,619,950 from sales of our products, as compared to revenue of $29,282,910 for the same period in 2017. We had an increase in Nutraceuticals in 2018 as compared to 2017 due to new customers. We had a decrease in Over the Counter in 2018 as compared to 2017 as 2017 was high due to a sell in to new customers. We had a decrease in Consumer Goods in 2018 as compared to 2017 as 2017 was the launch of a new product. We had an increase in Cosmeceuticals in 2018 as compared to 2017 due to new customers and new products. The decrease is comprised of the following categories:

	September 30, 2018		September 30, 2017
Nutraceuticals	$	26,450,312	$	24,126,323
Over the Counter (OTC)		459,980		1,245,096
Consumer Goods		822,959		3,506,378
Cosmeceuticals		886,699		405,113
	$	28,619,950	$	29,282,910

Cost of Revenue

For the nine months ended September 30, 2018, our cost of revenue was $8,500,057. Our cost of revenue for the nine months ended September 30, 2017, was $7,622,577. We had an increase in Nutraceuticals in 2018 as compared to 2017 due to higher sales and a different mix of products being sold. We had an increase in Over the Counter in 2018 as compared to 2017 due to a different mix of product being sold. We had a decrease in Consumer Goods in 2018 as compared to 2017 due to a decrease in revenue. We had an increase in Cosmeceuticals in 2018 as compared to 2017 due to an increase in revenue. The cost of revenue is comprised of the following categories:

	September 30, 2018		September 30, 2017
Nutraceuticals	$	8,178,988	$	7,182,725
Over the Counter (OTC)		71,076		67,616
Consumer Goods		91,479		332,621
Cosmeceuticals		158,514		39,615
	$	8,500,057	$	7,622,577

Gross Profit

Gross profit was $20,119,893, or 70% for the nine months ended September 30, 2018, as compared to gross profit of $21,660,333, or 74% for the same period in 2017, a decrease of $1,540,440, or 7%. The decrease in gross profit margin is directly related to a different mix of products being sold, with higher costs which reduces profit margin.

Operating Expenses

Selling and Marketing Expenses

For the nine months ended September 30, 2018, our selling and marketing expenses were $13,361,490 as compared to $10,806,422 for the same period in 2017, which is primarily due to increased personnel in our advertising and marketing departments.

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General and Administrative Expenses

For the nine months ended September 30, 2018, our general and administrative expenses were $4,425,826. For the nine months ended September 30, 2017, our general and administrative expenses were $6,296,355. The decrease is primarily due to better management of operating costs.

Depreciation and Amortization Expenses

For the nine months ended September 30, 2018, our depreciation and amortization expenses were $1,363,016 as compared to $1,046,286 for the same period in 2017. The increase is due to more assets owned in 2018.

Other Income and Expenses

For the nine months ended September 30, 2018 and 2017 we had other (income) and expense items of the following:

	Nine months ended September 30, 2018			Nine months ended September 30, 2017
Interest income	$	(121	)	$	(794	)
Interest expense		864,342			706,759
Other income		(27,674	)		(111,666	)
Remeasurement gain (loss) on translation of foreign subsidiary		197,674			(100,718	)
Loss on sale of assets		-			2,877
Amortization of debt issuance cost		171,824			157,429
Total other expense	$	1,206,045		$	653,887

For the nine months ended September 30, 2018, we had interest expense of $864,342 as compared to $706,759 for the same period in 2017. The increase was due to increase in the interest rate of Loan 3 from 10% to 13% offset by repayment of Loan 1 and Loan 2.

Net (Loss) Income

For the nine months ended September 30, 2018, our net loss was $493,296 as compared to a net income of $2,635,959 for the same period in 2017.

Liquidity and Capital Resources

Overview

As of September 30, 2018, we had $1,605,381 cash on hand and a $2,822,351 working capital surplus. In addition, we also had restricted cash of $137,096 which is held for credit card collateral.

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Nine months ended September 30, 2018 and 2017

Net Cash Provided by Operating Activities

Net cash provided by operating activities for the nine months ended September 30, 2018 was $2,043,765, compared to $969,227 for the same period in 2017. This increase in net cash provided by operating activities for the nine months ended September 30, 2018 was primarily attributable to a decrease in accounts receivable.

The $2,043,765 consists of our net loss of $493,296 adjusted by:

Amortization of debt issuance cost	$	171,824
Depreciation and amortization		1,363,015
Stock based compensation		148,990
Non cash implied interest		58,014
Remeasurement loss on translation of foreign subsidiary		197,674
Foreign currency transaction gain		(47,887	)
Decrease in accounts receivable		2,309,350
Increase in inventory		(539,438	)
Decrease in prepaid expenses		375,795
Increase in deferred revenue		44,983
Decrease in accounts payable and accrued expenses		(1,545,260	)

Net Cash Used in Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2018 was $194,300, compared to net cash used of $1,860,116 for the same period in 2017. The decrease in cash used in investing activities during 2018 is attributable to the payout of a development fee in 2017.

Payments for acquisition of fixed assets	$	(129,087	)
Payment for acquisition of domain name		(15,213	)
Purchase of intangible assets		(50,000	)

Net Cash (Used in) Provided by Financing Activities

Net cash used in financing activities for the nine months ended September 30, 2018 was $2,287,500, compared to net cash provided of $3,884,631 for the same period in 2017. This is attributable to proceeds from a new loan in 2017 and the repayment of notes in 2018.

Repayment of notes payable $ (2,287,500 )

Key 2018 Initiatives

During 2018, 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.

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Contractual Obligations and Off-Balance Sheet Arrangements

Contractual Obligations

None.

Off-Balance Sheet Arrangements

None.

Inflation

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

Summary of Significant Accounting Policies

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported periods. The more critical accounting estimates include estimates related to revenue recognition and accounts receivable allowances. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results, which are described in Note 2 to our unaudited condensed consolidated financial statements appearing elsewhere in this report.

Recent Accounting Pronouncements

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required by this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer (principal executive officer), who is also our Chief Financial Officer (principal financial officer), reviewed the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report and concluded that as of September 30, 2018, (i) the Company’s disclosure controls and procedures were not effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “Commission”), and (ii) the Company’s controls and procedures have not been designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

The Company’s management does not expect that its disclosure controls or its internal control over financial reporting, when and if effective, will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

28

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

ITEM 1A. RISK FACTORS

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Number	Description
31.1	Section 302 Certification by the Corporation’s Chief Executive Officer *
31.2	Section 302 Certification by the Corporation’s Chief Financial Officer *
32.1	Section 906 Certification by the Corporation’s Chief Executive Officer *
32.2	Section 906 Certification by the Corporation’s Chief Financial Officer *
101.INS	XBRL Instance Document* **
101.SCH	XBRL Taxonomy Extension Schema Document* **
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document* **
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document* **
101.LAB	XBRL Taxonomy Extension Label Linkbase Document* **
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document* **

*

Filed herewith

**

Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

29

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Signatures	Title	Date
/s/ Jack Ross	Chief Executive Officer	November 13, 2018
	Chief Financial Officer

30

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jack Ross, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Synergy CHC Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 13, 2018	By:	/s/ Jack Ross
		Jack Ross
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Jack Ross, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Synergy CHC Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date:  November 13, 2018	By:	/s/ Jack Ross
		Jack Ross
		Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

In connection with the quarterly report of Synergy CHC Corp. (the “Company”) on Form 10-Q for the quarter ended September 30, 2018, as filed with the Securities and Exchange Commission (the “Report”), I, Jack Ross, Chief Executive Officer (Principal Executive Officer) of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

Date:  November 13, 2018	By:	/s/ Jack Ross
		Jack Ross
		Chief Executive Officer
		(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION

In connection with the quarterly report of Synergy CHC Corp. (the “Company”) on Form 10-Q for the quarter ended September 30, 2018, as filed with the Securities and Exchange Commission (the “Report”), I, Jack Ross, Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

Date:  November 13, 2018	By:	/s/ Jack Ross
		Jack Ross
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 12, 2018
Document And Entity Information [Abstract]
Entity Registrant Name	Synergy CHC Corp.
Entity Central Index Key	0001562733
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		89,862,683
Trading Symbol	SNYR
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2018

XML

Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Current Assets:
Cash and cash equivalents	$ 1,605,381	$ 1,955,614
Restricted cash	137,096	139,071
Accounts receivable, net	2,024,258	4,333,608
Prepaid expenses	767,456	1,143,251
Inventory, net	3,381,814	2,842,376
Total Current Assets	7,916,005	10,413,920
Fixed assets, net	307,832	293,205
Goodwill	7,793,240	7,793,240
Intangible assets, net	4,348,868	5,532,210
Total Assets	20,365,945	24,032,575
Current Liabilities:
Accounts payable and accrued liabilities	2,912,269	4,328,548
Deferred revenue	48,041	3,058
Provision for income taxes payable	115,764	94,956
Current portion of long-term debt, net of debt discount and debt issuance cost, related party	1,955,917	2,487,233
Current portion of royalty payable	61,663	221,222
Total Current Liabilities	5,093,654	7,135,017
Long-term Liabilities:
Note payable, net of debt discount and debt issuance cost, related party	6,097,494	7,464,279
Total Long-term Liabilities	6,097,494	7,464,279
Total Liabilities	11,191,148	14,599,296
Commitments and contingencies
Stockholders' Equity:
Common stock, $0.00001 par value; 300,000,000 shares authorized; 89,862,683 and 89,862,683 shares issued and outstanding, respectively	899	899
Additional paid in capital	18,525,791	18,376,801
Accumulated other comprehensive income (loss)	7,838	(77,988)
Accumulated deficit	(9,359,731)	(8,866,432)
Total stockholders' equity	9,174,797	9,433,279
Total Liabilities and Stockholders' Equity	$ 20,365,945	$ 24,032,575

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.00001	$ 0.00001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	89,862,683	89,862,683
Common stock, shares outstanding	89,862,683	89,862,683

XML

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Statement [Abstract]
Revenue	$ 9,190,377	$ 9,175,673	$ 28,619,950	$ 29,282,910
Cost of sales	2,945,389	2,657,623	8,500,057	7,622,577
Gross profit	6,244,988	6,518,050	20,119,893	21,660,333
Operating expenses
Selling and marketing	3,960,131	3,685,513	13,361,490	10,806,422
General and administrative	1,189,681	1,990,743	4,425,826	6,296,355
Depreciation and amortization	455,579	396,857	1,363,016	1,046,286
Total operating expenses	5,605,391	6,073,113	19,150,332	18,149,063
Income from operations	639,597	444,937	969,561	3,511,270
Other (income) expenses
Interest income	(50)	(784)	(121)	(794)
Interest expense	288,479	272,318	864,342	706,759
Other income	(27,674)	(111,666)	(27,674)	(111,666)
Remeasurement loss (gain) on translation of foreign subsidiary	66,353	(8,987)	197,674	(100,718)
Loss on sale of assets				(2,877)
Amortization of debt issuance cost	93,089	68,857	171,824	157,429
Total other expenses	420,197	219,738	1,206,045	653,887
Net income (loss) income before income taxes	219,400	225,199	(236,484)	2,857,383
Income tax (benefit) expense	(126,190)	97,713	256,812	221,424
Net income (loss) income after tax	$ 345,590	$ 127,486	$ (493,296)	$ 2,635,959
Net income (loss) per share - basic	$ 0.00	$ 0.00	$ (0.01)	$ 0.03
Net income (loss) per share - diluted	$ 0.00	$ 0.00	$ (0.01)	$ 0.03
Weighted average common shares outstanding
Basic	89,862,683	89,237,683	89,862,683	88,939,470
Diluted	89,862,683	89,362,683	89,862,683	89,064,470
Comprehensive (loss) income:
Net income (loss)	$ 345,590	$ 127,486	$ (493,296)	$ 2,635,959
Foreign currency translation adjustment	(17,578)	(34,152)	85,826	(63,284)
Comprehensive income (loss)	$ 328,012	$ 93,334	$ (407,470)	$ 2,572,675

