Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 12, 2019 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Synergy CHC Corp. | |
Entity Central Index Key | 0001562733 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity's Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 89,889,074 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash and cash equivalents | $ 1,064,301 | $ 459,736 |
Restricted cash | 136,966 | 136,180 |
Accounts receivable, net | 2,366,078 | 4,458,225 |
Other current assets | 611,614 | 828,847 |
Income taxes receivable | 361,564 | 386,686 |
Inventory, net | 2,492,136 | 2,670,305 |
Total Current Assets | 7,032,659 | 8,939,979 |
Fixed assets, net | 197,448 | 269,771 |
Goodwill | 7,793,240 | 7,793,240 |
Intangible assets, net | 2,469,973 | 3,007,521 |
Total Assets | 17,493,320 | 20,010,511 |
Current Liabilities: | ||
Accounts payable and accrued liabilities | 5,061,810 | 8,397,220 |
Deferred revenue | 37,051 | 49,709 |
Current portion of long-term debt, net of debt discount and debt issuance cost, related party | 1,979,876 | 1,963,887 |
Total Current Liabilities | 7,078,737 | 10,410,816 |
Long-term Liabilities: | ||
Note payable, net of debt discount and debt issuance cost, related party | 4,680,346 | 5,629,002 |
Total Long-term Liabilities | 4,680,346 | 5,629,002 |
Total Liabilities | 11,759,083 | 16,039,818 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Common stock, $0.00001 par value; 300,000,000 shares authorized; 89,889,074 and 89,862,683 shares issued and outstanding, respectively | 899 | 899 |
Additional paid in capital | 18,941,597 | 18,817,800 |
Accumulated other comprehensive income | 33,115 | 179,116 |
Accumulated deficit | (13,241,374) | (15,027,122) |
Total stockholders' equity | 5,734,237 | 3,970,693 |
Total Liabilities and Stockholders' Equity | $ 17,493,320 | $ 20,010,511 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
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 | 89,889,074 | 89,862,683 |
Common stock, shares outstanding | 89,889,074 | 89,862,683 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenue | $ 6,336,721 | $ 9,728,712 | $ 15,805,676 | $ 19,429,573 |
Cost of sales | 1,607,587 | 2,744,760 | 4,148,037 | 5,554,668 |
Gross profit | 4,729,434 | 6,983,952 | 11,657,639 | 13,874,905 |
Operating expenses | ||||
Selling and marketing | 2,647,378 | 5,148,656 | 5,959,245 | 9,401,359 |
General and administrative | 1,072,706 | 1,475,289 | 2,559,813 | 3,236,145 |
Depreciation and amortization | 303,596 | 455,951 | 609,871 | 907,437 |
Total operating expenses | 4,023,680 | 7,079,896 | 9,128,928 | 13,544,941 |
Income (loss) from operations | 705,454 | (95,944) | 2,528,709 | 329,964 |
Other (income) expenses | ||||
Interest income | (113) | 1,011 | (224) | (71) |
Interest expense | 284,285 | 305,687 | 624,413 | 575,863 |
Remeasurement loss on translation of foreign subsidiary | 27,770 | 120,623 | (11,262) | (131,321) |
Amortization of debt issuance cost | 34,594 | 37,739 | 72,962 | 78,735 |
Total other expenses | 346,536 | 465,060 | 708,413 | 785,848 |
Net income (loss) before income taxes | 358,918 | (561,004) | 1,820,296 | (455,884) |
Income tax expense | 40,456 | 222,389 | 34,548 | 383,002 |
Net income (loss) after tax | $ 318,462 | $ (783,393) | $ 1,785,748 | $ (838,886) |
Net income (loss) per share – basic | $ 0 | $ (0.01) | $ 0.02 | $ (0.01) |
Net income (loss) per share – diluted | $ 0 | $ (0.01) | $ 0.02 | $ (0.01) |
Weighted average common shares outstanding | ||||
Basic | 89,889,044 | 89,862,683 | 89,877,247 | 89,862,683 |
Diluted | 89,889,044 | 89,862,683 | 89,877,247 | 89,862,683 |
Comprehensive income (loss): | ||||
Net income (loss) | $ 318,462 | $ (783,393) | $ 1,785,748 | $ (838,886) |
Foreign currency translation adjustment | (75,061) | 42,891 | (146,001) | 103,404 |
Comprehensive income (loss) | $ 243,401 | $ (740,502) | $ 1,639,747 | $ (735,482) |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid in Capital [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2017 | $ 899 | $ 18,376,801 | $ (77,989) | $ (8,866,432) | $ 9,433,279 |
Balance, shares at Dec. 31, 2017 | 89,862,683 | ||||
Fair value of vested stock options | $ 119,617 | $ 119,617 | |||
Foreign currency translation gain (loss) | 60,513 | 60,513 | |||
Net income loss | (55,493) | (55,493) | |||
Balance at Mar. 31, 2018 | $ 899 | $ 18,496,418 | $ (17,476) | $ (8,921,928) | $ 9,557,913 |
Balance, shares at Mar. 31, 2018 | 89,862,683 | ||||
Balance at Dec. 31, 2017 | $ 899 | $ 18,376,801 | $ (77,989) | $ (8,866,432) | $ 9,433,279 |
Balance, shares at Dec. 31, 2017 | 89,862,683 | ||||
Foreign currency translation gain (loss) | $ 103,404 | ||||
Net income loss | (838,886) | ||||
Balance at Jun. 30, 2018 | $ 899 | $ 18,616,187 | $ 25,415 | $ (9,705,322) | $ 8,937,179 |
Balance, shares at Jun. 30, 2018 | 89,862,683 | ||||
Balance at Mar. 31, 2018 | $ 899 | $ 18,496,418 | $ (17,476) | $ (8,921,928) | $ 9,557,913 |
Balance, shares at Mar. 31, 2018 | 89,862,683 | ||||
Fair value of vested stock options | $ 119,769 | $ 119,769 | |||
Foreign currency translation gain (loss) | 42,891 | 42,891 | |||
Net income loss | (783,393) | (783,393) | |||
Balance at Jun. 30, 2018 | $ 899 | $ 18,616,187 | $ 25,415 | $ (9,705,322) | $ 8,937,179 |
Balance, shares at Jun. 30, 2018 | 89,862,683 | ||||
Balance at Dec. 31, 2018 | $ 899 | $ 18,817,800 | $ 179,116 | $ (15,027,122) | $ 3,970,693 |
Balance, shares at Dec. 31, 2018 | 89,862,683 | ||||
Fair value of vested stock options | $ 45,534 | $ 45,534 | |||
Foreign currency translation gain (loss) | (70,940) | (70,940) | |||
Common stock issued for Per-fekt settlement | $ 39,585 | $ 39,585 | |||
Common stock issued for Per-fekt settlement, shares | 26,391 | ||||
Net income loss | $ 1,467,287 | $ 1,467,287 | |||
Balance at Mar. 31, 2019 | $ 899 | $ 18,902,919 | $ 108,176 | $ (13,559,835) | $ 5,452,159 |
Balance, shares at Mar. 31, 2019 | 89,889,074 | ||||
Balance at Dec. 31, 2018 | $ 899 | $ 18,817,800 | $ 179,116 | $ (15,027,122) | $ 3,970,693 |
Balance, shares at Dec. 31, 2018 | 89,862,683 | ||||
Foreign currency translation gain (loss) | $ (146,001) | ||||
Net income loss | 1,785,748 | ||||
Balance at Jun. 30, 2019 | $ 899 | $ 18,941,597 | $ 33,115 | $ (13,241,374) | $ 5,734,237 |
Balance, shares at Jun. 30, 2019 | 89,889,074 | ||||
Balance at Mar. 31, 2019 | $ 899 | $ 18,902,919 | $ 108,176 | $ (13,559,835) | $ 5,452,159 |
Balance, shares at Mar. 31, 2019 | 89,889,074 | ||||
Fair value of vested stock options | $ 38,679 | $ 38,679 | |||
Foreign currency translation gain (loss) | $ (75,061) | (75,061) | |||
Net income loss | $ 318,462 | 318,462 | |||
Balance at Jun. 30, 2019 | $ 899 | $ 18,941,597 | $ 33,115 | $ (13,241,374) | $ 5,734,237 |
Balance, shares at Jun. 30, 2019 | 89,889,074 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash Flows from Operating Activities | ||
Net income (loss) | $ 1,785,748 | $ (838,886) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 609,871 | 907,437 |
Amortization of debt issuance cost | 72,962 | 78,735 |
Stock based compensation expense | 123,797 | 239,386 |
Remeasurement loss on translation of foreign subsidiary | 11,262 | 131,321 |
Foreign currency transaction loss | 27,314 | 30,931 |
Non cash implied interest | 19,370 | 42,535 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,092,147 | 244,566 |
Inventory | 178,171 | (313,838) |
Other current assets | 217,233 | 217,779 |
Accounts payable and accrued liabilities | (3,348,865) | |
Deferred revenue | (12,658) | 37,843 |
Net cash provided by operating activities | 1,776,352 | 712,546 |
Cash Flows from Investing Activities | ||
Payments for acquisition of fixed assets | (129,087) | |
Payment for acquisition of domain name | (15,213) | |
Purchase of intangible assets | (50,000) | |
Net cash used in investing activities | (194,300) | |
Cash Flows from Financing Activities | ||
Repayment of notes payable | (1,025,000) | (1,712,500) |
Net cash used in financing activities | (1,025,000) | (1,712,500) |
Effect of exchange rate on cash, cash equivalents and restricted cash | (146,001) | 103,404 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 605,351 | (1,090,850) |
Cash, Cash Equivalents and restricted cash, beginning of period | 595,916 | 2,094,685 |
Cash, Cash Equivalents and restricted cash, end of period | 1,201,267 | 1,003,835 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest | 555,737 | 700,197 |
Income taxes | 38,919 | 85,639 |
Supplemental Disclosure of Non-cash Investing and Financing Activities |
Nature of the Business
