Core Insights - Synergy CHC Corp. has announced significant retail and distribution wins for its FOCUSfactor supplement and functional beverage lines, reflecting a focused strategy to scale its cognitive health portfolio [1][2] Supplement Gains - London Drugs will launch FOCUSfactor brain health supplements across all 80 store locations in Western Canada starting this summer, targeting a growing health and wellness consumer base [3][4] - Synergy has secured a national distribution agreement with McKesson Canada, allowing access to thousands of pharmacy and health-focused retail locations across Canada, with a rollout scheduled for Q4 2025 [4][5] Beverage Gains - Gabe's will introduce FOCUSfactor Focus + Energy beverages to 137 stores in the Mid-Atlantic and Southeast, with additional exposure through Old Time Pottery's 34 stores, totaling 171 retail locations across 20 states [5][6] - FOCUSfactor will showcase its beverage line at the 2025 ECRM Beverage Show in Dallas, meeting with over 25 national retailers and distributors representing over 32,000 doors across the USA [6][7] Building Momentum - The recent distribution wins follow a series of major agreements earlier this year, indicating accelerating momentum across both product lines and key regions, with expectations for further updates in the coming months [8]

Core Insights - Synergy CHC Corp. has announced significant retail and distribution gains in North America for its supplement and functional beverage portfolios, marking a major expansion in access to its products [1][2] Beverage Gains - Core-Mark has granted national item authorization for FOCUSfactor Focus + Energy beverages, allowing distribution across over 50,000 customer locations in all 50 U.S. states and Canada, with products expected on shelves in Q3 2025 [3][4] - Metro Ontario has launched FOCUSfactor Focus + Energy in over 125 grocery stores, while its convenience division will introduce the brand to over 600 locations starting July 2025 [4] - Energy North Group will add FOCUSfactor beverages to its offerings across its 70 convenience stores and gas stations in New England and Upstate New York, with availability beginning in Q3 2025 [5] - Downey Wholesale has included FOCUSfactor Focus + Energy in its national portfolio, targeting over 10,000 small wholesalers and independent retailers, with products expected to be available in Q3 2025 [6][7] Supplement Gains - Synergy has secured national placement for two FOCUSfactor SKUs within Walmart Canada's vitamin set, with rollout scheduled for Q4 2025, enhancing the brand's international growth strategy [8] - The expansion into Walmart Canada is seen as a significant milestone, building on an 18-year partnership with Walmart in the U.S. and reinforcing FOCUSfactor's leadership in the brain health category [8][9]

Core Insights - Synergy CHC Corp. has expanded its international licensing deal with Gravity Pharma to include Turkey, alongside the UAE, for exclusive distribution of FOCUSfactor®, generating $2 million in upfront licensing revenue with additional performance-based royalties [1][2][5] Company Overview - Synergy CHC Corp. is a consumer health and wellness company known for its flagship brands, including FOCUSfactor®, a clinically tested brain health supplement, and Flat Tummy®, a lifestyle wellness brand for women [4] Strategic Growth - The licensing model in the UAE and Turkey allows Synergy to scale the FOCUSfactor® brand without diluting ownership or diverting focus from U.S. operations, retaining 100% ownership and global intellectual property [2] - The company is pursuing a high-margin, global expansion strategy through capital-efficient partnerships, positioning itself to capitalize on the growing demand for cognitive health solutions [3][5] Market Potential - The brain health market is projected to exceed $20 billion by 2030, indicating significant growth opportunities for Synergy CHC Corp. [5]