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash Flows from Operating Activities
Net (loss) income	$ (493,296)	$ 2,635,959
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	1,363,016	1,046,286
Amortization of debt issuance cost	171,824	157,429
Stock based compensation expense	148,990	1,024,630
Remeasurement loss (gain) on translation of foreign subsidiary	(197,674)	100,718
Foreign currency transaction (gain) loss	(47,887)	91,203
Non cash implied interest	58,014	56,851
Loss on sale of fixed assets		2,877
Changes in operating assets and liabilities:
Accounts receivable	2,309,350	(333,136)
Inventory	(539,438)	(710,034)
Prepaid expense	375,795	(78,650)
Accounts payable and accrued liabilities	(1,545,260)	(2,795,274)
Deferred revenue	44,983	(28,197)
Net cash provided by operating activities	2,043,765	969,226
Cash Flows from Investing Activities
Payments for acquisition of fixed assets	(129,087)	(104,380)
Payment for acquisition of domain name	(15,213)
Proceeds from sale of assets		6,199
Payment of development fee		(1,761,935)
Purchase of intangible assets	(50,000)
Net cash used in investing activities	(194,300)	(1,860,116)
Cash Flows from Financing Activities
Repayment of notes payable	(2,287,500)	(5,662,500)
Proceeds from notes payable		10,000,000
Payment of debt issuance costs		(452,869)
Net cash used in financing activities	(2,287,500)	3,884,631
Effect of exchange rate on cash, cash equivalents and restricted cash	85,827	(63,284)
Net decrease in cash, cash equivalents and restricted cash	(352,208)	2,930,457
Cash, Cash Equivalents and restricted cash, beginning of period	2,094,685	2,617,642
Cash, Cash Equivalents and restricted cash, end of period	1,742,477	5,548,099
Supplemental Disclosure of Cash Flow Information:
Interest	983,130	536,111
Income taxes	224,114	1,121,509
Supplemental Disclosure of Non-cash Investing and Financing Activities:
Common stock issued for the acquisition of assets of Per-fekt		$ 241,396

XML

Nature of the Business

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of the Business

Note 1 – Nature of the Business

Synergy CHC Corp. (“Synergy”, “we”, “us”, “our” or the “Company”) (formerly Synergy Strips Corp.) was incorporated on December 29, 2010 in Nevada under the name “Oro Capital Corporation.” On April 21, 2014, the Company changed its fiscal year end from July 31 to December 31. On April 28, 2014, the Company changed its name to “Synergy Strips Corp.”. On August 5, 2015, the Company changed its name to “Synergy CHC Corp.”

The Company is a consumer health care company that is in the process of building a portfolio of best-in-class consumer product brands. Synergy’s strategy is to grow its portfolio both organically and by further acquisition.

Synergy 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.

XML

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

General

The accompanying condensed consolidated financial statements as of September 30, 2018 and December 31, 2017 and for the three and nine months ended September 30, 2018 and 2017 are unaudited. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and are presented in accordance with the requirements of Rule S-X of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q. 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, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2018. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2017 and footnotes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on April 2, 2018.

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are assumptions about collection of accounts receivable, useful life of fixed and intangible assets, goodwill and assumptions used in Black-Scholes-Merton, or BSM, valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate.

Cash and Cash Equivalents

The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of September 30, 2018, the Company had no cash equivalents. The Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (FDIC) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. At September 30, 2018, the uninsured balance amounted to $1,040,864.

Restricted Cash

The 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, 2018		December 31, 2017		September 30, 2017
Cash and cash equivalents	$	1,605,381	$	1,955,614	$	5,408,927
Restricted cash		137,096		139,071		139,172
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	1,742,477	$	2,094,685	$	5,548,099

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

Capitalization of Fixed Assets

The Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred.

Intangible Assets

We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. All of our intangible assets are subject to amortization except intellectual property of $1,450,000 acquired as part of an Asset Purchase Agreement entered into with Factor Nutrition Labs LLC on January 22, 2015, $10,000 acquired as part of an Asset Purchase Agreement entered into with Perfekt Beauty Holdings LLC and CDG Holdings, LLC on June 21, 2017 and $50,000 acquired as an Asset Purchase entered into with Cocowhite on May 22, 2018. Intangible assets are amortized on a straight line basis over the useful lives. As of September 30, 2018, our qualitative analysis of intangible assets with indefinite lives did not indicate any impairment.

Long-lived Assets

Long-lived assets include equipment and intangible assets other than those with indefinite lives. We assess the carrying value of our long-lived asset groups when indicators of impairment exist and recognize an impairment loss when the carrying amount of a long-lived asset is not recoverable when compared to undiscounted cash flows expected to result from the use and eventual disposition of the asset.

Indicators of impairment include significant underperformance relative to historical or projected future operating results, significant changes in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry or economic trends. 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. As of September 30, 2018, our qualitative analysis of long-lived assets did not indicate any impairment.

Goodwill

An asset purchase is accounted for under the purchase method of accounting. Under that method, assets and liabilities of the business acquired are recorded at their estimated fair values as of the date of the acquisition, with any excess of the cost of the acquisition over the estimated fair value of the net tangible and intangible assets acquired recorded as goodwill. As of September 30, 2018, our qualitative analysis of goodwill did not indicate any impairment.

Revenue Recognition

Adoption of ASU 2014-09, Revenue from Contracts with Customers

On January 1, 2018, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606) using the modified retrospective (cumulative effect) transition method. Under this transition method, results for reporting periods beginning January 1, 2018 or later are presented under ASC 606, while prior period results continue to be reported in accordance with previous guidance. The cumulative effect of the initial application of ASC 606 was immaterial, no adjustment was recorded to the opening balance of retained earnings. The timing of revenue recognition for our various revenue streams was not materially impacted by the adoption of this standard. The Company believes its business processes, systems, and controls are appropriate to support recognition and disclosure under ASC 606. In addition, the adoption has led to increased footnote disclosures. Overall, the adoption of ASC 606 did not have a material impact on the Company’s condensed consolidated balance sheet, statement of operations and comprehensive income and statement of cash flows for the nine months ended September 30, 2018. ASC 606 also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. As described below, the analysis of contracts under ASC 606 supports the recognition of revenue at a point in time, resulting in revenue recognition timing that is materially consistent with the Company’s historical practice of recognizing product revenue when title and risk of loss pass to the customer.

Policy

The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s (“FASB”), Accounting Standards Codification (“ASC”) ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied.

The Company recognizes revenue upon shipment from its fulfillment centers. Certain of our distributors may also perform a separate function as a co-packer on our behalf. In such cases, ownership of and title to our products that are co-packed on our behalf by those co-packers who are also distributors, passes to such distributors when we are notified by them that they have taken transfer or possession of the relevant portion of our finished goods. Freight billed to customers is presented as revenues, and the related freight costs are presented as cost of goods sold. Cancelled orders are refunded if not already dispatched, refunds are only paid if stock is damaged in transit, discounts are only offered with specific promotions and orders will be refilled if lost in transit.

Contract Assets

The Company does not have any contract assets such as work-in-process. All trade receivables on the Company’s condensed consolidated balance sheet are from contracts with customers.

Contract Costs

Costs incurred to obtain a contract are capitalized unless short term in nature. As a practical expedient, costs to obtain a contract that are short term in nature are expensed as incurred. The Company does not have any contract costs capitalized as of September 30, 2018.

Contract Liabilities - Deferred Revenue

The Company’s contract liabilities consist of advance customer payments and deferred revenue. Deferred revenue results from transactions in which the Company has been paid for products by customers, but for which all revenue recognition criteria have not yet been met. Once all revenue recognition criteria have been met, the deferred revenues are recognized.

Accounts receivable

Accounts receivable are generally unsecured. The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management’s evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote. Any future recoveries are applied against the allowance for doubtful accounts.

Advertising Expense

The Company expenses marketing, promotions and advertising costs as incurred. Such costs are included in selling expense in the accompanying unaudited condensed consolidated statements of income.

Research and Development

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

Income Taxes

The Company utilizes FASB ASC 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

The Company generated a deferred tax asset through net operating loss carry-forward. However, a valuation allowance of 100% has been established due to the uncertainty of the Company’s realization of the net operating loss carry forward prior to its expiration.

NomadChoice Pty Ltd, the Company’s wholly-owned foreign subsidiary, is subject to income taxes in the jurisdictions in which it operates. Significant judgment is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The company recognizes liabilities for anticipated tax audit issues based on the Company’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Synergy CHC Inc. is a wholly-owned foreign subsidiary, is subject to income taxes in the jurisdictions in which it operates. Significant judgment is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The company recognizes liabilities for anticipated tax audit issues based on the Company’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Net Earnings (Loss) Per Common Share

The Company computes earnings per share under ASC subtopic 260-10, Earnings Per Share. Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the reporting periods. Diluted earnings per share is computed by increasing the denominator by the weighted average number of additional shares that could have been outstanding from securities convertible into common stock (using the “treasury stock” method), unless their effect on net loss per share is anti-dilutive. As of September 30, 2018, and 2017, options to purchase 7,166,667 and 6,300,000 shares of common stock, respectively, were outstanding. As of both September 30, 2018 and 2017, warrants to purchase 1,000,000 shares of common stock were outstanding.

The 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, 2018, and 2017:

	For the three months ended				For the nine months ended
	September 30, 2018		September 30, 2017		September 30, 2018			September 30, 2017
Net income (loss) after tax	$	345,590	$	127,486	$	(493,296	)	$	2,635,959
Weighted average common shares outstanding		89,862,683		89,237,683		89,862,683			88,939,470
Common stock to be issued		-		125,000		-			125,000
Incremental shares from the assumed exercise of dilutive stock options		-		-		-			-
Incremental shares from the assumed exercise of dilutive stock warrants		-		-		-			-
Dilutive potential common shares		89,862,683		89,362,683		89,862,683			89,064,470
Net earnings (loss) per share:
Basic	$	0.00	$	0.00	$	(0.01	)	$	0.03
Diluted	$	0.00	$	0.00	$	(0.01	)	$	0.03

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

	2018		2017
Options to purchase common stock		7,166,667		6,300,000
Warrants to purchase common stock		1,000,000		1,000,000
		8,166,667		7,300,000

Fair Value Measurements

The Company measures and discloses the fair value of assets and liabilities required to be carried at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value, and enhances fair value measurement disclosure.

ASC 825 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices for identical assets or liabilities in active markets to which we have access at the measurement date.

Level 2 - Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 - Unobservable inputs for the asset or liability.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

As of September 30, 2018, the Company has determined that there were no assets or liabilities measured at fair value.

Inventory

Inventory consists of raw materials, components and finished goods. The Company’s inventory is stated at the lower of cost (FIFO cost basis) or net realizable value. Finished goods include the cost of labor to assemble the items.

Stock-Based Compensation

ASC 718, “Compensation – Stock Compensation,” prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

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

Foreign Currency Translation

The functional currency of one of the Company’s foreign subsidiaries (Nomadchoice Pty Ltd.) is the U.S. Dollar. The Company’s foreign subsidiary maintains its records using local currency (Australian Dollar). All monetary assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at quarter end exchange rates, non-monetary assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at transaction day exchange rates. Income and expense items related to non-monetary items were translated at exchange rates prevailing during the transaction date and other incomes and expenses were translated using average exchange rate for the period. The resulting translation adjustments, net of income taxes, were recorded in statements of operations as Remeasurement gain or loss on translation of foreign subsidiary.

The functional currency of the Company’s other foreign subsidiary (Synergy CHC Inc.) is the Canadian Dollar (CAD). The Company’s foreign subsidiary maintains its records using local currency (CAD). All assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at period end exchange rates and stockholders’ equity is translated at the historical rates. Income and expense items were translated using average exchange rate for the period. The resulting translation adjustments, net of income taxes, are reported as other comprehensive income and accumulated other comprehensive income in the stockholder’s equity in accordance with ASC 220 – Comprehensive Income.

Translation gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are translated into either Australian Dollars or Canadian Dollars, as the case may be, at the rate on the date of the transaction and included in the results of operations as incurred.

Concentrations of Credit Risk

In the normal course of business, the Company provides credit terms to its customers; however, collateral is not required. Accordingly, the Company performs credit evaluations of its customers and maintains allowances for possible losses which, when realized, were within the range of management’s expectations. From time to time, a higher concentration of credit risk exists on outstanding accounts receivable for a select number of customers due to individual buying patterns.

Warehousing costs

Warehouse costs include all third party warehouse rent fees and are charged to selling and marketing expenses as incurred. Any additional costs relating to assembly or special pack-outs of the Company’s products are charged to cost of sales.

Product display costs

All displays manufactured and purchased by the Company are for placement of product in retail stores. This also includes all costs for display execution and setup and retail services are charged to cost of sales and expensed as incurred.

Cost of Sales

Cost of sales includes the purchase cost of products sold and all costs associated with getting the products into the retail stores including buying and transportation costs.

Debt Issuance Costs

Debt issuance costs consist primarily of arrangement fees, professional fees and legal fees. These costs are netted off with the related loan and are being amortized to interest expense over the term of the related debt facilities.