Nature of the Business | 6 Months Ended |
Jun. 30, 2019 | |
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. Effective January 1, 2019 the Company has merged its U.S. subsidiaries (Neuragen Corp., Breakthrough Products, Inc., Sneaky Vaunt Corp., and The Queen Pegasus Corp.) into the parent company. Synergy is the sole owner of two subsidiaries: NomadChoice Pty Ltd., and Synergy CHC Inc. and the results have been consolidated in these statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies General The accompanying condensed consolidated financial statements as of June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 2019 and 2018 are unaudited. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and are presented in accordance with the requirements of Rule S-X of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2019. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2018 and footnotes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2019. 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 June 30, 2019, 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 June 30, 2019, the uninsured balance amounted to $770,545. 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. June 30, 2019 December 31, 2018 June 30, 2018 Cash and cash equivalents $ 1,064,301 $ 459,736 $ 865,812 Restricted cash 136,966 136,180 138,023 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 1,201,267 $ 595,916 $ 1,003,835 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 (“Perfekt”) on June 21, 2017 and $50,000 acquired as an Asset Purchase entered into with Cocowhite on May 22, 2018. Intangible assets are amortized on a straight line basis over the useful lives. During the year ended December 31, 2018, the Company fully impaired intangible assets related to Perfekt and Cocowhite and charged to operations impairment loss of $60,000. As of June 30, 2019, 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. However, as of December 31, 2018 our review of intangible assets related to two of our subsidiaries did indicate that the carrying amount of the asset may not be recoverable. During the year ended December 31, 2018, the Company fully impaired related intangible assets and charged to operations impairment loss of $864,067. As of June 30, 2019, 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 June 30, 2019, our qualitative analysis of goodwill did not indicate any impairment. Revenue Recognition 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 June 30, 2019. 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. As of both June 30, 2019 and December 31, 2018, allowance for doubtful accounts was $0. 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 operations. 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 June 30, 2019, and 2018, options to purchase 6,166,667 and 8,666,667 shares of common stock, respectively, were outstanding. As of June 30, 2018, 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 six months ended June 30, 2019, and 2018: For the three months ended For the six months ended June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Net income (loss) after tax $ 318,462 $ (783,393 ) $ 1,785,748 (838,886 ) Weighted average common shares outstanding 89,889,044 89,862,683 89,877,247 89,862,683 Incremental shares from the assumed exercise of dilutive stock options - - - - Incremental shares from the assumed exercise of dilutive stock warrants - - - - Dilutive potential common shares 89,889,044 89,862,683 89,877,247 89,862,683 Net earnings per share: Basic $ 0.00 $ (0.01 ) $ 0.02 $ (0.01 ) Diluted $ 0.00 $ (0.01 ) $ 0.02 $ (0.01 ) The following securities were not included in the computation of diluted net earnings per share as their effect would have been antidilutive: 2019 2018 Options to purchase common stock 6,166,667 8,666,667 Warrants to purchase common stock - 1,000,000 6,166,667 9,666,667 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 June 30, 2019, 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 515-50, “Compensation – Stock Compensation.” 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. The exchange rates used to translate amounts in AUD and CAD into USD for the purposes of preparing the consolidated financial statements were as follows: Balance sheet: June 30, 2019 December 31, 2018 Period-end AUD: USD exchange rate $ 0.7023 $ 0.7046 Period-end CAD: USD exchange rate $ 0.7641 $ 0.7330 Income statement: June 30, 2019 June 30, 2018 Average Quarterly AUD: USD exchange rate $ 0.7064 $ 0.7714 Average Quarterly CAD: USD exchange rate $ 0.7499 $ 0.7827 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. Presentation of Financial Statements – Going Concern Going Concern Evaluation In connection with preparing unaudited condensed consolidated financial statements for the three and six months ended June 30, 2019, management evaluated whether there were conditions and events, considered in the aggregate, that raised substantial doubt about the Company’s ability to continue as a going concern within one year from the date that the financial statements are issued. The Company considered the following: ● At June 30, 2019, the Company had an accumulated deficit of $13,241,374. ● At June 30, 2019, the Company had working capital deficit of $46,078. ● Revenue decline in 2019 as compared to 2018 of $3,623,897. Ordinarily, conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern relate to the entity’s ability to meet its obligations as they become due. The Company evaluated its ability to meet its obligations as they become due within one year from the date that the financial statements are issued by considering the following: ● The Company raised $10.0 million via debt financing during the year ended December 31, 2017. ● In 2019, the Company repaid $1,025,000 of loans. ● The Company generated net income of $318,462 for the three months ended June 30, 2019 and $1,785,748 for the six months ended June 30, 2019. ● In 2019, the Company generated $1,776,352 of cash from operating activities. ● Working capital deficit of $46,078 at June 30, 2019, includes loans payables to related party of $1,979,876, royalty payable to related party of $312,568 and deferred revenue of $37,051. ● The Company has line of credit facility of $20 million available from its current lender for future mergers and acquisition. Management concluded that above factors alleviates doubts about the Company’s ability to generate enough cash from operations and other available sources to satisfy its obligations for the next twelve months from the issuance date. The Company will take the following actions if it starts to trend unfavorably to its internal profitability and cash flow projections, in order to mitigate conditions or events that would raise substantial doubt about its ability to continue as a going concern: ● Raise additional capital through line of credit and/or loans financing for future mergers and acquisition. ● Implement additional restructuring and cost reductions. ● Raise additional capital through a private placement. As of August 12, 2019 and June 30, 2019, the Company had $875,154 and $1,201,267, respectively, in cash and cash equivalents. Recent Accounting Pronouncements ASU 2018-13 In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes in Disclosure Requirements for Fair Value Measurement, which removes, modifies and adds certain disclosure requirements in Topic 820 “Fair Value Measurement”. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The adoption of ASU 2018-13 is not expected to have any impact on the Company’s unaudited condensed consolidated financial statements. ASU 2018-07 In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The adoption of ASU 2018-07 did not have any impact on the Company’s unaudited condensed consolidated financial statements. 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 2018-05 on our unaudited condensed 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. The adoption of ASU 2018-02 did not have any impact on the Company’s unaudited condensed 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. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Update 2016-02. The adoption of ASU 2018-01 did not have any impact on the Company’s unaudited condensed consolidated financial statements. |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2019 | |