Core Insights - Synergy CHC Corp. has appointed Damian Marano as Vice President of Beverage, marking a significant step in its expansion into the functional beverage market [1][2] Company Overview - Synergy CHC Corp. is a consumer health and wellness company with a focus on cognitive-enhancing and clean-energy drinks, leveraging its flagship brand FOCUSfactor [7][8] - The company is rapidly scaling its operations across North America, the U.K., and new international markets, indicating strong growth potential [7] Leadership and Expertise - Damian Marano brings over 20 years of experience in sales and business development within the beverage and consumer goods sectors, having held significant roles at The Coca-Cola Company [2][3] - His previous achievements include leading a $200 million ARR portfolio and implementing AI-driven revenue growth strategies at Coca-Cola [2] - Marano's experience also includes generating $2.5 million in ARR at Cypre and achieving a 10x increase in enterprise deal size at H2O.ai [3] Product Development - The company is launching FOCUSfactor Energy Drinks, which are designed to enhance mental clarity and provide clean energy through fast-acting B-vitamins and nootropics [5] - These beverages are positioned alongside Synergy's existing health products, aiming to meet the growing demand for better-for-you drinks [5][6]

Core Viewpoint - Synergy CHC Corp. has secured a $20 million term loan credit agreement to enhance its capital structure and support growth initiatives [1][3]. Financial Details - The company received a $15 million term loan at closing with an interest rate of SOFR plus 8.5%, structured as interest-only through 2025 [2]. - Quarterly principal payments will commence in January 2026 at $175,000, increasing to $350,000 per quarter in 2027 and beyond [2]. - Additionally, a $2.5 million delayed draw facility and a $2.5 million uncommitted term loan incremental facility are available [2]. Strategic Implications - The CEO of Synergy emphasized that the refinancing supports the company's growth strategy and strengthens its capital structure, providing necessary flexibility for future growth [3]. - The delayed draw proceeds will enable the company to repay debt related to settlement agreements, enhancing financial stability as it pursues strategic goals [3]. Company Overview - Synergy CHC Corp. specializes in consumer health care and lifestyle products, with notable brands including FOCUSfactor, a brain health supplement, and Flat Tummy, a wellness brand focused on nutritional products for weight management [4].

Core Insights - Synergy CHC Corp. has appointed Erik Shields as Vice President of Beverage, effective May 26, 2025, to enhance its beverage business strategy [1][2] - Shields brings nearly 20 years of experience in sales leadership within both alcoholic and non-alcoholic beverage sectors, previously serving as Director of C-Store Sales at Trilliant Food & Nutrition [2][3] - The company is focusing on expanding its flagship brain health brand, FOCUSfactor, into the functional beverage category with the launch of Focus + Energy Drinks, which are designed to meet rising consumer demand for health-oriented beverage options [3][5] Company Strategy - The appointment of Erik Shields is seen as a strategic move to accelerate growth in the beverage category, leveraging his expertise in national strategies and key account management [2][4] - Shields will oversee the go-to-market strategy, distribution, and brand execution for the new Focus + Energy Drinks, aligning with trends in mental performance and functional beverages [3][4] - Synergy's current brand portfolio includes FOCUSfactor, a brain health supplement, and Flat Tummy, a wellness brand aimed at women's nutritional needs [5]