Shipping Costs

Shipping and handling costs billed to customers are recorded in sales. Shipping costs incurred by the company are recorded in selling and marketing expenses.

Related parties

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. All transactions with related parties are recorded at fair value of the goods or services exchanged.

Segment Reporting

Segment identification and selection is consistent with the management structure used by the Company’s chief operating decision maker to evaluate performance and make decisions regarding resource allocation, as well as the materiality of financial results consistent with that structure. Based on the Company’s management structure and method of internal reporting, the Company has one operating segment. The Company’s chief operating decision maker does not review operating results on a disaggregated basis; rather, the chief operating decision maker reviews operating results on an aggregate basis.

Recent Accounting Pronouncements

ASU 2018-05

This 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.

ASU 2018-02

On 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.

This 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.

ASU 2018-01

The 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.

ASU 2017-13

In September 2017, the FASB issued Accounting Standard Update (ASU) 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842). The effective date for ASU 2017-13 is for fiscal years beginning after December 15, 2018. We have adopted ASC 606 as disclosed above. We are currently evaluating the impact of adopting Leases Topic 840 ASU 2017-13 on our consolidated financial statements.

ASU 2017-09

The 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 award.

The 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.

This 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.

ASU 2017-04

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350), which simplifies the goodwill impairment test. The effective date for ASU 2017-04 is for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact of adopting ASU 2017-04 on our consolidated financial statements.

ASU No. 2017-01

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard will be effective for the Company on January 1, 2018; however, early adoption is permitted with prospective application to any business development transaction. We are currently evaluating the impact of adopting ASU 2017-04 on our consolidated financial statements.

ASU 2016-18

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), which requires that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. The effective date for ASU 2016-18 is for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We 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 equivalents. 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 September 30, 2017 has been reclassified to reflect this change.

ASU 2016-15

In August 2016, the FASB issued AS 2016-15, Classification of Certain Cash Receipts and Cash Payments, which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The effective date for ASU 2016-15 is for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. We are currently evaluating the impact of adopting ASU 2016-18 on our consolidated financial statements.

ASU 2016-09

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation, or ASU No. 2016-09. The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. We are currently evaluating the impact of adopting ASU No. 2016-09 on our consolidated financial statements.

ASU 2016-01

In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements.

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Inventory

9 Months Ended

Sep. 30, 2018

Inventory Disclosure [Abstract]

Inventory

Note 3 – Inventory

Inventory consists of finished goods, components and raw materials. The Company’s inventory is stated at the lower of cost (FIFO cost basis) or net realizable value.

The carrying value of inventory consisted of the following:

	September 30, 2018		December 31, 2017
Finished goods	$	2,529,198	$	1,507,344
Components		733,676		1,197,228
Inventory in transit		-		45,188
Raw materials		118,940		92,616
Total inventory	$	3,381,814	$	2,842,376

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

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Accounts Receivable

9 Months Ended

Sep. 30, 2018

Receivables [Abstract]

Accounts Receivable

Note 4 – Accounts Receivable

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

	September 30, 2018		December 31, 2017
Trade accounts receivable	$	2,024,258	$	4,333,608
Less allowances		-		-
Total accounts receivable, net	$	2,024,258	$	4,333,608

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Prepaid Expenses

9 Months Ended

Sep. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepaid Expenses

Note 5 – Prepaid Expenses

Prepaid expenses consisted of the following:

	September 30, 2018		December 31, 2017
Advances for inventory	$	71,087	$	206,973
Components		-		104,668
Media production		41,583		109,388
Insurance		29,273		41,548
Trade shows		18,295		17,150
Deposits		49,472		44,841
Rent		-		19,500
Promotion - Bloggers		101,700		246,592
License agreement		83,334		158,333
Software subscriptions		54,798		20,513
Rebranding		52,429		32,841
Clinical Research		39,575		47,490
Advertising		75,155		2,500
Promotions		-		37,500
Miscellaneous		150,755		53,414
Total	$	767,456	$	1,143,251

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Concentration of Credit Risk

9 Months Ended

Sep. 30, 2018

Risks and Uncertainties [Abstract]

Concentration of Credit Risk

Note 6 – Concentration of Credit Risk

Cash and cash equivalents

The Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (FDIC) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. At September 30, 2018 and December 31, 2017, the uninsured balances amounted to $1,040,864 and $1,557,373, respectively.

Accounts receivable

As of September 30, 2018, four customers accounted for 78% of the Company’s accounts receivable. As of December 31, 2017, three customers accounted for 88% of the Company’s accounts receivable.

Major customers

For 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 nine months ended September 30, 2017, two customers accounted for approximately 34% of the Company’s net revenue. For the three months ended September 30, 2017, two customers accounted for approximately 50% of the Company’s net revenue. For the year ended December 31, 2017, two customers accounted for approximately 42% of the Company’s net revenues. Substantially all of the Company’s business is with companies in the United States.

Major suppliers

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

FOCUSfactor	Atrium Innovations - Pittsburgh, PA	Vit-Best Nutrition, Inc. - Tustin, CA
Flat Tummy Tea	Caraway Tea Company, LLC - Highland, NY	-
Neuragen	C-Care, LLC - Linthicum Heights, MD	-
UrgentRx	Capstone Nutrition - Ogden, UT	-
Hand MD	HealthSpecialty - Santa Fe Springs, CA	-
Sneaky Vaunt	Dongguan Jingrui – China	-
The Queen Pegasus	Skin Actives – Gilbert, AZ	Ningbo Beautiful Daily Cosmetics – Zhejiang, China

It is the opinion of management that the products can be produced by other manufacturers and the choice to utilize these suppliers is not a significant concentration.

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Fixed Assets and Intangible Assets

9 Months Ended

Sep. 30, 2018

Assets

Fixed Assets and Intangible Assets

Note 7 – Fixed Assets and Intangible Assets

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

	September 30, 2018			December 31, 2017
Property and equipment	$	566,446		$	437,358
Less accumulated depreciation		(258,614	)		(144,153	)
Fixed assets, net	$	307,832		$	293,205

Depreciation expense for the three months ended September 30, 2018 and 2017 was $38,299 and $27,134, respectively. Depreciation expense for the nine months ended September 30, 2018 and 2017 was $114,461 and $77,445, respectively.

	September 30, 2018			December 31, 2017
FOCUSfactor intellectual property	$	1,450,000		$	1,450,000
Perfekt intellectual property		10,000			10,000
Cocowhite intellectual property		50,000			-
Intangible assets subject to amortization		7,150,165			7,134,952
Less accumulated amortization		(4,311,297	)		(3,062,742	)
Intangible assets, net	$	4,348,868		$	5,532,210

Amortization expense for the three months ended September 30, 2018 and 2017 was $417,280 and $369,722, respectively. Amortization expense for the nine months ended September 30, 2018 and 2017 was $1,248,555 and $968,841, respectively. These intangible assets were acquired through an Asset Purchase Agreement and Stock Purchase Agreements.

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Related Party Transactions

9 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

Related Party Transactions

Note 8 – Related Party Transactions

The Company accrued and paid consulting fees of $57,917 for seven months to a company owned by Mr. Jack Ross, Chief Executive Officer of the Company. The Company expensed $173,750 during the three months ended September 30, 2018 and $403,583 during the nine months ended September 30, 2018. As of September 30, 2018, the total outstanding balance was $0 for consulting fees and reimbursements.

On January 22, 2015, the Company entered into a Loan Agreement with Knight Therapeutics (Barbados) Inc. (“Knight”), a related party, for the purchase of the Focus Factor assets. At September 30, 2018, the Company owed Knight $0 on this loan, net of debt issuance cost (see Note 10).

On June 26, 2015, the Company entered into a Security Agreement with Knight Therapeutics, Inc., through its wholly owned subsidiary Neuragen Corp., for the purchase of Knight Therapeutics, Inc.’s assets. At September 30, 2018, the Company owed Knight $274,814 in relation to this agreement (see Note 10).

On August 18, 2015, the Company entered into a Consulting Agreement with Kara Harshbarger, the co-founder of Hand MD, LLC, pursuant to which she will provide marketing and sales related service. The Company pays Ms. Harshbarger $10,000 a month for one year unless the Consulting Agreement is terminated earlier by either party. The Company has extended this agreement on a month to month basis. Hand MD, LLC is a 50% owner in Hand MD Corp. The Company expensed $30,000 through payroll for the three months ended September 30, 2018 and $90,000 for the nine months ended September 30, 2018. As of September 30, 2018, the total outstanding balance was $0.

On November 12, 2015, the Company entered into a Loan Agreement with Knight Therapeutics (Barbados) Inc., a related party, for the purchase of NomadChoice Pty Limited and Breakthrough Products, Inc. At September 30, 2018, the Company owed Knight $0 on this loan, net of debt issuance cost (see Note 10).

On 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, 2018, the Company owed Knight $8,053,411 on this loan, net of debt issuance cost (see Note 10).

On December 23, 2016, we entered into an agreement with Knight Therapeutics for the distribution rights of FOCUSFactor in Canada. In conjunction with this agreement, we are required to pay Knight a distribution fee equal to 30% of gross sales for sales achieved through a direct sales channel and 5% of gross sales for sales achieved through retail sales. The minimum due to Knight under this agreement is $100,000 Canadian dollars. As of September 30, 2018, the total outstanding balance was $100,000 Canadian dollars.

The Company expensed royalty of $62,306 during the three months ended September 30, 2018 and $342,315 during the nine months ended September 30, 2018. At September 30, 2018 NomadChoice Pty Ltd., a subsidiary of the Company, owed Knight Therapeutics $50,310 in connection with a royalty distribution agreement.

The Company expensed royalty of $4,663 during the three months ended September 30, 2018 and $14,279 during the nine months ended September 30, 2018. At September 30, 2018 Sneaky Vaunt Corp., a subsidiary of the Company, owed Knight Therapeutics $3,948 in connection with a royalty distribution agreement.

The Company expensed commissions of $10,898 during the three months ended September 30, 2018 and $38,529 during the nine months ended September 30, 2018. At September 30, 2018, Sneaky Vaunt Corp., a subsidiary of the Company, owed Founded Ventures, owned by a shareholder in the Company, $5,734 in connection with a commission agreement.

The Company expensed royalty of $386 during the three months ended September 30, 2018 and $2,297 during the nine months ended September 30, 2018. At September 30, 2018 The Queen Pegasus, a subsidiary of the Company, owed Knight Therapeutics $129 in connection with a royalty distribution agreement.

The Company expensed commissions of $1,228 during the three months ended September 30, 2018 and $7,118 during the nine months ended September 30, 2018. At September 30, 2018, The Queen Pegasus, a subsidiary of the Company, owed Founded Ventures $649 in connection with a commission agreement.

The Company paid $62,500 and $187,500 during the three and nine months ended September 30, 2018 to Hand MD, Corp, related to a royalty agreement. At September 30, 2018, the Company owed Hand MD Corp. $61,663 in minimum future royalties.

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Accounts Payable and Accrued Liabilities

9 Months Ended

Sep. 30, 2018

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities

Note 9 – Accounts Payable and Accrued Liabilities

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

	September 30, 2018		December 31, 2017
Accrued payroll	$	228,545	$	296,491
Accrued legal fees		16,319		96,017
Accounting fees		36,041		19,681
Commissions		186,666		178,286
Manufacturers		2,022,187		2,147,751
Promotions		99,181		897,925
Professional Fees		30,000		45,921
Rent		20,085		19,500
Customers		177		106,395
Interest		-		147,000
Royalties, related party		138,585		138,143
Warehousing		8,640		10,388
Others		125,843		225,050
Total	$	2,912,269	$	4,328,548

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Notes Payable

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Notes Payable

Note 10 – Notes Payable

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

	September 30, 2018			December 31, 2017
Loans payable	$	8,274,814		$	10,344,739
Unamortized debt issuance cost		(221,403	)		(393,227	)
Total		8,053,411			9,951,512
Less: Current portion		(1,955,917	)		(2,487,233	)
Long-term portion	$	6,097,494		$	7,464,279

$6,000,000 January 22, 2015 Loan:

On January 22, 2015, the Company entered into a Loan and Security Agreement (“Loan Agreement”) with Knight Therapeutics (Barbados) Inc. (“Knight”), pursuant to which Knight agreed to loan the Company $6.0 million (the “Loan”), and which amount was borrowed at closing (the “Financing”) for the purpose of acquiring the Focus Factor Business (defined below). At closing, the Company paid Knight an origination fee of $120,000 and a work fee of $60,000 and also paid $40,000 of Knight’s expenses associated with the Loan. The Loan bears interest at a rate of 15% per year; provided, however, that upon the occurrence of an equity or convertible equity offering by the Company of at least $1.0 million, the interest rate will drop to 13% per year. Interest accrues quarterly and is payable in arrears on March 31, June 30, September 30 and December 31 in each year, beginning on March 31, 2015.