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: June 30, 2019 December 31, 2018 Finished goods $ 2,072,233 $ 1,956,942 Components 403,873 441,282 Inventory in transit - 256,051 Raw materials 16,030 16,030 Total inventory $ 2,492,136 $ 2,670,305 On January 22, 2015, inventory was pledged to Knight Therapeutics under the Loan Agreement (see note 10). |
Accounts Receivable
Accounts Receivable | 6 Months Ended |
Jun. 30, 2019 | |
Receivables [Abstract] | |
Accounts Receivable | Note 4 – Accounts Receivable Accounts receivable, net of allowances for sales returns and doubtful accounts, consisted of the following: June 30, 2019 December 31, 2018 Trade accounts receivable $ 2,366,078 $ 4,458,225 Less allowances - - Total accounts receivable, net $ 2,366,078 $ 4,458,225 |
Other Current Assets
Other Current Assets | 6 Months Ended |
Jun. 30, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Current Assets | Note 5 – Other Current Assets Other current assets consisted of the following: June 30, 2019 December 31, 2018 Advances for inventory $ 41,645 $ 25,170 Media production - 20,791 Insurance 23,947 13,302 Deposits 8,417 45,144 Trademarks 39,413 78,826 Rent 87,384 103,912 Promotions 106,539 342,220 License agreement 8,333 58,333 Software subscriptions 83,925 34,440 Rebranding 18,538 40,783 Clinical Research 27,702 35,617 Miscellaneous 45,111 30,309 Related Party Receivable 120,660 - Total $ 611,614 $ 828,847 |
Concentration of Credit Risk
Concentration of Credit Risk | 6 Months Ended |
Jun. 30, 2019 | |
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 June 30, 2019 and December 31, 2018, the uninsured balances amounted to $770,545 and $162,729, respectively. Accounts receivable As of June 30, 2019, 4 customers accounted for 67% of the Company’s accounts receivable. As of December 31, 2018, three customers accounted for 83% of the Company’s accounts receivable. Major customers For the six months ended June 30, 2019, two customers accounted for approximately 42% of the Company’s net revenue. For the six months ended June 30, 2018, three customers accounted for approximately 44% of the Company’s net revenue. For the three months ended June 30, 2019, two customers accounted for approximately 44% of the Company’s net revenue. For the three months ended June 30, 2018, three customers accounted for approximately 47% of the Company’s net revenue. For the year ended December 31, 2018, two customers accounted for approximately 41% of the Company’s net revenues. Substantially all of the Company’s business is with companies in the United States. Accounts payable As of June 30, 2019 and December 31, 2018, two vendors accounted for 72% and 77%, respectively, of the Company’s accounts payable. Major suppliers For the six months ended June 30, 2019, two suppliers accounted for approximately 36% of the Company’s purchases. For the six months ended June 30, 2018, three suppliers accounted for approximately 46% of the Company’s purchases. For the three months ended June 30, 2019, two suppliers accounted for approximately 27% of the Company’s purchases. For the three months ended June 30, 2018, two suppliers accounted for approximately 32% of the Company’s purchases. Substantially all of the Company’s business is with suppliers in the United States. |
Fixed Assets and Intangible Ass
Fixed Assets and Intangible Assets | 6 Months Ended |
Jun. 30, 2019 | |
Assets | |
Fixed Assets and Intangible Assets | Note 7 – Fixed Assets and Intangible Assets As of June 30, 2019, and December 31, 2018, fixed assets and intangible assets consisted of the following: June 30, 2019 December 31, 2018 Property and equipment $ 566,445 $ 566,445 Less accumulated depreciation (368,997 ) (296,674 ) Fixed assets, net $ 197,448 $ 269,771 Depreciation expense for the three months ended June 30, 2019 and 2018 was $34,263 and $39,754, respectively. Depreciation expense for the six months ended June 30, 2019 and 2018 was $72,323 and $76,162, respectively. June 30, 2019 December 31, 2018 FOCUSfactor intellectual property $ 1,450,000 $ 1,450,000 Perfekt intellectual property - 10,000 Cocowhite intellectual property - 50,000 Intangible assets subject to amortization 5,388,230 7,150,165 Less accumulated amortization (4,368,257 ) (4,728,576 ) Less accumulated impairment - (924,068 ) Intangible assets, net $ 2,469,973 $ 3,007,521 Amortization expense for the three months ended June 30, 2019 and 2018 was $269,333 and $416,197, respectively. Amortization expense for the six months ended June 30, 2019 and 2018 was $537,548 and $831,275, respectively. These intangible assets were acquired through an Asset Purchase Agreement and Stock Purchase Agreements. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 8 – Related Party Transactions The Company accrued and paid consulting fees of $57,917 per month and a management fee of $76,461 to a company owned by Mr. Jack Ross, Chief Executive Officer of the Company. The Company expensed $185,000 during the three months ended June 30, 2019 and $423,961 during the six months ended June 30, 2019. As of June 30, 2019, the total outstanding balance was $0 for consulting fees and reimbursements. As of June 30, 2019, the Company has a receivable of $120,660 related to services the Company performed for a company owned by Mr. Jack Ross. 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 June 30, 2019, the Company owed Knight $500,000 in relation to this agreement (see Note 10). The Company recorded present value of future payments of $266,521 and $272,151 as of June 30, 2019 and December 31, 2018, respectively. 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 June 30, 2019 and $60,000 for the six months ended June 30, 2019. As of June 30, 2019, the total outstanding balance was $0. 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 June 30, 2019, the Company owed Knight $6,393,702 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 June 30, 2019, the total outstanding balance was $200,000 Canadian dollars (approximately $152,834 USD). On December 23, 2016, we entered into an agreement with Knight Therapeutics for the distribution rights of Hand MD into Canada. In conjunction with this agreement, we are required to pay Knight a distribution fee equal to 60% of gross sales for sales achieved through a direct sales channel until the sales in the calendar year equal the threshold amount and then 40% of all such gross sales in such calendar year in excess of the threshold amount and 5% of gross sales for sales achieved through retail sales. The minimum due to Knight under this agreement is $25,000 Canadian dollars. As of June 30, 2019 the total outstanding balance was $25,000 Canadian dollars (approximately $18,325 USD). The Company expensed royalty of $50,445 during the three months ended June 30, 2019 and $139,309 for the six months ended June 30, 2019. At June 30, 2019 the Company, owed Knight Therapeutics $139,309 in connection with a royalty distribution agreement. The Company expensed royalty of $2,100 during the three months ended June 30, 2019 and $3,185 for the six months ended June 30, 2019. At June 30, 2019 the Company owed Knight Therapeutics $2,100 in connection with a royalty distribution agreement for Sneaky Vaunt. The Company expensed commissions of $4,887 during the three months ended June 30, 2019 and $9,065 for the six months ended June 30, 2019. At June 30, 2019, the Company, owed Founded Ventures, owned by a shareholder in the Company, $4,887 in connection with a commission agreement for Sneaky Vaunt. The Company expensed commissions of $259 during the three months ended June 30, 2019 and $644 for the six months ended June 30, 2019. At June 30, 2019, the Company owed Founded Ventures $259 in connection with a commission agreement for The Queen Pegasus. The Company paid $5,826 during the three months ended June 30, 2019 and $8,621 for the six months ended June 30, 2019 to Hand MD, Corp, related to a royalty agreement. At June 30, 2019, the Company owed Hand MD Corp. $0 in minimum future royalties. |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 6 Months Ended |
