Document and Entity Information
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 | 1,562,733 | |
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 | 2,018 |
Condensed Consolidated Balance
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 |
Condensed Consolidated Balanc_2
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 |
Condensed Consolidated Statemen
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 | $ 0 | $ (0.01) | $ 0.03 |
Net income (loss) per share - diluted | $ 0 | $ 0 | $ (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 |
Condensed Consolidated Statem_2
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 |
Nature of the Business
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. |
Summary of Significant Accounti
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 adoptio |
Inventory
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). |
Accounts Receivable
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 |
Prepaid Expenses
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 |
Concentration of Credit Risk
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. |
Fixed Assets and Intangible Ass
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. |
Related Party Transactions
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. |
Accounts Payable and Accrued Li
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 |
Notes Payable
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. |
Stockholders' Equity
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. |
Commitments and Contingencies
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 |
Stock Options
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 $353,065, and will be recognized over a period of 2 years. |
Stock Warrants
Stock Warrants | 9 Months Ended |
Sep. 30, 2018 | |
Stock Warrants | |
Stock Warrants | Note 14 – Stock Warrants The following table summarizes the warrants outstanding, warrant exercisability and the related prices for the shares of the Company’s common stock at September 30, 2018: Warrants Outstanding Warrants Exercisable Exercise Prices ($) 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. |
Segments
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 |
Income Taxes
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. |
Subsequent Events
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. |
Summary of Significant Accoun_2
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. |
Summary of Significant Accoun_3
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 |
Inventory (Tables)
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 |
Accounts Receivable (Tables)
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 |
Prepaid Expenses (Tables)
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 |
Concentration of Credit Risk (T
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 |
Fixed Assets and Intangible A_2
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 |
Accounts Payable and Accrued _2
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 |
Notes Payable (Tables)
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 |
Commitments and Contingencies (
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 |
Stock Options (Tables)
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 |
Stock Warrants (Tables)
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 |
Segments (Tables)
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 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) | 9 Months Ended | |||||
Sep. 30, 2018USD ($)Segmentshares | Sep. 30, 2017shares | May 22, 2018USD ($) | Dec. 31, 2017USD ($) | Jun. 21, 2017USD ($) | Jan. 22, 2015USD ($) | |
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 |
Summary of Significant Accoun_5
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 |
Summary of Significant Accoun_6
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 | $ 0 | $ (0.01) | $ 0.03 |
Net earnings per share - Diluted | $ 0 | $ 0 | $ (0.01) | $ 0.03 |
Summary of Significant Accoun_7
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 |
Inventory - Schedule of Carryin
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 |
Accounts Receivable - Accounts
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 |
Prepaid Expenses - Summary of P
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 |
Concentration of Credit Risk (D
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% |
Concentration of Credit Risk -
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 |
Fixed Assets and Intangible A_3
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 |
Fixed Assets and Intangible A_4
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 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | Dec. 23, 2016CAD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($) | Aug. 09, 2017USD ($) |
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 |
Accounts Payable and Accrued _3
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 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) | Aug. 09, 2017USD ($) | Nov. 12, 2015USD ($)$ / sharesshares | Jun. 26, 2015USD ($) | Jan. 22, 2015USD ($)$ / sharesshares | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) |
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. 8, 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 | ||||||||
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 | ||||||||
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% |
Notes Payable - Schedule of Loa
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 |
Stockholders' Equity (Details N
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 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) | Oct. 17, 2017USD ($)Integershares | Aug. 16, 2017USD ($) |
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 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Rental Payments for Operating Leases (Details) | Sep. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2018 - remaining three months | $ 60,255 |
2,019 | 245,234 |
2,020 | 252,591 |
2,021 | 106,540 |
2,022 | |
Total | $ 664,620 |
Stock Options (Details Narrativ
Stock Options (Details Narrative) - USD ($) | 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 |
Stock Options - Summary of Opti
Stock Options - Summary of Options Outstanding by Price Range (Details) | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
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 |
Stock Options - Schedule of Sto
Stock Options - Schedule of Stock Options Activity (Details) - Stock Option Plan [Member] | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
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 |
Stock Warrants (Details Narrati
Stock Warrants (Details Narrative) | Sep. 30, 2018USD ($) |
Stock options outstanding intrinsic value | $ 30,000 |
Stock Warrant [Member] | |
Stock options outstanding intrinsic value | $ 0 |
Stock Warrants - Summary of War
Stock Warrants - Summary of Warrants Outstanding, Warrant Exercisability and Related Prices for Shares of Common Stock (Details) | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
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 |
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 |
Warrants Exercisable, Number Exercisable | shares | 1,000,000 |
Warrants Exercisable, Weighted Average Exercise Price | $ 5 |
Stock Warrants - Schedule of St
Stock Warrants - Schedule of Stock Warrants Activity (Details) - Warrant [Member] | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
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 |
Segments (Details Narrative)
Segments (Details Narrative) | 9 Months Ended |
Sep. 30, 2018Segment | |
Number of operating segments | 1 |
Sales Revenue, Net [Member] | |
Concentration risk percentage | 10.00% |
Segments - Summary of Net Sales
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 |
Segments - Summary of Net Sal_2
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 |
Segments - Schedule of Net Sale
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 |
Segments - Summary of Long-live
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 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 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 | 2,035 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Subsequent Events [Abstract] | |
Payment of loan | $ 500,000 |
Loan amount | $ 10,000,000 |