All outstanding principal and accrued and unpaid interest is due on the earliest to occur of either January 20, 2017 (the “Maturity Date”), or the date that Knight, in its discretion, accelerates the Company’s obligations due to an event of default. The Company may extend the Maturity Date for two successive additional 12-month periods if at March 31, 2016 and March 31, 2017, respectively, the Company’s revenues exceed $13.0 million and its EBITDA exceeds $2.0 million for the respective 12-month period then ending. These covenants were achieved, therefore the Company chose to extend the loan for the first 12-month period to January 20, 2018. Principal payments under the Loan Agreement commenced on June 30, 2015 and continue quarterly as set forth on the Repayment Schedule to the Loan Agreement. This Loan was repaid in full on January 20, 2018. The Company recognized and paid interest expense of $0 and $4,611, respectively during the three and nine months ended September 30, 2018. Accrued interest expense was $0 as of September 30, 2018.

Subject to certain restrictions, the Company may prepay the outstanding principal of the Loan (in whole but not in part) at any time if the Company pays a concurrent prepayment fee equal to the greater of (i) the total unpaid annual interest that would have been payable during the year in which the prepayment is made if the prepayment is made prior to the first anniversary of the closing, and (ii) $300,000. The Company’s obligations under the Loan Agreement are secured by a first priority security interest in all present and future assets of the Company. The Company also agreed to not pledge or otherwise encumber its intellectual property assets, subject to certain customary exceptions.

The Loan Agreement includes customary representations, warranties, and affirmative and restrictive covenants, including covenants to attain and maintain certain financial metrics, and to not merge or dispose of assets, acquire other businesses (except for businesses substantially similar or complementary to the Company’s business and the aggregate consideration to be paid does not exceed $100,000) or make capital expenditures in excess of $100,000 over the Company’s annual business plan in any year. The Loan Agreement also includes customary events of default, including payment defaults, breaches of covenants, change of control and material adverse effect default. Upon the occurrence of an event of default and during the continuation thereof, the principal amount of the Loan will bear a default interest rate of an additional 5%.

In connection with the Loan Agreement, the Company issued to Knight a warrant that entitled Knight to purchase 4,595,187 shares of common stock of the Company (“Common Stock”) on or prior to close of business on January 30, 2015 (the “ST Warrant”). The aggregate exercise price of the Common Stock under the ST Warrant is $1.00. Knight exercised the ST Warrant on January 22, 2015. Also in connection with the Loan Agreement, the Company issued to Knight a warrant to purchase 3,584,759 shares of Common Stock on or prior to the close of business of January 22, 2025 (the “LT Warrant”). The exercise price per share of the Common Stock under the LT Warrant is $0.34. The LT Warrant provides for cashless exercise. The LT Warrant also provides that in the event the closing price of the Common Stock remains above $1.00 for six consecutive months, Knight will forfeit the difference between the number of shares acquired under the LT Warrant prior to 90 days after such six-month period, and 25% of the shares purchasable under the LT Warrant.

The beneficial conversion feature of the warrants issued to Knight amounted to $1,952,953 (ST warrants) and $1,462,560 (LT warrants), respectively, and was recorded as debt discount of the corresponding debt.

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

The Company also recorded deferred financing costs of $289,045 with respect to the above loan. The Company recognized amortization of deferred financing costs of $0 and $3,257 during the three and nine months ended September 30, 2018, respectively. Unamortized debt issuance cost as of September 30, 2018 amounted to $0.

$950,000 June 26, 2015 Security Agreement:

On June 26, 2015, the Company, through its wholly owned subsidiary, Neuragen Corp. (“Neuragen”), issued a 0% promissory note in a principal amount of $950,000 in connection with an Asset Purchase Agreement. The note requires $250,000 to be paid on or before June 30, 2016, and $700,000 to be paid in quarterly installments (beginning with the quarter ended September 30, 2015) equal to the greater of $12,500 or 5% of U.S. net sales, and 2% of U.S. net sales of Neuragen for 60 months thereafter. The payment of such amounts is secured by a security interest in certain assets, undertakings and property (“Collateral”) pursuant to the Security Agreement, which will be released upon receipt of total payments of $1.2 million.

The Company also recorded deferred financing costs of $10,486 with respect to the above agreement. The Company recognized amortization of deferred financing costs of $0 during the three and nine months ended September 30, 2018. Unamortized debt issuance cost as of September 30, 2018 amounted to $0. The Company recorded present value of future payments of $274,814 and $282,240 as of September 30, 2018 and December 31, 2017, respectively. The Company recorded imputed interest expense of $9,933 and $30,074 for the three and nine months ended September 30, 2018, respectively.

During the three and nine months ended September 30, 2018, the Company made payments of $12,500 and $37,500, respectively, in connection with this Security Agreement.

$5,500,000 November 12, 2015 Loan:

On November 12, 2015, we entered into a First Amendment to Loan Agreement (“First Amendment”) with Knight, pursuant to which Knight agreed to loan us an additional $5.5 million, and which amount was borrowed at closing (the “Financing”) for the purpose of acquiring Breakthrough Products, Inc. and NomadChoice Pty Limited through Stock Purchase Agreements. At closing, we paid Knight an origination fee of $110,000 and a work fee of $55,000 and also paid $24,000 of Knight’s expenses associated with the Loan. The Loan bears interest at a rate of 15% per year. The interest rate will decrease to 13% if we meet certain equity-fundraising targets. The amended Loan Agreement matured on November 11, 2017 and was fully paid.

In connection with the First Amendment, we issued Knight a warrant that entitles Knight to purchase 5,550,625 shares of our common stock (“Knight Warrant Shares”) representing approximately 6.5% of our fully diluted capital, which Knight exercised in full on November 12, 2015. Knight also received a 10-year warrant entitling Knight to purchase up to 4,547,243 shares of our common stock at $0.49 per share (“Knight Warrants”).

The beneficial conversion feature of the warrants issued to Knight amounted to $2,553,287 (5,550,625 warrants) and $2,067,258 (4,547,243 warrants), respectively, and was recorded as debt discount of the corresponding debt in 2015.

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

$10,000,000 August 9, 2017 Loan:

On August 9, 2017, we entered into a Second Amendment to Loan Agreement (“Second Amendment”) with Knight, pursuant to which Knight agreed to loan us an additional $10 million, and an ongoing credit facility of up to $20 million, and which amount was borrowed at closing (the “Financing”) for working capital purposes. At closing, we paid Knight an origination fee of $200,000 and a work fee of $100,000 and also paid $100,000 of Knight’s expenses associated with the Loan. The Loan bears interest at 10.5% per annum. The amended Loan Agreement matures on August 8, 2020. We have met all the covenants except for the TTM EBITDA of $5 million during the 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. During the period ending June 30, 2018 the interest rate was reduced to 13% due to reducing payroll expenses. Also, Synergy will maintain Focus Factor Net Sales as measured on a year-end basis of at least USD $15 million for each fiscal year starting with December 31, 2017.

The Company also recorded deferred financing costs of $452,869 with respect to the above loan. The Company recognized amortization of deferred financing costs of $93,090 and $168,568 during the three and nine months ended September 30, 2018, respectively. Unamortized debt issuance cost as of September 30, 2018 amounted to $221,403.

The Company recognized and paid interest expense of $273,000 and $801,444 during the three and nine months ended September 30, 2018, respectively. Accrued interest was $0 as of September 30, 2018. The loan balance at September 30, 2018 was $8,000,000.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Stockholders' Equity

Note 11 – Stockholders’ Equity

The total number of shares of all classes of capital stock which the Company is authorized to issue is 300,000,000 shares of common stock with $0.00001 par value.

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

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 12 – Commitments & Contingencies

Litigation:

From time to time the Company may become a party to litigation in the normal course of business. Management believes that there are no current legal matters that would have a material effect on the Company’s financial position or results of operations.

Employee Commitments

The Company and Mr. McCullough entered into an employment agreement on October 17, 2017 (the “Employment Agreement”) with an initial term of 3 years. In exchange for his service as President, Mr. McCullough will receive an annual base salary of $340,000. He received a cash signing bonus of $37,500, to be paid on January 1, 2018, and an additional cash signing bonus of $37,500, to be paid on July 1, 2018, provided that he is employed by the Company through such dates. Mr. McCullough will be eligible for an annual bonus of up to twenty-five percent (25%) of his base salary. The annual bonus will be determined at the discretion of our Board or compensation committee based upon the achievement of financial goals established by the Company’s Chief Executive Officer. Mr. 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, 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 date. The Option Grant will be granted under the Company’s 2014 Stock Incentive Plan pursuant to a stock grant agreement between the Company and Mr. McCullough.

Operating leases

On August 16, 2017, the Company entered into a sublease for office space, effective October 1, 2017 through May 2021. Rent expense under this lease will be $19,500 per month, and increasing annually on June 1.

The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of September 30, 2018:

Year ending December 31:
2018 – remaining three months	$	60,255
2019		245,234
2020		252,591
2021		106,540
2022		-
Total	$	664,620

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Stock Options

9 Months Ended

Sep. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Options

Note 13 – Stock Options

On July 4, 2016, the Company granted 500,000 options with an exercise price of $0.70 per share to an employee of the Company. During 2017, 333,333 unvested options were cancelled due to termination of employee.

On 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.

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

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

The following table summarizes the options outstanding, option exercisability and the related prices for the shares of the Company’s common stock issued to employees and consultants under the Plan at September 30, 2018:

		Options Outstanding						Options Exercisable
Exercise Prices ($)		Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price ($)		Number Exercisable		Weighted Average Exercise Price ($)
$	0.25 - $0.70		7,166,667		5.93	$	0.50		6,341,667	$	0.47

The stock option activity for the nine months ended September 30, 2018 is as follows:

	Options Outstanding			Weighted Average Exercise Price
Outstanding at December 31, 2017		8,666,667		$	0.51
Granted		-			-
Exercised		-			-
Expired or canceled		(1,500,000	)		(0.55	)
Outstanding at September 30, 2018		7,166,667		$	0.50

Stock-based compensation expense related to vested options was ($90,396) and $148,990 during the three and nine months ended September 30, 2018, respectively, which is a component of general and administrative expense in the statement of income. The Company determined the value of share-based compensation for options vesting during the period using the Black-Scholes fair value option-pricing model with the following weighted average assumptions: estimated fair value of Company’s common stock of $0.40-0.74, risk-free interest rate of 0.90-2.23%, volatility of 135-160%, expected lives of 3-10 years, and dividend yield of 0%. Stock options outstanding as of September 30, 2018, as disclosed in the above table, have an intrinsic value of $30,000. As of September 30, 2018, unamortized stock-based compensation costs related to options was $353,065, and will be recognized over a period of 2 years.

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Stock Warrants

9 Months Ended

Sep. 30, 2018

Stock Warrants

Stock Warrants

Note 14 – Stock Warrants

The following table summarizes the warrants outstanding, warrant exercisability and the related prices for the shares of the Company’s common stock at September 30, 2018:

		Warrants Outstanding						Warrants Exercisable
Exercise Prices ($)		Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price ($)		Number Exercisable		Weighted Average Exercise Price ($)
	5.00		1,000,000		0.21		5.00		1,000,000		5.00

The warrant activity for the nine months ended September 30, 2018 is as follows:

	Warrants Outstanding		Weighted Average Exercise Price
Outstanding at December 31, 2017		1,000,000	$	5
Granted		-		-
Exercised		-		-
Expired or canceled		-		-
Outstanding at September 30, 2018		1,000,000	$	5

Warrants outstanding as of September 30, 2018, as disclosed in the above table, have an intrinsic value of $0.

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Segments

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Segments

Note 15 – Segments

Segment identification and selection is consistent with the management structure used by the Company’s chief operating decision maker to evaluate performance and make decisions regarding resource allocation, as well as the materiality of financial results consistent with that structure. Based on the Company’s management structure and method of internal reporting, the Company has one operating segment. The Company’s chief operating decision maker does not review operating results on a disaggregated basis; rather, the chief operating decision maker reviews operating results on an aggregate basis.