Jun. 30, 2019 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Liabilities | Note 9 – Accounts Payable and Accrued Liabilities As of June 30, 2019, and December 31, 2018, accounts payable and accrued liabilities consisted of the following: June 30, 2019 December 31, 2018 Accrued payroll $ 189,728 $ 217,069 Legal fees 94,511 71,236 Commissions 185,811 134,784 Manufacturers 2,808,325 3,898,896 Promotions 157,217 1,262,503 Returns allowance - 850,627 Accounting fees 146,963 104,198 Rent - 61,738 Customers 77,345 76,617 Interest 49,305 - Royalties, related party 326,294 304,434 Warehousing 30,207 64,289 Sales taxes 286,189 180,222 Taxes - 178,069 Severance Accrual 350,869 506,250 Charitable Donation 25,000 - Related Party Reimbursements 178,825 178,825 Others 155,221 307,463 Total $ 5,061,810 $ 8,397,220 |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 10 – Notes Payable The Company’s loans payable at June 30, 2019 and December 31, 2018 are as follows: June 30, 2019 December 31, 2018 Loans payable $ 6,766,520 $ 7,772,150 Unamortized debt issuance cost (106,298 ) (179,261 ) Total 6,660,222 7,592,889 Less: Current portion (1,979,876 ) (1,963,887 ) Long-term portion $ 4,680,346 $ 5,629,002 $950,000 June 26, 2015 Security Agreement: On June 26, 2015, the Company 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 recorded present value of future payments of $266,521 and $272,151 as of June 30, 2019 and December 31, 2018, respectively. The Company recorded imputed interest expense of $9,633 for the three months ended June 30, 2019 and $19,370 for the six months ended June 30, 2019. During the three and six months ended June 30, 2019, the Company made payments of $12,500 and $25,000, respectively, in connection with this Security Agreement. $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. Additional Tranches under the Loan Agreement are available to the Company until August 9, 2022 provided that no event of default exists. Each Additional Tranche must be for a minimum amount of $1.0 million, may only be used to finance qualified acquisitions (as defined in the Loan Agreement), and can be denied in Knight’s absolute discretion. If an Additional Tranche is denied, the Company can effect a qualified acquisition through a special purpose entity with such special purpose entity being entitled to obtain financing from third parties so long as such financing does not adversely affect Knight or Knight’s rights under the Loan Agreement. Upon the closing of any Additional Tranche, the Company will pay Knight an origination fee equal to 2% of the Additional Tranche, a work fee equal to 1% of the amount of the Additional Tranche, and reimburse Knight for its expenses incurred in connection with its consideration of any Additional Tranche (whether or not advanced). The Loan bears interest at 10.5% per annum. The amended Loan Agreement matures on August 8, 2020 and (b) the date that Knight, in its discretion, accelerates the Company’s obligations due to an event of default. On the Maturity Date of the Third Tranche and every Additional Tranche (or upon the acceleration of each such loan), the Company must pay Knight a success fee (the “Success Fee”) of that number of Company common shares equal to 10% of the loan, divided by the lesser of (a) $1.50, (b) the lowest price at which any common shares were issued by the Company in any offering or equity financing or other transaction between the Closing Date and the date the Success Fee is due, and (c) the current market price on the date the Success Fee is due. The Company may also pay the Success Fee in cash pursuant to the terms of the Loan Agreement. 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 provided that the aggregate consideration to be paid does not exceed $100,000 and the acquired business guarantees the Company’s obligations under the Loan Agreement) or make capital expenditures in excess of $500,000. The Loan Agreement also includes customary events of default, including payment defaults, breaches of covenants, change of control and material adverse effect defaults. Upon the occurrence of an event of default and during the continuation thereof, the principal amount of all loans under the Loan Agreement will bear a default interest rate of an additional 5%. The Company’s obligations and liabilities under the Loan Agreement are secured and unconditionally guaranteed by certain of the Company’s wholly owned subsidiaries as provided in the Loan Agreement. 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. We entered into Loan Amendment Agreement on May 14, 2018, the interest rate was reduced to 13% due to reducing payroll expenses. Also, Synergy will maintain Focus Factor Net Sales as measured on a year-end basis of at least USD $15 million for each fiscal year starting with December 31, 2017. We have amended our covenants under our loan agreement on March 27, 2019 and are currently in compliance with all covenants. The new covenants are as follows: we will maintain a minimum EBITDA of $1,900,000 for the twelve months ending on December 31, 2018, $2,500,000 for the twelve months ending March 31, 2019, $3,500,000 for the twelve months ending June 30, 2019 and $5,000,000 for the twelve months period ending on last day of each fiscal quarters thereafter. We shall maintain a net debt to TTM EBITDA ratio of no more than 8:1 for the twelve month period ending on December 31, 2018 until March 31, 2019 and shall maintain a net debt to TTM EBITDA ratio of no more than 6:1 thereafter. We shall maintain at all times a positive cash balance of $575,000 for the three month period ending December 31, 2018, $750,000 for the three month period ending March 31, 2019 and $1,000,000 thereafter. The default interest rate of 2.5% applies (from 13% to 15.5%) in accordance to our current agreement and will be in effect as of October 1, 2018. 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 $34,594 and $72,962 during the three and six months ended June 30, 2019, respectively. Unamortized debt issuance cost as of June 30, 2019 amounted to $106,298. The Company recognized interest expense of $263,069 and paid $263,069 during the three months ended June 30, 2019 and $592,236 and paid $542,930 during the six months ended June 30, 2019. Accrued interest was $49,306 as of June 30, 2019. The loan balance at June 30, 2019 was $6,500,000. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2019 | |
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. During the six months ended June 30, 2019, the Company issued 26,391 shares of its common stock valued at $39,585 in full and final settlement on the Per-fekt transaction. As of June 30, 2019 and December 31, 2018, there were 89,889,074 and 89,862,683, respectively, shares of the Company’s common stock issued and outstanding. |
Commitments & Contingencies
Commitments & Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments & 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 paid on January 1, 2018, and an additional cash signing bonus of $37,500 paid on July 1, 2018. 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. Other Commitments During the six months ended June 30, 2019 the Company received a 60 day Proposition 65 letter that one of its products did not have California’s prop 65 label. The Company is in the process of finalizing the settlement of this case and should be notified on our about August 15, 2019. |
Stock Options
Stock Options | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Options | Note 13 – Stock Options 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 a stock option plan at June 30, 2019: 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 6,166,667 6.06 $ 0.54 5,666,667 $ 0.52 The stock option activity for the six months ended June 30, 2019 is as follows: Options Weighted Average Outstanding at December 31, 2018 7,166,667 $ 0.50 Granted - - Exercised - - Expired or canceled (1,000,000 ) 0.25 Outstanding at June 30, 2019 6,166,667 $ 0.54 Stock-based compensation expense related to vested options was $38,679 and $84,212 during the three and six months ended June 30, 2019, respectively, which is a component of general and administrative expense in the statement of operations. The Company determined the value of share-based compensation for options vesting during the period using the Black-Scholes fair value option-pricing model with the following weighted average assumptions: estimated fair value of Company’s common stock of $0.48-.050, risk-free interest rate of 1.95-1.99%, volatility of 116-117%, expected lives of 10 years, and dividend yield of 0%. Stock options outstanding as of June 30, 2019, as disclosed in the above table, have an intrinsic value of $0. As of June 30, 2019, unamortized stock-based compensation costs related to options was $206,287, and will be recognized over a period of 1.33 years. |
Segments