Financial Data and Key Metrics Changes - The company reported a 30% growth in earnings per share year over year, marking the ninth consecutive quarter of profitability [4] - EBITDA margins expanded significantly to 24.1% compared to 19.7% in the prior period [4] - Net revenue for the first quarter was $8.2 million, reflecting a 13% decrease year over year [11] - Gross margin increased to 75.4% from 72% in the same quarter last year [11] - Operating expenses decreased by 15% to $4.2 million [11] - Net income for the first quarter was $876,000 or $0.10 per diluted share, compared to $580,000 or $0.08 per diluted share in the year-ago quarter [12] Business Line Data and Key Metrics Changes - The company has entered a three-year license agreement for the Focus Factor brand in the UAE, expecting revenue generation by the fourth quarter [5] - The RTD beverage segment generated $30,000 in revenue in the first quarter, with expectations of $2 million in the second quarter due to Amazon orders [16][17] - A long-term supplier agreement for Focus Factor products is expected to provide significant cost savings [9] Market Data and Key Metrics Changes - The company has opened over 400 additional convenience stores in Canada for RTD products [7] - Plans to expand into Australia and Taiwan markets are set for early fourth quarter [6] Company Strategy and Development Direction - The company aims to expand its global presence by adding new licensees in selected markets without establishing a direct footprint [5] - Focus on cost management while investing in key growth initiatives [11] - Refinancing of debt is expected to accelerate free cash flow and extend maturity dates into 2029 [9] Management's Comments on Operating Environment and Future Outlook - Management does not expect material impact from tariffs due to local sourcing of products [10] - The company is optimistic about revenue generation from new licensing agreements and RTD beverage growth [21][25] Other Important Information - Cash and cash equivalents decreased to $177,900 from $687,900 as of December 31, 2024 [13] - Total liabilities decreased to $31.3 million from $33 million at the end of the previous year [14] Q&A Session Summary Question: What are the plans for the RTD beverage rollout for the remainder of the year? - The company expects to generate about $2 million in revenue in the second quarter, primarily from Canada and the US [16][17] Question: Will G&A expenses rise through the year? - G&A expenses are expected to remain flat as a percentage, with some headcount additions [19] Question: What was the licensing revenue booked in the first quarter? - The company received a startup fee of $1.5 million for the UAE territory, with revenue expected to start in the fourth quarter [20][21]

Financial Data and Key Metrics Changes - The company reported a 30% growth in earnings per share year over year, marking the ninth consecutive quarter of profitability [5] - EBITDA margins expanded to 24.1% compared to 19.7% in the prior period [5] - Net revenue for Q1 2025 was $8.2 million, a 13% decrease from $9.4 million in the same quarter last year [12] - Gross margin increased to 75.4% from 72% year over year [12] - Operating expenses decreased by 15% to $4.2 million from $5 million in the prior year [12] - Net income for Q1 was $876,000 or $0.10 per diluted share, up from $580,000 or $0.08 per diluted share in the previous year [13] Business Line Data and Key Metrics Changes - The RTD beverage segment generated $30,000 in revenue during Q1, with expectations of $2 million in Q2 due to strong orders from Amazon [17][18] - A long-term supplier agreement for Focus Factor products is expected to yield significant cost savings [9] Market Data and Key Metrics Changes - The company has entered a three-year license agreement for the Focus Factor brand in the UAE, expecting revenue generation by Q4 2025 [6] - A wholly owned subsidiary has been established in Mexico, with revenue expected to start in early Q3 [7] Company Strategy and Development Direction - The company plans to expand its global presence by adding new licensees in selected markets where it does not currently operate [6] - The focus remains on growing the Canadian and US convenience store business for RTD beverages [8] - The refinancing of debt is expected to alleviate over $10 million in principal payments in 2025 and extend maturity into 2029 [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing discipline around cost management and the strength of the operating model [5] - The company does not expect material impacts from tariffs due to its sourcing strategy [11] Other Important Information - Cash and cash equivalents decreased to $177,900 from $687,900 at the end of 2024 [14] - Total liabilities decreased to $31.3 million from $33 million at the end of 2024 [15] Q&A Session Summary Question: What was the RTD beverage revenue in the quarter and plans for rollout? - The RTD beverage segment generated $30,000 in Q1, with expectations of $2 million in Q2 due to Amazon orders [17] Question: What are the plans for geographic territories and distribution channels? - The focus is primarily on Canada and the US, targeting convenience stores and existing retailers [20] Question: Will G&A expenses rise through the year? - G&A expenses are expected to remain flat as a percentage, with some headcount additions [21] Question: What was the licensing revenue booked in Q1? - The company received a $1.5 million fee for the UAE license agreement, with revenue expected to start in Q4 [23][25]