Net sales attributed to customers in the United States and foreign countries for the three months ended September 30, 2018 and 2017 were as follows:

	September 30, 2018		September 30, 2017
United States	$	8,944,970	$	8,472,498
Foreign countries		245,407		703,175
	$	9,190,377	$	9,175,673

Foreign countries primarily consist of Australia and Canada.

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

	September 30, 2018		September 30, 2017
Nutraceuticals	$	8,540,044	$	7,961,616
Over the Counter (OTC)		125,878		169,403
Consumer Goods		260,027		733,744
Cosmeceuticals		264,428		310,910
	$	9,190,377	$	9,175,673

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

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

	September 30, 2018		September 30, 2017
Online	$	4,902,161	$	3,236,124
Retail		4,288,216		5,939,549
	$	9,190,377	$	9,175,673

Net sales attributed to customers in the United States and foreign countries for the nine months ended September 30, 2018 and 2017 were as follows:

	September 30, 2018		September 30, 2017
United States	$	27,215,818	$	26,926,114
Foreign countries		1,404,132		2,356,796
	$	28,619,950	$	29,282,910

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

	September 30, 2018		September 30, 2017
Nutraceuticals	$	26,450,312	$	24,126,323
Over the Counter (OTC)		459,980		1,245,096
Consumer Goods		822,959		3,506,378
Cosmeceuticals		886,699		405,113
	$	28,619,950	$	29,282,910

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

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

	September 30, 2018		September 30, 2017
Online	$	13,926,758	$	14,696,177
Retail		14,693,192		14,586,733
	$	28,619,950	$	29,282,910

Long-lived assets (net) attributable to operations in the United States and foreign countries as of September 30, 2018 and December 31, 2017 were as follows:

	September 30, 2018		December 31, 2017
United States	$	12,436,714	$	13,613,043
Foreign countries		13,226		5,612
	$	12,449,940	$	13,618,655

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Income Taxes

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Note 16 – Income Taxes

Income tax (benefit) expense was ($126,190) and $256,812 for the three and nine months ended September 30, 2018, respectively, compared to $97,713 and $221,424, respectively, for the same periods in 2017. The current provision is attributable to Australian operations and the current tax rate in effect in that country.

On 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.

The 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. But is reviewing the TCJA’s potential ramifications, as the Company acts to bring tax compliance up to date.

The 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. 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.

For U.S. purposes, the Company has not completed its evaluation of NOL utilization limitations under Internal Revenue Code, as amended (the “Code”) Section 382/383, change of ownership rules. If the Company has had a change in ownership, the NOL’s would be limited or eliminated, as to the amount that could be utilized each year, based on the Code. NOL’s attributable to Breakthrough Products, Inc., which are the majority of the Company’s domestic NOL’s are Separate Return Limitation Year (SRLY) NOL’s. Such losses may generally not be available for use (limited or eliminated).

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 open. Such liability, if any, has not yet been quantified by the Company, as of the reporting date. The Company is currently assessing the requirements to file these returns in states to determine any potential liability, which the Company believes is immaterial.

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Subsequent Events

9 Months Ended

Sep. 30, 2018

Subsequent Events [Abstract]

Subsequent Events

Note 17 – Subsequent Events

Management evaluated all activities of the Company through the issuance date of the Company’s unaudited condensed consolidated financial statements and concluded that no subsequent events except as disclosed below have occurred that would require adjustments or disclosure into the unaudited condensed consolidated financial statements.

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

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

General

General

The accompanying condensed consolidated financial statements as of September 30, 2018 and December 31, 2017 and for the three and nine months ended September 30, 2018 and 2017 are unaudited. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and are presented in accordance with the requirements of Rule S-X of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q. 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, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2018. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2017 and footnotes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on April 2, 2018.

Basis of Presentation

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are assumptions about collection of accounts receivable, useful life of fixed and intangible assets, goodwill and assumptions used in Black-Scholes-Merton, or BSM, valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of September 30, 2018, the Company had no cash equivalents. The Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (FDIC) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. At September 30, 2018, the uninsured balance amounted to $1,040,864.

Restricted Cash

Restricted Cash

The 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, 2018		December 31, 2017		September 30, 2017
Cash and cash equivalents	$	1,605,381	$	1,955,614	$	5,408,927
Restricted cash		137,096		139,071		139,172
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	1,742,477	$	2,094,685	$	5,548,099

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

Capitalization of Fixed Assets

Capitalization of Fixed Assets

The Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred.

Intangible Assets

Intangible Assets

We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. All of our intangible assets are subject to amortization except intellectual property of $1,450,000 acquired as part of an Asset Purchase Agreement entered into with Factor Nutrition Labs LLC on January 22, 2015, $10,000 acquired as part of an Asset Purchase Agreement entered into with Perfekt Beauty Holdings LLC and CDG Holdings, LLC on June 21, 2017 and $50,000 acquired as an Asset Purchase entered into with Cocowhite on May 22, 2018. Intangible assets are amortized on a straight line basis over the useful lives. As of September 30, 2018, our qualitative analysis of intangible assets with indefinite lives did not indicate any impairment.

Long-lived Assets

Long-lived Assets

Long-lived assets include equipment and intangible assets other than those with indefinite lives. We assess the carrying value of our long-lived asset groups when indicators of impairment exist and recognize an impairment loss when the carrying amount of a long-lived asset is not recoverable when compared to undiscounted cash flows expected to result from the use and eventual disposition of the asset.

Indicators of impairment include significant underperformance relative to historical or projected future operating results, significant changes in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry or economic trends. 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. As of September 30, 2018, our qualitative analysis of long-lived assets did not indicate any impairment.

Goodwill

Goodwill

An asset purchase is accounted for under the purchase method of accounting. Under that method, assets and liabilities of the business acquired are recorded at their estimated fair values as of the date of the acquisition, with any excess of the cost of the acquisition over the estimated fair value of the net tangible and intangible assets acquired recorded as goodwill. As of September 30, 2018, our qualitative analysis of goodwill did not indicate any impairment.

Revenue Recognition

Revenue Recognition

Adoption of ASU 2014-09, Revenue from Contracts with Customers

On January 1, 2018, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606) using the modified retrospective (cumulative effect) transition method. Under this transition method, results for reporting periods beginning January 1, 2018 or later are presented under ASC 606, while prior period results continue to be reported in accordance with previous guidance. The cumulative effect of the initial application of ASC 606 was immaterial, no adjustment was recorded to the opening balance of retained earnings. The timing of revenue recognition for our various revenue streams was not materially impacted by the adoption of this standard. The Company believes its business processes, systems, and controls are appropriate to support recognition and disclosure under ASC 606. In addition, the adoption has led to increased footnote disclosures. Overall, the adoption of ASC 606 did not have a material impact on the Company’s condensed consolidated balance sheet, statement of operations and comprehensive income and statement of cash flows for the nine months ended September 30, 2018. ASC 606 also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. As described below, the analysis of contracts under ASC 606 supports the recognition of revenue at a point in time, resulting in revenue recognition timing that is materially consistent with the Company’s historical practice of recognizing product revenue when title and risk of loss pass to the customer.

Policy

The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s (“FASB”), Accounting Standards Codification (“ASC”) ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied.

The Company recognizes revenue upon shipment from its fulfillment centers. Certain of our distributors may also perform a separate function as a co-packer on our behalf. In such cases, ownership of and title to our products that are co-packed on our behalf by those co-packers who are also distributors, passes to such distributors when we are notified by them that they have taken transfer or possession of the relevant portion of our finished goods. Freight billed to customers is presented as revenues, and the related freight costs are presented as cost of goods sold. Cancelled orders are refunded if not already dispatched, refunds are only paid if stock is damaged in transit, discounts are only offered with specific promotions and orders will be refilled if lost in transit.

Contract Assets

Contract Assets

The Company does not have any contract assets such as work-in-process. All trade receivables on the Company’s condensed consolidated balance sheet are from contracts with customers.

Contract Costs

Contract Costs

Costs incurred to obtain a contract are capitalized unless short term in nature. As a practical expedient, costs to obtain a contract that are short term in nature are expensed as incurred. The Company does not have any contract costs capitalized as of September 30, 2018.

Contract Liabilities - Deferred Revenue

Contract Liabilities - Deferred Revenue

The Company’s contract liabilities consist of advance customer payments and deferred revenue. Deferred revenue results from transactions in which the Company has been paid for products by customers, but for which all revenue recognition criteria have not yet been met. Once all revenue recognition criteria have been met, the deferred revenues are recognized.

Accounts Receivable

Accounts receivable

Accounts receivable are generally unsecured. The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management’s evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote. Any future recoveries are applied against the allowance for doubtful accounts.

Advertising Expense

Advertising Expense

The Company expenses marketing, promotions and advertising costs as incurred. Such costs are included in selling expense in the accompanying unaudited condensed consolidated statements of income.

Research and Development

Research and Development

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

Income Taxes

Income Taxes

The Company utilizes FASB ASC 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

The Company generated a deferred tax asset through net operating loss carry-forward. However, a valuation allowance of 100% has been established due to the uncertainty of the Company’s realization of the net operating loss carry forward prior to its expiration.

NomadChoice Pty Ltd, the Company’s wholly-owned foreign subsidiary, is subject to income taxes in the jurisdictions in which it operates. Significant judgment is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The company recognizes liabilities for anticipated tax audit issues based on the Company’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Synergy CHC Inc. is a wholly-owned foreign subsidiary, is subject to income taxes in the jurisdictions in which it operates. Significant judgment is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The company recognizes liabilities for anticipated tax audit issues based on the Company’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Net Earnings (loss) Per Common Share

Net Earnings (Loss) Per Common Share

The Company computes earnings per share under ASC subtopic 260-10, Earnings Per Share. Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the reporting periods. Diluted earnings per share is computed by increasing the denominator by the weighted average number of additional shares that could have been outstanding from securities convertible into common stock (using the “treasury stock” method), unless their effect on net loss per share is anti-dilutive. As of September 30, 2018, and 2017, options to purchase 7,166,667 and 6,300,000 shares of common stock, respectively, were outstanding. As of both September 30, 2018 and 2017, warrants to purchase 1,000,000 shares of common stock were outstanding.

The 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, 2018, and 2017:

	For the three months ended				For the nine months ended
	September 30, 2018		September 30, 2017		September 30, 2018			September 30, 2017
Net income (loss) after tax	$	345,590	$	127,486	$	(493,296	)	$	2,635,959
Weighted average common shares outstanding		89,862,683		89,237,683		89,862,683			88,939,470
Common stock to be issued		-		125,000		-			125,000
Incremental shares from the assumed exercise of dilutive stock options		-		-		-			-
Incremental shares from the assumed exercise of dilutive stock warrants		-		-		-			-
Dilutive potential common shares		89,862,683		89,362,683		89,862,683			89,064,470
Net earnings (loss) per share:
Basic	$	0.00	$	0.00	$	(0.01	)	$	0.03
Diluted	$	0.00	$	0.00	$	(0.01	)	$	0.03

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

	2018		2017
Options to purchase common stock		7,166,667		6,300,000
Warrants to purchase common stock		1,000,000		1,000,000
		8,166,667		7,300,000

Fair Value Measurements

Fair Value Measurements

The Company measures and discloses the fair value of assets and liabilities required to be carried at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value, and enhances fair value measurement disclosure.

ASC 825 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices for identical assets or liabilities in active markets to which we have access at the measurement date.

Level 2 - Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 - Unobservable inputs for the asset or liability.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

As of September 30, 2018, the Company has determined that there were no assets or liabilities measured at fair value.

Inventory

Inventory

Inventory consists of raw materials, components and finished goods. The Company’s inventory is stated at the lower of cost (FIFO cost basis) or net realizable value. Finished goods include the cost of labor to assemble the items.

Stock-based Compensation

Stock-Based Compensation

ASC 718, “Compensation – Stock Compensation,” prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

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

Foreign Currency Translation

Foreign Currency Translation

The functional currency of one of the Company’s foreign subsidiaries (Nomadchoice Pty Ltd.) is the U.S. Dollar. The Company’s foreign subsidiary maintains its records using local currency (Australian Dollar). All monetary assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at quarter end exchange rates, non-monetary assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at transaction day exchange rates. Income and expense items related to non-monetary items were translated at exchange rates prevailing during the transaction date and other incomes and expenses were translated using average exchange rate for the period. The resulting translation adjustments, net of income taxes, were recorded in statements of operations as Remeasurement gain or loss on translation of foreign subsidiary.