Segments | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segments | Note 14 – 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 June 30, 2019 and 2018 were as follows: June 30, 2019 June 30, 2018 United States $ 5,979,538 $ 9,242,986 Foreign countries 357,183 485,726 $ 6,336,721 $ 9,728,712 Foreign countries primarily consist of Australia and Canada. The Company’s net sales by product group for the three months ended June 30, 2019 and 2018 were as follows: June 30, 2019 June 30, 2018 Nutraceuticals $ 6,001,392 $ 8,895,489 Over the Counter (OTC) 20,734 171,918 Consumer Goods 194,407 290,641 Cosmeceuticals 120,188 370,664 $ 6,336,721 $ 9,728,712 (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 June 30, 2019 and 2018 were as follows: June 30, 2019 June 30, 2018 Online $ 2,669,794 $ 3,611,997 Retail 3,666,927 6,116,715 $ 6,336,721 $ 9,728,712 Net sales attributed to customers in the United States and foreign countries for the six months ended June 30, 2019 and 2018 were as follows: June 30, 2019 June 30, 2018 United States $ 14,592,059 $ 18,270,848 Foreign countries 1,213,617 1,158,725 $ 15,805,676 $ 19,429,573 Foreign countries primarily consist of Australia and Canada. The Company’s net sales by product group for the six months ended June 30, 2019 and 2018 were as follows: June 30, 2019 June 30, 2018 Nutraceuticals $ 15,056,836 $ 17,910,268 Over the Counter (OTC) 29,066 334,102 Consumer Goods 352,030 562,932 Cosmeceuticals 367,744 622,271 $ 15,805,676 $ 19,429,573 (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 six months ended June 30, 2019 and 2018 were as follows: June 30, 2019 June 30, 2018 Online $ 6,522,818 $ 9,024,597 Retail 9,282,858 10,404,976 $ 15,805,676 $ 19,429,573 Long-lived assets (net) attributable to operations in the United States and foreign countries as of June 30, 2019 and December 31, 2018 were as follows: June 30, 2019 December 31, 2018 United States $ 10,451,087 $ 11,058,528 Foreign countries 9,574 12,004 $ 10,460,661 $ 11,070,532 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 15 – Income Taxes Income tax expense was $40,456 and $34,548 for the three and six months ended June 30, 2019, respectively, compared to $222,389 and $383,002, respectively for the same periods in 2018. The current provision is attributable to Australian operations and the current tax rate in effect in that country. 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. 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. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 16 – 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 have occurred that would require adjustments or disclosure into the unaudited condensed consolidated financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
General | General The accompanying condensed consolidated financial statements as of June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 2019 and 2018 are unaudited. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and are presented in accordance with the requirements of Rule S-X of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2019. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2018 and footnotes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2019. |
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 June 30, 2019, 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 June 30, 2019, the uninsured balance amounted to $770,545. |
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. June 30, 2019 December 31, 2018 June 30, 2018 Cash and cash equivalents $ 1,064,301 $ 459,736 $ 865,812 Restricted cash 136,966 136,180 138,023 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 1,201,267 $ 595,916 $ 1,003,835 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 (“Perfekt”) on June 21, 2017 and $50,000 acquired as an Asset Purchase entered into with Cocowhite on May 22, 2018. Intangible assets are amortized on a straight line basis over the useful lives. During the year ended December 31, 2018, the Company fully impaired intangible assets related to Perfekt and Cocowhite and charged to operations impairment loss of $60,000. As of June 30, 2019, 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. However, as of December 31, 2018 our review of intangible assets related to two of our subsidiaries did indicate that the carrying amount of the asset may not be recoverable. During the year ended December 31, 2018, the Company fully impaired related intangible assets and charged to operations impairment loss of $864,067. As of June 30, 2019, 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 June 30, 2019, our qualitative analysis of goodwill did not indicate any impairment. |
Revenue Recognition | Revenue Recognition 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 June 30, 2019. |
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. As of both June 30, 2019 and December 31, 2018, allowance for doubtful accounts was $0. |
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 operations. |
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 June 30, 2019, and 2018, options to purchase 6,166,667 and 8,666,667 shares of common stock, respectively, were outstanding. As of June 30, 2018, 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 six months ended June 30, 2019, and 2018: For the three months ended For the six months ended June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Net income (loss) after tax $ 318,462 $ (783,393 ) $ 1,785,748 (838,886 ) Weighted average common shares outstanding 89,889,044 89,862,683 89,877,247 89,862,683 Incremental shares from the assumed exercise of dilutive stock options - - - - Incremental shares from the assumed exercise of dilutive stock warrants - - - - Dilutive potential common shares 89,889,044 89,862,683 89,877,247 89,862,683 Net earnings per share: Basic $ 0.00 $ (0.01 ) $ 0.02 $ (0.01 ) Diluted $ 0.00 $ (0.01 ) $ 0.02 $ (0.01 ) The following securities were not included in the computation of diluted net earnings per share as their effect would have been antidilutive: 2019 2018 Options to purchase common stock 6,166,667 8,666,667 Warrants to purchase common stock - 1,000,000 6,166,667 9,666,667 |
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 June 30, 2019, 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 515-50, “Compensation – Stock Compensation.” 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. The exchange rates used to translate amounts in AUD and CAD into USD for the purposes of preparing the consolidated financial statements were as follows: Balance sheet: June 30, 2019 December 31, 2018 Period-end AUD: USD exchange rate $ 0.7023 $ 0.7046 Period-end CAD: USD exchange rate $ 0.7641 $ 0.7330 Income statement: June 30, 2019 June 30, 2018 Average Quarterly AUD: USD exchange rate $ 0.7064 $ 0.7714 Average Quarterly CAD: USD exchange rate $ 0.7499 $ 0.7827 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. |
Presentation of Financial Statements - Going Concern | Presentation of Financial Statements – Going Concern Going Concern Evaluation In connection with preparing unaudited condensed consolidated financial statements for the three and six months ended June 30, 2019, management evaluated whether there were conditions and events, considered in the aggregate, that raised substantial doubt about the Company’s ability to continue as a going concern within one year from the date that the financial statements are issued. The Company considered the following: ● At June 30, 2019, the Company had an accumulated deficit of $13,241,374. ● At June 30, 2019, the Company had working capital deficit of $46,078. ● Revenue decline in 2019 as compared to 2018 of $3,623,897. Ordinarily, conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern relate to the entity’s ability to meet its obligations as they become due. The Company evaluated its ability to meet its obligations as they become due within one year from the date that the financial statements are issued by considering the following: ● The Company raised $10.0 million via debt financing during the year ended December 31, 2017. ● In 2019, the Company repaid $1,025,000 of loans. ● The Company generated net income of $318,462 for the three months ended June 30, 2019 and $1,785,748 for the six months ended June 30, 2019. ● In 2019, the Company generated $1,776,352 of cash from operating activities. ● Working capital deficit of $46,078 at June 30, 2019, includes loans payables to related party of $1,979,876, royalty payable to related party of $312,568 and deferred revenue of $37,051. ● The Company has line of credit facility of $20 million available from its current lender for future mergers and acquisition. Management concluded that above factors alleviates doubts about the Company’s ability to generate enough cash from operations and other available sources to satisfy its obligations for the next twelve months from the issuance date. The Company will take the following actions if it starts to trend unfavorably to its internal profitability and cash flow projections, in order to mitigate conditions or events that would raise substantial doubt about its ability to continue as a going concern: ● Raise additional capital through line of credit and/or loans financing for future mergers and acquisition. ● Implement additional restructuring and cost reductions. ● Raise additional capital through a private placement. As of August 12, 2019 and June 30, 2019, the Company had $875,154 and $1,201,267, respectively, in cash and cash equivalents. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements ASU 2018-13 In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes in Disclosure Requirements for Fair Value Measurement, which removes, modifies and adds certain disclosure requirements in Topic 820 “Fair Value Measurement”. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The adoption of ASU 2018-13 is not expected to have any impact on the Company’s unaudited condensed consolidated financial statements. ASU 2018-07 In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The adoption of ASU 2018-07 did not have any impact on the Company’s unaudited condensed consolidated financial statements. 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 2018-05 on our unaudited condensed 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. The adoption of ASU 2018-02 did not have any impact on the Company’s unaudited condensed 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. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Update 2016-02. The adoption of ASU 2018-01 did not have any impact on the Company’s unaudited condensed consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Cash, Cash Equivalents, and 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. June 30, 2019 December 31, 2018 June 30, 2018 Cash and cash equivalents $ 1,064,301 $ 459,736 $ 865,812 Restricted cash 136,966 136,180 138,023 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 1,201,267 $ 595,916 $ 1,003,835 |
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 six months ended June 30, 2019, and 2018: For the three months ended For the six months ended June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Net income (loss) after tax $ 318,462 $ (783,393 ) $ 1,785,748 (838,886 ) Weighted average common shares outstanding 89,889,044 89,862,683 89,877,247 89,862,683 Incremental shares from the assumed exercise of dilutive stock options - - - - Incremental shares from the assumed exercise of dilutive stock warrants - - - - Dilutive potential common shares 89,889,044 89,862,683 89,877,247 89,862,683 Net earnings per share: Basic $ 0.00 $ (0.01 ) $ 0.02 $ (0.01 ) Diluted $ 0.00 $ (0.01 ) $ 0.02 $ (0.01 ) |
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: 2019 2018 Options to purchase common stock 6,166,667 8,666,667 Warrants to purchase common stock - 1,000,000 6,166,667 9,666,667 |
Schedule of Foreign Currencies Translation Exchange Rate | The exchange rates used to translate amounts in AUD and CAD into USD for the purposes of preparing the consolidated financial statements were as follows: Balance sheet: June 30, 2019 December 31, 2018 Period-end AUD: USD exchange rate $ 0.7023 $ 0.7046 Period-end CAD: USD exchange rate $ 0.7641 $ 0.7330 Income statement: June 30, 2019 June 30, 2018 Average Quarterly AUD: USD exchange rate $ 0.7064 $ 0.7714 Average Quarterly CAD: USD exchange rate $ 0.7499 $ 0.7827 |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Carrying Value of Inventory | The carrying value of inventory consisted of the following: June 30, 2019 December 31, 2018 Finished goods $ 2,072,233 $ 1,956,942 Components 403,873 441,282 Inventory in transit - 256,051 Raw materials 16,030 16,030 Total inventory $ 2,492,136 $ 2,670,305 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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: June 30, 2019 December 31, 2018 Trade accounts receivable $ 2,366,078 $ 4,458,225 Less allowances - - Total accounts receivable, net $ 2,366,078 $ 4,458,225 |
Other Current Assets (Tables)
Other Current Assets (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Current Assets | Other current assets consisted of the following: June 30, 2019 December 31, 2018 Advances for inventory $ 41,645 $ 25,170 Media production - 20,791 Insurance 23,947 13,302 Deposits 8,417 45,144 Trademarks 39,413 78,826 Rent 87,384 103,912 Promotions 106,539 342,220 License agreement 8,333 58,333 Software subscriptions 83,925 34,440 Rebranding 18,538 40,783 Clinical Research 27,702 35,617 Miscellaneous 45,111 30,309 Related Party Receivable 120,660 - Total $ 611,614 $ 828,847 |
Fixed Assets and Intangible A_2
Fixed Assets and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Assets | |
Summary of Fixed and Intangible Assets | As of June 30, 2019, and December 31, 2018, fixed assets and intangible assets consisted of the following: June 30, 2019 December 31, 2018 Property and equipment $ 566,445 $ 566,445 Less accumulated depreciation (368,997 ) (296,674 ) Fixed assets, net $ 197,448 $ 269,771 Depreciation expense for the three months ended June 30, 2019 and 2018 was $34,263 and $39,754, respectively. Depreciation expense for the six months ended June 30, 2019 and 2018 was $72,323 and $76,162, respectively. June 30, 2019 December 31, 2018 FOCUSfactor intellectual property $ 1,450,000 $ 1,450,000 Perfekt intellectual property - 10,000 Cocowhite intellectual property - 50,000 Intangible assets subject to amortization 5,388,230 7,150,165 Less accumulated amortization (4,368,257 ) (4,728,576 ) Less accumulated impairment - (924,068 ) Intangible assets, net $ 2,469,973 $ 3,007,521 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities | As of June 30, 2019, and December 31, 2018, accounts payable and accrued liabilities consisted of the following: June 30, 2019 December 31, 2018 Accrued payroll $ 189,728 $ 217,069 Legal fees 94,511 71,236 Commissions 185,811 134,784 Manufacturers 2,808,325 3,898,896 Promotions 157,217 1,262,503 Returns allowance - 850,627 Accounting fees 146,963 104,198 Rent - 61,738 Customers 77,345 76,617 Interest 49,305 - Royalties, related party 326,294 304,434 Warehousing 30,207 64,289 Sales taxes 286,189 180,222 Taxes - 178,069 Severance Accrual 350,869 506,250 Charitable Donation 25,000 - Related Party Reimbursements 178,825 178,825 Others 155,221 307,463 Total $ 5,061,810 $ 8,397,220 |
Notes Payable (Tables)
Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Loans Payable | The Company’s loans payable at June 30, 2019 and December 31, 2018 are as follows: June 30, 2019 December 31, 2018 Loans payable $ 6,766,520 $ 7,772,150 Unamortized debt issuance cost (106,298 ) (179,261 ) Total 6,660,222 7,592,889 Less: Current portion (1,979,876 ) (1,963,887 ) Long-term portion $ 4,680,346 $ 5,629,002 |
Stock Options (Tables)
Stock Options (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [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 a stock option plan at June 30, 2019: 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 6,166,667 6.06 $ 0.54 5,666,667 $ 0.52 |
Schedule of Stock Options Activity | The stock option activity for the six months ended June 30, 2019 is as follows: Options Weighted Average Outstanding at December 31, 2018 7,166,667 $ 0.50 Granted - - Exercised - - Expired or canceled (1,000,000 ) 0.25 Outstanding at June 30, 2019 6,166,667 $ 0.54 |
Segments (Tables)
Segments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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 June 30, 2019 and 2018 were as follows: June 30, 2019 June 30, 2018 United States $ 5,979,538 $ 9,242,986 Foreign countries 357,183 485,726 $ 6,336,721 $ 9,728,712 Net sales attributed to customers in the United States and foreign countries for the six months ended June 30, 2019 and 2018 were as follows: June 30, 2019 June 30, 2018 United States $ 14,592,059 $ 18,270,848 Foreign countries 1,213,617 1,158,725 $ 15,805,676 $ 19,429,573 |
Summary of Net Sales Attributed to Customers Product Group | The Company’s net sales by product group for the three months ended June 30, 2019 and 2018 were as follows: June 30, 2019 June 30, 2018 Nutraceuticals $ 6,001,392 $ 8,895,489 Over the Counter (OTC) 20,734 171,918 Consumer Goods 194,407 290,641 Cosmeceuticals 120,188 370,664 $ 6,336,721 $ 9,728,712 The Company’s net sales by product group for the six months ended June 30, 2019 and 2018 were as follows: June 30, 2019 June 30, 2018 Nutraceuticals $ 15,056,836 $ 17,910,268 Over the Counter (OTC) 29,066 334,102 Consumer Goods 352,030 562,932 Cosmeceuticals 367,744 622,271 $ 15,805,676 $ 19,429,573 |