PART I—FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Synergy CHC Corp.'s Q1 2025 unaudited financial statements show increased net income despite lower revenue, driven by cost management and new license revenue [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of March 31, 2025, reflects decreased assets and liabilities, an improved stockholders' deficit, and a significant decline in cash Condensed Consolidated Balance Sheet Highlights (unaudited) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $177,882 | $687,920 | | Total Current Assets | $15,406,042 | $16,059,768 | | **Total Assets** | **$15,656,042** | **$16,343,101** | | Total Current Liabilities | $8,065,745 | $17,184,369 | | **Total Liabilities** | **$31,295,408** | **$32,974,444** | | **Total stockholders' deficit** | **$(15,639,366)** | **$(16,631,343)** | [Unaudited Condensed Consolidated Statements of Income and Comprehensive Income](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) For Q1 2025, total revenue decreased to $8.17 million, yet net income increased to $876,264 due to reduced costs and new license revenue Consolidated Statements of Income (unaudited) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenue | $8,170,534 | $9,411,863 | | Gross Profit | $6,164,021 | $6,774,724 | | Income from operations | $1,947,703 | $1,808,329 | | **Net income** | **$876,264** | **$580,530** | | Net income per share – diluted | $0.10 | $0.08 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 cash flow reflects improved operating cash usage, no investing activities, and a significant decrease in financing cash, leading to a net cash decrease Consolidated Statements of Cash Flows Highlights (unaudited) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(822,781) | $(858,042) | | Net cash from investing activities | $0 | $0 | | Net cash provided by financing activities | $314,678 | $1,004,620 | | **Net (decrease) increase in cash** | **$(510,038)** | **$278,215** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, a reverse stock split, significant customer and supplier concentration, extensive related-party transactions, and debt covenants - On September 11, 2024, the Company effected a **1-for-11.9 reverse stock split** of its common stock[22](index=22&type=chunk) - In Q1 2025, **three customers accounted for 71% of net revenue**, and **two suppliers accounted for 44% of purchases**, indicating **significant concentration risk**[87](index=87&type=chunk)[89](index=89&type=chunk) - The company has **extensive related-party transactions**, including **significant loans** from and **distribution agreements** with Knight Therapeutics, a major shareholder[95](index=95&type=chunk)[98](index=98&type=chunk)[104](index=104&type=chunk) - Debt agreements include **strict covenants**, such as maintaining a **minimum quarterly EBITDA of $1,250,000** and **raising $5,000,000 in equity by March 31, 2025**, to **avoid default and a $1,000,000 fee**[119](index=119&type=chunk)[123](index=123&type=chunk) - Subsequent to March 31, 2025, the company **issued 442,005 shares of common stock** to noteholders and **established a wholly-owned subsidiary in Mexico**[165](index=165&type=chunk)[167](index=167&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 revenue decrease, improved gross margin and net income, tight liquidity, and strategic initiatives including organic growth and acquisitions Results of Operations Comparison (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $8,170,534 | $9,411,863 | (13.2)% | | Gross Profit | $6,164,021 | $6,774,724 | (9.0)% | | Gross Margin | 75% | 72% | +3 p.p. | | Net Income | $876,264 | $580,530 | +50.9% | - The **decrease in Nutraceuticals revenue** was due to a **new product sell-in** to one customer in 2024 that did not repeat in 2025[177](index=177&type=chunk) EBITDA Reconciliation (Non-GAAP) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $876,264 | $580,530 | | Interest expense | $1,095,369 | $1,109,980 | | Income taxes (benefit) | $(11,460) | $127,189 | | Depreciation and amortization | $33,333 | $33,333 | | **EBITDA** | **$1,979,624** | **$1,850,645** | - As of March 31, 2025, the company had **$177,882 in cash on hand** and **$100,000 in restricted cash**[185](index=185&type=chunk) - Near-term initiatives include **growing current product lines**, **launching new products**, **expanding distribution** for the FOCUSfactor ready-to-drink beverage, and **pursuing strategic acquisitions**[191](index=191&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Synergy CHC Corp. has elected not to provide disclosures about market risk - The company is a **smaller reporting company** and is **not required to provide disclosures about market risk**[196](index=196&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2025, with no material changes to internal controls - Management concluded that as of the end of the period covered by this report, the Company's disclosure controls and procedures were **not effective**[197](index=197&type=chunk) - There were **no changes in internal control over financial reporting** during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, internal controls[198](index=198&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings, though it may face incidental claims in the ordinary course of business - The company is **not party to any material legal proceedings**[201](index=201&type=chunk) [Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, the company is not required to include risk factors and reports no material changes to previously disclosed risks - There have been **no material changes to the risk factors** previously disclosed in the company's IPO prospectus[202](index=202&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - The company reports **'None' for unregistered sales of equity securities and use of proceeds**[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) [Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - The company reports **'None' for defaults upon senior securities**[206](index=206&type=chunk) [Other Information](index=42&type=section&id=Item%205.%20Other%20Information) The company reported no other material information and no director or officer adopted or terminated a Rule 10b5-1 trading arrangement - During the quarter ended March 31, 2025, **no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement**[209](index=209&type=chunk) [Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the quarterly report, including officer certifications and XBRL data files - The report includes **required certifications** under Rule 13a-14(a) and Section 1350, as well as **Inline XBRL documents**, as exhibits[211](index=211&type=chunk)