The functional currency of the Company’s other foreign subsidiary (Synergy CHC Inc.) is the Canadian Dollar (CAD). The Company’s foreign subsidiary maintains its records using local currency (CAD). All assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at period end exchange rates and stockholders’ equity is translated at the historical rates. Income and expense items were translated using average exchange rate for the period. The resulting translation adjustments, net of income taxes, are reported as other comprehensive income and accumulated other comprehensive income in the stockholder’s equity in accordance with ASC 220 – Comprehensive Income.

Translation gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are translated into either Australian Dollars or Canadian Dollars, as the case may be, at the rate on the date of the transaction and included in the results of operations as incurred.

Concentrations of Credit Risk

Concentrations of Credit Risk

In the normal course of business, the Company provides credit terms to its customers; however, collateral is not required. Accordingly, the Company performs credit evaluations of its customers and maintains allowances for possible losses which, when realized, were within the range of management’s expectations. From time to time, a higher concentration of credit risk exists on outstanding accounts receivable for a select number of customers due to individual buying patterns.

Warehousing Costs

Warehousing costs

Warehouse costs include all third party warehouse rent fees and are charged to selling and marketing expenses as incurred. Any additional costs relating to assembly or special pack-outs of the Company’s products are charged to cost of sales.

Product Display Costs

Product display costs

All displays manufactured and purchased by the Company are for placement of product in retail stores. This also includes all costs for display execution and setup and retail services are charged to cost of sales and expensed as incurred.

Cost of Sales

Cost of Sales

Cost of sales includes the purchase cost of products sold and all costs associated with getting the products into the retail stores including buying and transportation costs.

Debt Issuance Costs

Debt Issuance Costs

Debt issuance costs consist primarily of arrangement fees, professional fees and legal fees. These costs are netted off with the related loan and are being amortized to interest expense over the term of the related debt facilities.

Shipping Costs

Shipping Costs

Shipping and handling costs billed to customers are recorded in sales. Shipping costs incurred by the company are recorded in selling and marketing expenses.

Related Parties

Related parties

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. All transactions with related parties are recorded at fair value of the goods or services exchanged.

Segment Reporting

Segment Reporting

Segment identification and selection is consistent with the management structure used by the Company’s chief operating decision maker to evaluate performance and make decisions regarding resource allocation, as well as the materiality of financial results consistent with that structure. Based on the Company’s management structure and method of internal reporting, the Company has one operating segment. The Company’s chief operating decision maker does not review operating results on a disaggregated basis; rather, the chief operating decision maker reviews operating results on an aggregate basis.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

ASU 2018-05

This 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.

ASU 2018-02

On 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.

This 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.

ASU 2018-01

The 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.

ASU 2017-13

In September 2017, the FASB issued Accounting Standard Update (ASU) 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842). The effective date for ASU 2017-13 is for fiscal years beginning after December 15, 2018. We have adopted ASC 606 as disclosed above. We are currently evaluating the impact of adopting Leases Topic 840 ASU 2017-13 on our consolidated financial statements.

ASU 2017-09

The 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 award.

The 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.

This 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.

ASU 2017-04

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350), which simplifies the goodwill impairment test. The effective date for ASU 2017-04 is for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact of adopting ASU 2017-04 on our consolidated financial statements.

ASU No. 2017-01

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard will be effective for the Company on January 1, 2018; however, early adoption is permitted with prospective application to any business development transaction. We are currently evaluating the impact of adopting ASU 2017-04 on our consolidated financial statements.

ASU 2016-18

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), which requires that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. The effective date for ASU 2016-18 is for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We 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 equivalents. 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 September 30, 2017 has been reclassified to reflect this change.

ASU 2016-15

In August 2016, the FASB issued AS 2016-15, Classification of Certain Cash Receipts and Cash Payments, which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The effective date for ASU 2016-15 is for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. We are currently evaluating the impact of adopting ASU 2016-18 on our consolidated financial statements.

ASU 2016-09

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation, or ASU No. 2016-09. The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. We are currently evaluating the impact of adopting ASU No. 2016-09 on our consolidated financial statements.

ASU 2016-01

In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Schedule of Restricted Cash

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

	September 30, 2018		December 31, 2017		September 30, 2017
Cash and cash equivalents	$	1,605,381	$	1,955,614	$	5,408,927
Restricted cash		137,096		139,071		139,172
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	1,742,477	$	2,094,685	$	5,548,099

Schedule of Number of Shares Used in Calculation of Earnings Per Share Basic and Diluted

The 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, 2018, and 2017:

	For the three months ended				For the nine months ended
	September 30, 2018		September 30, 2017		September 30, 2018			September 30, 2017
Net income (loss) after tax	$	345,590	$	127,486	$	(493,296	)	$	2,635,959
Weighted average common shares outstanding		89,862,683		89,237,683		89,862,683			88,939,470
Common stock to be issued		-		125,000		-			125,000
Incremental shares from the assumed exercise of dilutive stock options		-		-		-			-
Incremental shares from the assumed exercise of dilutive stock warrants		-		-		-			-
Dilutive potential common shares		89,862,683		89,362,683		89,862,683			89,064,470
Net earnings (loss) per share:
Basic	$	0.00	$	0.00	$	(0.01	)	$	0.03
Diluted	$	0.00	$	0.00	$	(0.01	)	$	0.03

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

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

	2018		2017
Options to purchase common stock		7,166,667		6,300,000
Warrants to purchase common stock		1,000,000		1,000,000
		8,166,667		7,300,000

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Inventory (Tables)

9 Months Ended

Sep. 30, 2018

Inventory Disclosure [Abstract]

Schedule of Carrying Value of Inventory

The carrying value of inventory consisted of the following:

	September 30, 2018		December 31, 2017
Finished goods	$	2,529,198	$	1,507,344
Components		733,676		1,197,228
Inventory in transit		-		45,188
Raw materials		118,940		92,616
Total inventory	$	3,381,814	$	2,842,376

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Accounts Receivable (Tables)

9 Months Ended

Sep. 30, 2018

Receivables [Abstract]

Accounts Receivable, Net of Allowances for Sales Returns and Doubtful Accounts

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

	September 30, 2018		December 31, 2017
Trade accounts receivable	$	2,024,258	$	4,333,608
Less allowances		-		-
Total accounts receivable, net	$	2,024,258	$	4,333,608

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Prepaid Expenses (Tables)

9 Months Ended

Sep. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Summary of Prepaid Expenses

Prepaid expenses consisted of the following:

	September 30, 2018		December 31, 2017
Advances for inventory	$	71,087	$	206,973
Components		-		104,668
Media production		41,583		109,388
Insurance		29,273		41,548
Trade shows		18,295		17,150
Deposits		49,472		44,841
Rent		-		19,500
Promotion - Bloggers		101,700		246,592
License agreement		83,334		158,333
Software subscriptions		54,798		20,513
Rebranding		52,429		32,841
Clinical Research		39,575		47,490
Advertising		75,155		2,500
Promotions		-		37,500
Miscellaneous		150,755		53,414
Total	$	767,456	$	1,143,251

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Concentration of Credit Risk (Tables)

9 Months Ended

Sep. 30, 2018

Risks and Uncertainties [Abstract]

Summary of Major Suppliers

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

FOCUSfactor	Atrium Innovations - Pittsburgh, PA	Vit-Best Nutrition, Inc. - Tustin, CA
Flat Tummy Tea	Caraway Tea Company, LLC - Highland, NY	-
Neuragen	C-Care, LLC - Linthicum Heights, MD	-
UrgentRx	Capstone Nutrition - Ogden, UT	-
Hand MD	HealthSpecialty - Santa Fe Springs, CA	-
Sneaky Vaunt	Dongguan Jingrui – China	-
The Queen Pegasus	Skin Actives – Gilbert, AZ	Ningbo Beautiful Daily Cosmetics – Zhejiang, China

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Fixed Assets and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2018

Assets

Summary of Fixed and Intangible Assets

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

	September 30, 2018			December 31, 2017
Property and equipment	$	566,446		$	437,358
Less accumulated depreciation		(258,614	)		(144,153	)
Fixed assets, net	$	307,832		$	293,205

	September 30, 2018			December 31, 2017
FOCUSfactor intellectual property	$	1,450,000		$	1,450,000
Perfekt intellectual property		10,000			10,000
Cocowhite intellectual property		50,000			-
Intangible assets subject to amortization		7,150,165			7,134,952
Less accumulated amortization		(4,311,297	)		(3,062,742	)
Intangible assets, net	$	4,348,868		$	5,532,210

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Accounts Payable and Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2018

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities

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

	September 30, 2018		December 31, 2017
Accrued payroll	$	228,545	$	296,491
Accrued legal fees		16,319		96,017
Accounting fees		36,041		19,681
Commissions		186,666		178,286
Manufacturers		2,022,187		2,147,751
Promotions		99,181		897,925
Professional Fees		30,000		45,921
Rent		20,085		19,500
Customers		177		106,395
Interest		-		147,000
Royalties, related party		138,585		138,143
Warehousing		8,640		10,388
Others		125,843		225,050
Total	$	2,912,269	$	4,328,548

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Notes Payable (Tables)

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Schedule of Loan Payable

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

	September 30, 2018			December 31, 2017
Loans payable	$	8,274,814		$	10,344,739
Unamortized debt issuance cost		(221,403	)		(393,227	)
Total		8,053,411			9,951,512
Less: Current portion		(1,955,917	)		(2,487,233	)
Long-term portion	$	6,097,494		$	7,464,279

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases

The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of September 30, 2018:

Year ending December 31:
2018 – remaining three months	$	60,255
2019		245,234
2020		252,591
2021		106,540
2022		-
Total	$	664,620

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Stock Options (Tables)

9 Months Ended

Sep. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Options Outstanding by Price Range

The following table summarizes the options outstanding, option exercisability and the related prices for the shares of the Company’s common stock issued to employees and consultants under the Plan at September 30, 2018:

		Options Outstanding						Options Exercisable
Exercise Prices ($)		Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price ($)		Number Exercisable		Weighted Average Exercise Price ($)
$	0.25 - $0.70		7,166,667		5.93	$	0.50		6,341,667	$	0.47

Schedule of Stock Options Activity

The stock option activity for the nine months ended September 30, 2018 is as follows:

	Options Outstanding			Weighted Average Exercise Price
Outstanding at December 31, 2017		8,666,667		$	0.51
Granted		-			-
Exercised		-			-
Expired or canceled		(1,500,000	)		(0.55	)
Outstanding at September 30, 2018		7,166,667		$	0.50

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Stock Warrants (Tables)

9 Months Ended

Sep. 30, 2018

Stock Warrants

Summary of Warrants Outstanding, Warrant Exercisability and Related Prices for Shares of Common Stock

The following table summarizes the warrants outstanding, warrant exercisability and the related prices for the shares of the Company’s common stock at September 30, 2018:

		Warrants Outstanding						Warrants Exercisable
Exercise Prices ($)		Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price ($)		Number Exercisable		Weighted Average Exercise Price ($)
	5.00		1,000,000		0.21		5.00		1,000,000		5.00

Schedule of Stock Warrants Activity

The warrant activity for the nine months ended September 30, 2018 is as follows:

	Warrants Outstanding		Weighted Average Exercise Price
Outstanding at December 31, 2017		1,000,000	$	5
Granted		-		-
Exercised		-		-
Expired or canceled		-		-
Outstanding at September 30, 2018		1,000,000	$	5

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Segments (Tables)

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Summary of Net Sales Attributed to Customers Geographical Segment

Net sales attributed to customers in the United States and foreign countries for the three months ended September 30, 2018 and 2017 were as follows:

	September 30, 2018		September 30, 2017
United States	$	8,944,970	$	8,472,498
Foreign countries		245,407		703,175
	$	9,190,377	$	9,175,673

Net sales attributed to customers in the United States and foreign countries for the nine months ended September 30, 2018 and 2017 were as follows:

	September 30, 2018		September 30, 2017
United States	$	27,215,818	$	26,926,114
Foreign countries		1,404,132		2,356,796
	$	28,619,950	$	29,282,910

Summary of Net Sales Attributed to Customers Product Group

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

	September 30, 2018		September 30, 2017
Nutraceuticals	$	8,540,044	$	7,961,616
Over the Counter (OTC)		125,878		169,403
Consumer Goods		260,027		733,744
Cosmeceuticals		264,428		310,910
	$	9,190,377	$	9,175,673

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

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

	September 30, 2018		September 30, 2017
Nutraceuticals	$	26,450,312	$	24,126,323
Over the Counter (OTC)		459,980		1,245,096
Consumer Goods		822,959		3,506,378
Cosmeceuticals		886,699		405,113
	$	28,619,950	$	29,282,910