Summary of Net Sales Attributed to Major Sales Channel | The Company’s net sales by major sales channel for the three months ended June 30, 2019 and 2018 were as follows: June 30, 2019 June 30, 2018 Online $ 2,669,794 $ 3,611,997 Retail 3,666,927 6,116,715 $ 6,336,721 $ 9,728,712 The Company’s net sales by major sales channel for the six months ended June 30, 2019 and 2018 were as follows: June 30, 2019 June 30, 2018 Online $ 6,522,818 $ 9,024,597 Retail 9,282,858 10,404,976 $ 15,805,676 $ 19,429,573 |
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 June 30, 2019 and December 31, 2018 were as follows: June 30, 2019 December 31, 2018 United States $ 10,451,087 $ 11,058,528 Foreign countries 9,574 12,004 $ 10,460,661 $ 11,070,532 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||
Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Jun. 30, 2019USD ($)Segmentshares | Jun. 30, 2018USD ($)shares | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Aug. 12, 2019USD ($) | May 22, 2018USD ($) | Jun. 21, 2017USD ($) | Jan. 22, 2015USD ($) | |
Cash equivalents | ||||||||||||
Cash federally insured limit per bank | 250,000 | 250,000 | ||||||||||
Cash uninsured amount | 770,545 | 770,545 | $ 162,729 | |||||||||
Intangible assets and charged to operations impairment loss | 60,000 | |||||||||||
Goodwill and charged to operations impairment loss | 864,067 | |||||||||||
Allowance for doubtful accounts | 0 | $ 0 | 0 | |||||||||
Percentage of valuation allowance | 100.00% | |||||||||||
Anti-dilutive securities | shares | 6,166,667 | 9,666,667 | ||||||||||
Number of operating segment | Segment | 1 | |||||||||||
Accumulated deficit | (13,241,374) | $ (13,241,374) | (15,027,122) | |||||||||
Working capital deficit | 46,078 | 46,078 | ||||||||||
Revenue decline | 3,623,897 | |||||||||||
Debt financing | $ 10,000,000 | |||||||||||
Repayment of loans payable | 1,025,000 | |||||||||||
Net income loss | 318,462 | $ 1,467,287 | $ (783,393) | $ (55,493) | 1,785,748 | $ (838,886) | ||||||
Cash from operating activities | 1,776,352 | 712,546 | ||||||||||
Deferred revenue | 37,051 | |||||||||||
Available line of credit | 20,000,000 | 20,000,000 | ||||||||||
Cash and cash equivalents | 1,064,301 | $ 865,812 | 1,064,301 | $ 865,812 | $ 459,736 | |||||||
Subsequent Event [Member] | ||||||||||||
Cash and cash equivalents | $ 875,154 | |||||||||||
Related Party [Member] | ||||||||||||
Loans payable | 1,979,876 | 1,979,876 | ||||||||||
Royalty payable | $ 312,568 | $ 312,568 | ||||||||||
Options to Purchase of Common Stock [Member] | ||||||||||||
Anti-dilutive securities | shares | 6,166,667 | 8,666,667 | ||||||||||
Warrants to Purchase of Common Stock [Member] | ||||||||||||
Anti-dilutive securities | shares | 1,000,000 | |||||||||||
Factor Nutrition Labs 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 Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 1,064,301 | $ 459,736 | $ 865,812 | |
Restricted cash | 136,966 | 136,180 | 138,023 | |
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ 1,201,267 | $ 595,916 | $ 1,003,835 | $ 2,094,685 |
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 | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Accounting Policies [Abstract] | ||||||
Net income (loss) after tax | $ 318,462 | $ 1,467,287 | $ (783,393) | $ (55,493) | $ 1,785,748 | $ (838,886) |
Weighted average common shares outstanding | 89,889,044 | 89,862,683 | 89,877,247 | 89,862,683 | ||
Incremental shares from the assumed exercise of dilutive stock options | ||||||
Incremental shares from the assumed exercise of dilutive stock warrants | ||||||
Dilutive potential common shares | 89,889,044 | 89,862,683 | 89,877,247 | 89,862,683 | ||
Net earnings per share - Basic | $ 0 | $ (0.01) | $ 0.02 | $ (0.01) | ||
Net earnings per share - Diluted | $ 0 | $ (0.01) | $ 0.02 | $ (0.01) |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Anti-dilutive securities | 6,166,667 | 9,666,667 |
Options to Purchase of Common Stock [Member] | ||
Anti-dilutive securities | 6,166,667 | 8,666,667 |
Warrants to Purchase of Common Stock [Member] | ||
Anti-dilutive securities | 1,000,000 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Schedule of Foreign Currencies Translation Exchange Rate (Details) | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 |
Period-End AUD: USD Exchange Rate [Member] | |||
Foreign currency translation exchange rate | 0.7023 | 0.7046 | |
Period-End CAD: USD Exchange Rate [Member] | |||
Foreign currency translation exchange rate | 0.7641 | 0.7330 | |
Average Quarterly AUD: USD Exchange Rate [Member] | |||
Foreign currency translation exchange rate | 0.7064 | 0.7714 | |
Average Quarterly CAD: USD Exchange Rate [Member] | |||
Foreign currency translation exchange rate | 0.7499 | 0.7827 |
Inventory - Schedule of Carryin
Inventory - Schedule of Carrying Value of Inventory (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 2,072,233 | $ 1,956,942 |
Components | 403,873 | 441,282 |
Inventory in transit | 256,051 | |
Raw materials | 16,030 | 16,030 |
Total inventory | $ 2,492,136 | $ 2,670,305 |
Accounts Receivable - Accounts
Accounts Receivable - Accounts Receivable, Net of Allowances for Sales Returns and Doubtful Accounts (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||
Trade accounts receivable | $ 2,366,078 | $ 4,458,225 |
Less allowances | ||
Total accounts receivable, net | $ 2,366,078 | $ 4,458,225 |
Other Current Assets - Schedule
Other Current Assets - Schedule of Other Current Assets (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Advances for inventory | $ 41,645 | $ 25,170 |
Media production | 20,791 | |
Insurance | 23,947 | 13,302 |
Deposits | 8,417 | 45,144 |
Trademarks | 39,413 | 78,826 |
Rent | 87,384 | 103,912 |
Promotions | 106,539 | 342,220 |
License agreement | 8,333 | 58,333 |
Software subscriptions | 83,925 | 34,440 |
Rebranding | 18,538 | 40,783 |
Clinical Research | 27,702 | 35,617 |
Miscellaneous | 45,111 | 30,309 |
Related party receivable | 120,660 | |
Total | $ 611,614 | $ 828,847 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Cash federally insured limit per bank | $ 250,000 | $ 250,000 | |||
Cash uninsured amount | $ 770,545 | $ 770,545 | $ 162,729 | ||
Four Customers [Member] | Accounts Receivable [Member] | |||||
Concentration risk percentage | 67.00% | ||||
Three Customers [Member] | Accounts Receivable [Member] | |||||
Concentration risk percentage | 83.00% | ||||
Three Customers [Member] | Sales Revenue, Net [Member] | |||||
Concentration risk percentage | 47.00% | 44.00% | |||
Two Customers [Member] | Sales Revenue, Net [Member] | |||||
Concentration risk percentage | 44.00% | 42.00% | 41.00% | ||
Two Vendors [Member] | Accounts Payable [Member] | |||||
Concentration risk percentage | 72.00% | 77.00% | |||
Two Suppliers [Member] | |||||
Concentration risk percentage | 27.00% | 32.00% | 36.00% | ||
Three Suppliers [Member] | |||||
Concentration risk percentage | 46.00% |
Fixed Assets and Intangible A_3
Fixed Assets and Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Assets | ||||
Depreciation expense | $ 34,263 | $ 39,754 | $ 72,323 | $ 76,162 |
Amortization expense | $ 269,333 | $ 416,197 | $ 537,548 | $ 831,275 |
Fixed Assets and Intangible A_4
Fixed Assets and Intangible Assets - Summary of Fixed and Intangible Assets (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Property and equipment | $ 566,445 | $ 566,445 |
Less accumulated depreciation | (368,997) | (296,674) |
Fixed assets, net | 197,448 | 269,771 |
Intangible assets subject to amortization | 5,388,230 | 7,150,165 |
Less accumulated amortization | (4,368,257) | (4,728,576) |
Less accumulated impairment | (924,068) | |
Intangible assets, net | 2,469,973 | 3,007,521 |
Focus Factor [Member] | ||
Intellectual property | 1,450,000 | 1,450,000 |
Perfekt [Member] | ||
Intellectual property | 10,000 | |
Cocowhite [Member] | ||
Intellectual property | $ 50,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | Dec. 23, 2016CAD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2019CAD ($) | Dec. 31, 2018USD ($) | Aug. 18, 2015USD ($) |
Consulting fees | $ 185,000 | $ 423,961 | ||||
Outstanding balance of consulting fees and reimbursement | 0 | 0 | ||||
