PART I—FINANCIAL INFORMATION Financial Statements 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 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 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 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 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 stock22 - In Q1 2025, three customers accounted for 71% of net revenue, and two suppliers accounted for 44% of purchases, indicating significant concentration risk8789 - The company has extensive related-party transactions, including significant loans from and distribution agreements with Knight Therapeutics, a major shareholder9598104 - 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 fee119123 - Subsequent to March 31, 2025, the company issued 442,005 shares of common stock to noteholders and established a wholly-owned subsidiary in Mexico165167 Management's Discussion and Analysis of Financial Condition and Results of Operations 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 2025177 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 cash185 - Near-term initiatives include growing current product lines, launching new products, expanding distribution for the FOCUSfactor ready-to-drink beverage, and pursuing strategic acquisitions191 Quantitative and Qualitative Disclosures About Market Risk 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 risk196 Controls and Procedures 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 effective197 - 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 controls198 PART II—OTHER INFORMATION Legal Proceedings 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 proceedings201 Risk Factors 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 prospectus202 Unregistered Sales of Equity Securities and Use of Proceeds 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 proceeds203204205 Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - The company reports 'None' for defaults upon senior securities206 Other Information 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 arrangement209 Exhibits 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 exhibits211
Synergy CHC Corp.(SNYR) - 2025 Q1 - Quarterly Report