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

Schedule of Net Sales by Major Sales Channel

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

	September 30, 2018		September 30, 2017
Online	$	4,902,161	$	3,236,124
Retail		4,288,216		5,939,549
	$	9,190,377	$	9,175,673

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

	September 30, 2018		September 30, 2017
Online	$	13,926,758	$	14,696,177
Retail		14,693,192		14,586,733
	$	28,619,950	$	29,282,910

Summary of Long-lived Assets (Net) Attributable to Operations Geographical Segment

Long-lived assets (net) attributable to operations in the United States and foreign countries as of September 30, 2018 and December 31, 2017 were as follows:

	September 30, 2018		December 31, 2017
United States	$	12,436,714	$	13,613,043
Foreign countries		13,226		5,612
	$	12,449,940	$	13,618,655

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Summary of Significant Accounting Policies (Details Narrative)	9 Months Ended
	Sep. 30, 2018 USD ($) Segment shares	Sep. 30, 2017 shares	May 22, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jun. 21, 2017 USD ($)	Jan. 22, 2015 USD ($)
Cash equivalents
Cash federally insured limit per bank	250,000
Cash uninsured amount	$ 1,040,864			$ 1,557,373
Percentage of valuation allowance	100.00%
Anti-dilutive securities | shares	8,166,667	7,300,000
Number of operating segment | Segment	1
Options to Purchase Common Stock [Member]
Anti-dilutive securities | shares	7,166,667	6,300,000
Warrants to Purchase Common Stock [Member]
Anti-dilutive securities | shares	1,000,000	1,000,000
Factor Nutrition LLC [Member]
Value of intellectual property acquired						$ 1,450,000
Perfekt Beauty Holdings LLC [Member]
Value of intellectual property acquired					$ 10,000
CDG Holdings, LLC [Member]
Value of intellectual property acquired					$ 10,000
Cocowhite [Member]
Value of intellectual property acquired			$ 50,000

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Summary of Significant Accounting Policies - Schedule of Restricted Cash (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Cash and cash equivalents	$ 1,605,381	$ 1,955,614	$ 5,408,927
Restricted cash	137,096	139,071	139,172
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$ 1,742,477	$ 2,094,685	$ 5,548,099	$ 2,617,642

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Summary of Significant Accounting Policies - Schedule of Number of Shares Used in Calculation of Earnings Per Share Basic and Diluted (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Accounting Policies [Abstract]
Net (loss) income after tax	$ 345,590	$ 127,486	$ (493,296)	$ 2,635,959
Weighted average common shares outstanding	89,862,683	89,237,683	89,862,683	88,939,470
Common stock to be issued		125,000		125,000
Incremental shares from the assumed exercise of dilutive stock options
Incremental shares from the assumed exercise of dilutive stock warrants
Dilutive potential common shares	89,862,683	89,362,683	89,862,683	89,064,470
Net earnings per share - Basic	$ 0.00	$ 0.00	$ (0.01)	$ 0.03
Net earnings per share - Diluted	$ 0.00	$ 0.00	$ (0.01)	$ 0.03

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Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Anti-dilutive securities	8,166,667	7,300,000
Options to Purchase Common Stock [Member]
Anti-dilutive securities	7,166,667	6,300,000
Warrants to Purchase Common Stock [Member]
Anti-dilutive securities	1,000,000	1,000,000

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Inventory - Schedule of Carrying Value of Inventory (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Inventory Disclosure [Abstract]
Finished goods	$ 2,529,198	$ 1,507,344
Components	733,676	1,197,228
Inventory in transit		45,188
Raw Materials	118,940	92,616
Total inventory	$ 3,381,814	$ 2,842,376

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Accounts Receivable - Accounts Receivable, Net of Allowances for Sales Returns and Doubtful Accounts (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Receivables [Abstract]
Trade accounts receivable	$ 2,024,258	$ 4,333,608
Less allowances
Total accounts receivable, net	$ 2,024,258	$ 4,333,608

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Prepaid Expenses - Summary of Prepaid Expenses (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Advances for inventory	$ 71,087	$ 206,973
Components		104,668
Media production	41,583	109,388
Insurance	29,273	41,548
Trade shows	18,295	17,150
Deposits	49,472	44,841
Rent		19,500
Promotion - Bloggers	101,700	246,592
License agreement	83,334	158,333
Software subscriptions	54,798	20,513
Rebranding	52,429	32,841
Clinical Research	39,575	47,490
Advertising	75,155	2,500
Promotions		37,500
Miscellaneous	150,755	53,414
Total	$ 767,456	$ 1,143,251

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Concentration of Credit Risk (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Cash federally insured limit per bank	$ 250,000		$ 250,000
Cash uninsured amount	$ 1,040,864		$ 1,040,864		$ 1,557,373
Three Customers [Member] | Accounts Receivable [Member]
Concentration risk percentage			78.00%		88.00%
Three Customers [Member] | Sales Revenue, Net [Member]
Concentration risk percentage	58.00%	50.00%	50.00%	34.00%
Two Customers [Member] | Sales Revenue, Net [Member]
Concentration risk percentage					42.00%

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Concentration of Credit Risk - Summary of Major Suppliers (Details)	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2018	Dec. 31, 2017
Suppliers One [Member]
Name of the Product	FOCUSfactor	FOCUSfactor	FOCUSfactor
Address of the suppliers	Atrium Innovations - Pittsburgh, PA	Atrium Innovations - Pittsburgh, PA	Atrium Innovations - Pittsburgh, PA
City of suppliers	Vit-Best Nutrition, Inc. - Tustin, CA	Vit-Best Nutrition, Inc. - Tustin, CA	Vit-Best Nutrition, Inc. - Tustin, CA
Suppliers Two [Member]
Name of the Product	Flat Tummy Tea	Flat Tummy Tea	Flat Tummy Tea
Address of the suppliers	Caraway Tea Company, LLC - Highland, NY	Caraway Tea Company, LLC - Highland, NY	Caraway Tea Company, LLC - Highland, NY
City of suppliers		-	-
Suppliers Three [Member]
Name of the Product	Neuragen	Neuragen	Neuragen
Address of the suppliers	C-Care, LLC - Linthicum Heights, MD	C-Care, LLC - Linthicum Heights, MD	C-Care, LLC - Linthicum Heights, MD
City of suppliers		-	-
Suppliers Four [Member]
Name of the Product	UrgentRx	UrgentRx	UrgentRx
Address of the suppliers	Capstone Nutrition - Ogden, UT	Capstone Nutrition - Ogden, UT	Capstone Nutrition - Ogden, UT
City of suppliers		-	-
Suppliers Five [Member]
Name of the Product	Hand MD	Hand MD	Hand MD
Address of the suppliers	HealthSpecialty - Santa Fe Springs, CA	HealthSpecialty - Santa Fe Springs, CA	HealthSpecialty - Santa Fe Springs, CA
City of suppliers			-
Suppliers Six [Member]
Name of the Product	Sneaky Vaunt	Sneaky Vaunt	Sneaky Vaunt
Address of the suppliers	Dongguan Jingrui - China	Dongguan Jingrui - China	Dongguan Jingrui - China
City of suppliers			-
Suppliers Seven [Member]
Name of the Product	The Queen Pegasus	The Queen Pegasus	The Queen Pegasus
Address of the suppliers	Skin Actives - Gilbert, AZ	Skin Actives - Gilbert, AZ	Skin Actives - Gilbert, AZ
City of suppliers	Ningbo Beautiful Daily Cosmetics - Zhejiang, China	Ningbo Beautiful Daily Cosmetics - Zhejiang, China	Ningbo Beautiful Daily Cosmetics - Zhejiang, China

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Fixed Assets and Intangible Assets (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Assets
Depreciation expense	$ 38,299	$ 27,134	$ 114,461	$ 77,445
Amortization expense	$ 417,280	$ 369,722	$ 1,248,555	$ 968,841

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Fixed Assets and Intangible Assets - Summary of Fixed and Intangible Assets (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Property and equipment	$ 566,445	$ 437,358
Less accumulated depreciation	(258,614)	(144,153)
Fixed assets, net	307,832	293,205
Intangible assets subject to amortization	7,150,165	7,134,952
Less accumulated amortization	(4,311,297)	3,062,742
Intangible assets, net	4,348,868	5,532,210
FOCUSfactor [Member]
Intellectual property	1,450,000	1,450,000
Per-fekt [Member]
Intellectual property	10,000	10,000
Cocowhite Intellectual Property [Member]
Intellectual property	$ 50,000

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Related Party Transactions (Details Narrative)		3 Months Ended	9 Months Ended
	Dec. 23, 2016 CAD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2018 USD ($)	Aug. 09, 2017 USD ($)
Consulting fees		$ 173,750	$ 403,583
Outstanding balance of consulting fees		0	0
Payroll expense			276,342
Hand MD LLC [Member]
Outstanding balance of consulting fees		$ 0	$ 0
Percentage of ownership interest		50.00%	50.00%
Payroll expense		$ 90,000	$ 30,000
NomadChoice Pty Limited's [Member]
Royal expense		62,306	342,315
Sneaky Vaunt Corp [Member]
Royal expense		4,663	14,279
The Queen Pegasus [Member]
Royal expense		386	2,297
Hand MD Corp [Member]
Royal expense		62,500	187,500
Minimum future royalties payment			61,663
Loan Agreement [Member] | NomadChoice's [Member]
Amount owed to related party		0	0
Loan Agreement [Member] | Knight Therapeutics Inc [Member]
Amount owed to related party		0	0	$ 8,053,411
Loan agreement description	In conjunction with this agreement, we are required to pay Knight a distribution fee equal to 30% of gross sales for sales achieved through a direct sales channel and 5% of gross sales for sales achieved through retail sales.
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | Canadian Dollars Currency [Member]
Due to related party		100,000	100,000
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | Canadian Dollars Currency [Member] | Minimum [Member]
Due to related party	$ 100,000
Security Agreement [Member] | Knight Therapeutics Inc [Member]
Amount owed to related party		274,814	274,814
Royalty Distribution Agreement [Member] | NomadChoice Pty Limited's [Member]
Royal expense			50,310
Royalty Distribution Agreement [Member] | Sneaky Vaunt Corp [Member]
Royal expense			3,948
Royalty Distribution Agreement [Member] | The Queen Pegasus [Member]
Royal expense			129
Commission Agreement [Member]
Commissions expense		10,898	38,529
Commission Agreement [Member] | Sneaky Vaunt Corp [Member]
Commissions expense			5,734
Commission Agreement One [Member]
Commissions expense		1,228	7,118
Commission Agreement One [Member] | The Queen Pegasus [Member]
Commissions expense			649
Mr. Jack Ross [Member]
Accrued consulting fees per month		57,917	57,917
Ms. Harshbarger [Member] | Consulting Agreement [Member]
Due to related party		$ 10,000	$ 10,000

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Accounts Payable and Accrued Liabilities - Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Payables and Accruals [Abstract]
Accrued payroll	$ 228,545	$ 296,491
Accrued legal fees	16,319	96,017
Accounting fees	36,041	19,681
Commissions	186,666	178,286
Manufacturers	2,022,187	2,147,751
Promotions	99,181	897,925
Professional Fees	30,000	45,921
Rent	20,085	19,500
Customers	177	106,395
Interest		147,000
Royalties, related party	138,585	138,143
Warehousing	8,640	10,388
Others	125,843	225,050
Total	$ 2,912,269	$ 4,328,548