Financial Performance - Earnings per share increased by 30% year-over-year, reaching $0.10 compared to $0.08 in the prior year[2] - Revenue for Q1 2025 was $8.2 million, a decrease of 13% from $9.4 million in Q1 2024, primarily due to a new product sell-in that did not repeat[4] - Gross margin improved to 75.4% in Q1 2025 from 72.0% in Q1 2024, driven by a favorable product mix[6] - Net income rose by 51% to $876.3 thousand in Q1 2025, up from $580.5 thousand in Q1 2024[7] - EBITDA for Q1 2025 was $1.98 million, a 7% increase from $1.85 million in Q1 2024, attributed to lower SG&A expenses[8] - Operating expenses decreased by 15% to $4.2 million in Q1 2025 from $5.0 million in Q1 2024[6] International Expansion - The company is preparing for international expansion into three new markets later in 2025 for its FOCUSfactor brand and Ready-To-Drink beverages[2] - Synergy established a wholly owned subsidiary in Mexico and is onboarding key suppliers and retailers in the region[5] Debt and Cash Flow Management - The company aims to refinance its debt to extend the maturity date to 2029, which is expected to enhance free cash flow[2] - Total liabilities decreased by $1.7 million to $31.3 million as of March 31, 2025, compared to $33.0 million at the end of 2024[9] - Net cash used in operating activities was $(822,781) for the three months ended March 31, 2025, slightly improved from $(858,042) in the same period of 2024[22] - Cash and restricted cash at the end of the period was $277,882, down from $1,010,749 at the end of the same period in 2024, indicating a decrease of 72.5%[22] - Net cash provided by financing activities was $314,678 for the three months ended March 31, 2025, compared to $1,004,620 in the same period of 2024, a decline of 68.7%[22] - Cash paid for interest during the period was $573,529, down from $1,102,781 in the same period of 2024, a decrease of 47.9%[22] - Advances from related party amounted to $135,000, a significant decrease from $1,400,000 in the same period of 2024[22] Asset Management - Accounts receivable increased by $940,519, while inventory decreased by $(629,935) during the three months ended March 31, 2025[22] - The company issued common stock for loan financing amounting to $117,648 during the period[22] Foreign Currency Impact - The company reported a foreign currency transaction loss of $(3,137) for the three months ended March 31, 2025, compared to a gain of $11,178 in the same period of 2024[22] - The effect of exchange rate on cash, cash equivalents, and restricted cash resulted in a loss of $(1,935) for the three months ended March 31, 2025[22]