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Notes Payable (Details Narrative)					3 Months Ended		9 Months Ended
	Aug. 09, 2017 USD ($)	Nov. 12, 2015 USD ($) $ / shares shares	Jun. 26, 2015 USD ($)	Jan. 22, 2015 USD ($) $ / shares shares	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Amount of loan obligation					$ 8,053,411		$ 8,053,411		$ 9,951,512
Recognized amortization of deferred financing costs					93,089	$ 68,857	171,824	$ 157,429
Unamortized debt issuance costs					221,403		221,403		393,227
Interest expense paid					288,479	$ 272,318	864,342	706,759
Payments of debt issuance costs								$ 452,869
Year-End Adjustment [Member]
Payroll reduction of interest rate							0.13
Net sales							$ 15,000,000
June 26, 2015 Security Agreement [Member] | U.S [Member]
Percentage of sale revenue net			5.00%
June 26, 2015 Security Agreement [Member] | June 30, 2016 [Member]
Note payable			$ 250,000
June 26, 2015 Security Agreement [Member] | June 30, 2016 [Member] | Minimum [Member]
Note payable			12,500
June 26, 2015 Security Agreement [Member] | Quarter Ending September 30, 2015 [Member]
Note payable			$ 700,000
Neuragen Corp [Member] | June 26, 2015 Security Agreement [Member]
Debt instrument interest rate percentage			0.00%
Note principal amount			$ 950,000
Total payments of acquire assets			$ 1,200,000
Neuragen Corp [Member] | June 26, 2015 Security Agreement [Member] | U.S [Member]
Percentage of sale revenue net			2.00%
Loan Agreement [Member] | Knight Therapeutics Inc [Member]
Loan amount	$ 10,000,000	$ 5,500,000		$ 6,000,000
Expenses associated with loan	$ 100,000	$ 24,000		$ 40,000
Debt instrument interest rate percentage	10.50%	15.00%		15.00%
Convertible equity offering				$ 1,000,000
Change in loan interest rate		13.00%		13.00%
Note maturity date	Aug. 08, 2020	Nov. 11, 2017		Jan. 20, 2017
Revenue				$ 13,000,000
Net income (loss)				2,000,000
Recognized and paid interest expense				4,611
Accrued interest expense				$ 0
Common stock purchase price per share | $ / shares		$ 0.49
Percentage of shares purchasable under warrants		6.50%
Deferred financing costs					289,045		289,045
Recognized amortization of deferred financing costs							3,257
Unamortized debt issuance costs					0		0
Warrants term		10 years
Credit facility maximum borrowing amount	$ 20,000,000
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | Second Amendment [Member]
Accrued interest expense					0		0
Deferred financing costs					452,869		452,869
Recognized amortization of deferred financing costs					93,090		168,568
Unamortized debt issuance costs					221,403		221,403
Note payable					8,000,000		8,000,000
Interest expense paid					273,000		801,444
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | ST Warrant [Member]
Number of warrants to purchase common stock | shares				4,595,187
Warrants exercise price | $ / shares				$ 1.00
Beneficial conversion feature of warrants				$ 1,952,953
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | LT Warrant [Member]
Number of warrants to purchase common stock | shares				3,584,759
Warrants exercise price | $ / shares				$ 0.34
Common stock purchase price per share | $ / shares				$ 1.00
Percentage of shares purchasable under warrants				25.00%
Beneficial conversion feature of warrants				$ 1,462,560
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | Knight Warrant Shares [Member]
Number of warrants to purchase common stock | shares		5,550,625
Amortization of debt discount		$ 2,553,287
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | Knight Warrant Shares [Member] | Maximum [Member]
Number of warrants to purchase common stock | shares		4,547,243
Amortization of debt discount		$ 2,067,258
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | January 22, 2015 Loan One [Member]
Debt instrument interest rate percentage				5.00%
Amount of loan obligation				$ 300,000
Aggregate consideration to be paid				100,000
Capital expenditures				100,000
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | Origination Fee [Member]
Expenses associated with loan	200,000	110,000		120,000
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | Work Fee [Member]
Expenses associated with loan	100,000	$ 55,000		60,000
Recognized and paid interest expense				$ 0
Security Agreement [Member]
Payments of debt issuance costs					12,500		37,500
Security Agreement [Member] | June 26, 2015 Security Agreement [Member]
Deferred financing costs					10,486		10,486
Recognized amortization of deferred financing costs							0
Unamortized debt issuance costs					0		0
Present value of future payments					274,814		274,814		$ 282,240
Interest expense paid					$ 9,933		$ 30,074
Covenants [Member]
Loan amount	$ 5,000,000
Debt instrument interest rate percentage	5.00%

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Notes Payable - Schedule of Loan Payable (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Debt Disclosure [Abstract]
Loans payable	$ 8,274,814	$ 10,344,739
Unamortized debt issuance cost	(221,403)	(393,227)
Total	8,053,411	9,951,512
Less: Current portion	(1,955,917)	(2,487,233)
Long-term portion	$ 6,097,494	$ 7,464,279

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Stockholders' Equity (Details Narrative) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Equity [Abstract]
Common stock, shares authorized	300,000,000	300,000,000
Common stock par value	$ 0.00001	$ 0.00001
Common stock, shares issued	89,862,683	89,862,683
Common stock, shares outstanding	89,862,683	89,862,683

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Commitments and Contingencies (Details Narrative)	Oct. 17, 2017 USD ($) Integer shares	Aug. 16, 2017 USD ($)
Rent expense		$ 19,500
Lease description		Effective October 1, 2017 through May 2021
Employment Agreement [Member]
Agreement initial term	3 years
Employment Agreement [Member] | Mr. McCullough [Member]
Salary received	$ 340,000
Employment Agreement [Member] | Mr. McCullough [Member] | Retail Sales [Member]
Percentage of sale revenue net	5.00%
Employment Agreement [Member] | Mr. McCullough [Member] | Maximum [Member]
Percentage of bonus based salary	25.00%
Employment Agreement [Member] | Mr. McCullough [Member] | January 1, 2018 [Member]
Received annual bonus	$ 37,500
Employment Agreement [Member] | Mr. McCullough [Member] | July 1, 2018 [Member]
Received annual bonus	$ 37,500
Employment Agreement [Member] | Mr. McCullough [Member] | Option Grant [Member]
Purchase of granted option of stock based payments | shares	1,000,000
Number of vesting annual installments | Integer	3

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Commitments and Contingencies - Schedule of Future Minimum Rental Payments for Operating Leases (Details)	Sep. 30, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2018 - remaining three months	$ 60,255
2019	245,234
2020	252,591
2021	106,540
2022
Total	$ 664,620

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Stock Options (Details Narrative) - USD ($)					1 Months Ended	3 Months Ended	9 Months Ended		12 Months Ended
	Oct. 18, 2017	Oct. 16, 2017	Oct. 10, 2017	Jul. 04, 2016	Aug. 31, 2018	Sep. 30, 2018	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Stock-based compensation expense						$ 90,396	$ 148,990	$ 1,024,630
Dividend yield							0.00%
Stock options outstanding intrinsic value						30,000	$ 30,000
Unamortized stock-based compensation costs						$ 353,065	$ 353,065
Recognized, period for recognition							2 years
Minimum [Member]
Estimated fair value of company's common stock						$ 0.40	$ 0.40
Risk-free interest rate							0.90%
Volatility rate							135.00%
Expected lives							3 years
Maximum [Member]
Estimated fair value of company's common stock						$ 0.74	$ 0.74
Risk-free interest rate							2.23%
Volatility rate							160.00%
Expected lives							10 years
Employee [Member]
Options outstanding, granted	200,000	1,500,000	1,000,000	500,000
Stock options exercise price per share	$ 0.70	$ 0.55	$ 0.70	$ 0.70
Cancellation of unvested options					1,500,000				333,333

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Stock Options - Summary of Options Outstanding by Price Range (Details)	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Options Outstanding, Exercise Price Lower Limit	$ 0.25
Options Outstanding, Exercise Price Upper Limit	$ 0.70
Options Outstanding, Number Outstanding | shares	7,166,667
Options Outstanding, Remaining Average Contractual Life (Years)	5 years 11 months 4 days
Options Outstanding, Weighted Average Exercise Price	$ .50
Options Exercisable, Number Exercisable | shares	6,341,667
Options Exercisable, Weighted Average Exercise Price	$ 0.47

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Stock Options - Schedule of Stock Options Activity (Details) - Stock Option Plan [Member]	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Options Outstanding, at Beginning balance | shares	8,666,667
Options Outstanding, Granted | shares
Options Outstanding, Exercised | shares
Options Outstanding, Expired or canceled | shares	(1,500,000)
Options Outstanding, at Ending balance | shares	7,166,667
Weighted Average Exercise Price, at Beginning balance | $ / shares	$ 0.51
Weighted Average Exercise Price, Granted | $ / shares
Weighted Average Exercise Price, Exercised | $ / shares
Weighted Average Exercise Price, Expired or canceled | $ / shares	(0.55)
Weighted Average Exercise Price, at Ending balance | $ / shares	$ 0.50

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Stock Warrants (Details Narrative)	Sep. 30, 2018 USD ($)
Stock options outstanding intrinsic value	$ 30,000
Stock Warrant [Member]
Stock options outstanding intrinsic value	$ 0

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Stock Warrants - Summary of Warrants Outstanding, Warrant Exercisability and Related Prices for Shares of Common Stock (Details)	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Warrants Outstanding, Exercise Prices	$ 0.25
Warrants Outstanding, Number Outstanding | shares	7,166,667
Warrants Outstanding, Weighted Average Remaining Average Contractual Life (Years)	5 years 11 months 4 days
Warrants Outstanding, Weighted Average Exercise Price	$ .50
Warrants Exercisable, Number Exercisable | shares	6,341,667
Warrants Exercisable, Weighted Average Exercise Price	$ 0.47
Warrant [Member] | Exercise Price Range One [Member]
Warrants Outstanding, Exercise Prices	$ 5.00
Warrants Outstanding, Number Outstanding | shares	1,000,000
Warrants Outstanding, Weighted Average Remaining Average Contractual Life (Years)	2 months 16 days
Warrants Outstanding, Weighted Average Exercise Price	$ 5.00
Warrants Exercisable, Number Exercisable | shares	1,000,000
Warrants Exercisable, Weighted Average Exercise Price	$ 5.00

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Stock Warrants - Schedule of Stock Warrants Activity (Details) - Warrant [Member]	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Options Outstanding, Beginning Balance | shares	1,000,000
Options Outstanding, Granted | shares
Options Outstanding, Exercised | shares
Options Outstanding, Expired or canceled | shares
Options Outstanding, Ending Balance | shares	1,000,000
Options Outstanding, Weighted Average Exercise Price, Beginning Balance | $ / shares	$ 5
Weighted Average Exercise Price, Granted | $ / shares
Weighted Average Exercise Price, Exercised | $ / shares
Weighted Average Exercise Price, Expired or canceled | $ / shares
Options Outstanding, Weighted Average Exercise Price, Ending Balance | $ / shares	$ 5

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Segments (Details Narrative)	9 Months Ended
	Sep. 30, 2018 Segment
Number of operating segments	1
Sales Revenue, Net [Member]
Concentration risk percentage	10.00%

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Segments - Summary of Net Sales Attributed to Customers Geographical Segment (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenue	$ 9,190,377	$ 9,175,673	$ 28,619,950	$ 29,282,910
United States [Member]
Revenue	8,944,970	8,472,498	27,215,818	26,926,114
Foreign Countries [Member]
Revenue	$ 245,407	$ 703,175	$ 1,404,132	$ 2,356,796

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Segments - Summary of Net Sales Attributed to Customers Product Group (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenue	$ 9,190,377	$ 9,175,673	$ 28,619,950	$ 29,282,910
Nutraceuticals [Member]
Revenue	8,540,044	7,961,616	26,450,312	24,126,323
Over the Counter (OTC) [Member]
Revenue	125,878	169,403	459,980	1,245,096
Consumer Goods [Member]
Revenue	260,027	733,744	822,959	3,506,378
Cosmeceuticals [Member]
Revenue	$ 264,428	$ 310,910	$ 886,699	$ 405,113

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Segments - Schedule of Net Sales by Major Sales Channel (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenue	$ 9,190,377	$ 9,175,673	$ 28,619,950	$ 29,282,910
Online [Member]
Revenue	4,902,161	3,236,124	13,926,758	14,696,177
Retail [Member]
Revenue	$ 4,288,216	$ 5,939,549	$ 14,693,192	$ 14,586,733

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Segments - Summary of Long-lived Assets (Net) Attributable to Operations Geographical Segment (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Long-lived assets net	$ 12,449,940	$ 13,618,655
United States [Member]
Long-lived assets net	12,436,714	13,613,043
Foreign Countries [Member]
Long-lived assets net	$ 13,226	$ 5,612

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Income Taxes (Details Narrative) - USD ($)		3 Months Ended		9 Months Ended
	Dec. 31, 2017	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Tax Disclosure [Abstract]
Tax expense		$ (126,190)	$ 97,713	$ 256,812	$ 221,424
Income tax examination description	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
Marginal tax rate of U.S				21.00%
Valuation allowance percentage				100.00%
Operating loss carryforwards expiration year				2035

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Subsequent Events (Details Narrative)	9 Months Ended
	Sep. 30, 2018 USD ($)
Subsequent Events [Abstract]
Payment of loan	$ 500,000
Loan amount	$ 10,000,000