Receivables related to services | 120,660 | 120,660 | ||||
Present value of future payments | 266,521 | 266,521 | $ 272,151 | |||
NomadChoice Pty Limited's [Member] | ||||||
Royal expense | 50,445 | 139,309 | ||||
Sneaky Vaunt Corp [Member] | ||||||
Royal expense | 2,100 | 3,185 | ||||
Queen Pegasus [Member] | ||||||
Commissions expense | 259 | |||||
Hand MD Corp [Member] | ||||||
Royal expense | 5,826 | 8,621 | ||||
Minimum royalty payment | 0 | |||||
Hand MD LLC [Member] | ||||||
Percentage of ownership interest | 50.00% | |||||
Payroll expense | 30,000 | 60,000 | ||||
Debt outstanding balance | 0 | 0 | ||||
Knight Therapeutics Inc [Member] | ||||||
Debt outstanding balance | 152,834 | 152,834 | ||||
Distribution gross sale percentage description | 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. | |||||
Hand MD [Member] | ||||||
Debt outstanding balance | 18,325 | 18,325 | ||||
Distribution gross sale percentage description | Knight a distribution fee equal to 60% of gross sales for sales achieved through a direct sales channel until the sales in the calendar year equal the threshold amount and then 40% of all such gross sales in such calendar year in excess of the threshold amount and 5% of gross sales for sales achieved through retail sales. | |||||
Security Agreement [Member] | Knight Therapeutics Inc [Member] | ||||||
Due to related party | 500,000 | 500,000 | ||||
Loan Agreement [Member] | Knight [Member] | ||||||
Due to related party | 6,393,702 | 6,393,702 | ||||
Royalty Distribution Agreement [Member] | NomadChoice Pty Limited's [Member] | ||||||
Royal expense | 139,309 | |||||
Royalty Distribution Agreement [Member] | Sneaky Vaunt Corp [Member] | ||||||
Royal expense | 2,100 | |||||
Commission Agreement One [Member] | ||||||
Commissions expense | 4,887 | 9,065 | ||||
Commission Agreement [Member] | ||||||
Commissions expense | 259 | 644 | ||||
Commission Agreement [Member] | Sneaky Vaunt Corp [Member] | ||||||
Commissions expense | 4,887 | |||||
CAD [Member] | Knight Therapeutics Inc [Member] | ||||||
Due to related party | $ 100,000 | |||||
Debt outstanding balance | $ 200,000 | |||||
CAD [Member] | Hand MD [Member] | ||||||
Due to related party | $ 25,000 | |||||
Debt outstanding balance | $ 25,000 | |||||
Mr. Jack Ross [Member] | ||||||
Accrued consulting fees per month | 57,917 | 57,917 | ||||
Management fee | $ 76,461 | $ 76,461 | ||||
Ms. Harshbarger [Member] | Consulting Agreement [Member] | ||||||
Due to related party | $ 10,000 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Liabilities - Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Accrued payroll | $ 189,728 | $ 217,069 |
Legal fees | 94,511 | 71,236 |
Commissions | 185,811 | 134,784 |
Manufacturers | 2,808,325 | 3,898,896 |
Promotions | 157,217 | 1,262,503 |
Returns allowance | 850,627 | |
Accounting fees | 146,963 | 104,198 |
Rent | 61,738 | |
Customers | 77,345 | 76,617 |
Interest | 49,305 | |
Royalties, related party | 326,294 | 304,434 |
Warehousing | 30,207 | 64,289 |
Sales taxes | 286,189 | 180,222 |
Taxes | 178,069 | |
Severance Accrual | 350,869 | 506,250 |
Charitable Donation | 25,000 | |
Related Party Reimbursements | 178,825 | 178,825 |
Others | 155,221 | 307,463 |
Total | $ 5,061,810 | $ 8,397,220 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Jun. 30, 2018 | Aug. 09, 2017 | Jun. 26, 2015 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Present value of future payments | $ 266,521 | $ 266,521 | $ 272,151 | ||||||
Payments of debt | 1,025,000 | ||||||||
Expenses associated with loan | $ 10,000,000 | ||||||||
Recognized amortization of deferred financing costs | 34,594 | $ 37,739 | 72,962 | $ 78,735 | |||||
Unamortized debt issuance costs | 106,298 | 106,298 | 179,261 | ||||||
June 26, 2015 Security Agreement [Member] | |||||||||
Debt instrument interest rate percentage | 0.00% | ||||||||
Note principal amount | $ 950,000 | ||||||||
Present value of future payments | 266,521 | 266,521 | $ 272,151 | ||||||
Interest expense | 9,633 | 19,370 | |||||||
Payments of debt | $ 12,500 | $ 25,000 | |||||||
June 26, 2015 Security Agreement [Member] | United States [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] | |||||||||
Total payments of acquire assets | $ 1,200,000 | ||||||||
Neuragen Corp [Member] | June 26, 2015 Security Agreement [Member] | United States [Member] | |||||||||
Percentage of sale revenue net | 2.00% | ||||||||
Focus Factor [Member] | Minimum [Member] | |||||||||
Net sales | $ 15,000,000 | ||||||||
Loan Agreement [Member] | |||||||||
Debt instrument interest rate percentage | 5.00% | 5.00% | 2.50% | 5.00% | 2.50% | 5.00% | |||
Capital expenditures | $ 500,000 | ||||||||
Debt EBITDA | $ 5,000,000 | ||||||||
Debt covenants, net debt to TTM EBITDA ratio | 8:1 | ||||||||
Loan Agreement [Member] | After March 31, 2019 [Member] | |||||||||
Debt covenants, net debt to TTM EBITDA ratio | 6:1 | ||||||||
Loan Agreement [Member] | Additional Tranche [Member] | |||||||||
Percentage of loan, description | Additional Tranches under the Loan Agreement are available to the Company until August 9, 2022 provided that no event of default exists. Each Additional Tranche must be for a minimum amount of $1.0 million, may only be used to finance qualified acquisitions (as defined in the Loan Agreement), and can be denied in Knight's absolute discretion. If an Additional Tranche is denied, the Company can effect a qualified acquisition through a special purpose entity with such special purpose entity being entitled to obtain financing from third parties so long as such financing does not adversely affect Knight or Knight's rights under the Loan Agreement. Upon the closing of any Additional Tranche, the Company will pay Knight an origination fee equal to 2% of the Additional Tranche, a work fee equal to 1% of the amount of the Additional Tranche, and reimburse Knight for its expenses incurred in connection with its consideration of any Additional Tranche (whether or not advanced). | ||||||||
Loan agreement, description | On the Maturity Date of the Third Tranche and every Additional Tranche (or upon the acceleration of each such loan), the Company must pay Knight a success fee (the "Success Fee") of that number of Company common shares equal to 10% of the loan, divided by the lesser of (a) $1.50, (b) the lowest price at which any common shares were issued by the Company in any offering or equity financing or other transaction between the Closing Date and the date the Success Fee is due, and (c) the current market price on the date the Success Fee is due. The Company may also pay the Success Fee in cash pursuant to the terms of the Loan Agreement. | ||||||||
Loan Agreement [Member] | Minimum [Member] | |||||||||
Debt instrument interest rate percentage | 10.50% | 13.00% | 10.50% | 13.00% | 10.50% | ||||
Debt covenants, minimum EBITDA | $ 1,900,000 | ||||||||
Debt covenants, minimum cash balance | $ 750,000 | $ 750,000 | 575,000 | ||||||
Loan Agreement [Member] | Minimum [Member] | Twelve Months Ending March 31, 2019 [Member] | |||||||||
Debt covenants, minimum EBITDA | 2,500,000 | ||||||||
Loan Agreement [Member] | Minimum [Member] | Twelve Months Ending June 30, 2019 [Member] | |||||||||
Debt covenants, minimum EBITDA | 3,500,000 | ||||||||
Loan Agreement [Member] | Minimum [Member] | Thereafter [Member] | |||||||||
Debt covenants, minimum EBITDA | $ 5,000,000 | ||||||||
Loan Agreement [Member] | Minimum [Member] | Quarters Ending After March 31, 2019 [Member] | |||||||||
Debt covenants, minimum cash balance | $ 1,000,000 | ||||||||
Loan Agreement [Member] | Minimum [Member] | Additional Tranche [Member] | |||||||||
Loan amount | $ 1,000,000 | ||||||||
Loan Agreement [Member] | Maximum [Member] | |||||||||
Debt instrument interest rate percentage | 15.50% | 15.50% | 15.50% | 15.50% | 15.50% | ||||
Payment for business acquisition consideration | $ 100,000 | ||||||||
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | |||||||||
Debt instrument interest rate percentage | 10.50% | ||||||||
Loan amount | $ 10,000,000 | ||||||||
Credit facility maximum borrowing amount | 20,000,000 | ||||||||
Expenses associated with loan | $ 100,000 | ||||||||
Note maturity date | Aug. 8, 2020 | ||||||||
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | Second Amendment [Member] | |||||||||
Note principal amount | $ 6,500,000 | $ 6,500,000 | |||||||
Interest expense | 263,069 | 592,236 | |||||||
Payments of debt | 263,069 | 542,930 | |||||||
Deferred financing costs | 452,869 | 452,869 | |||||||
Recognized amortization of deferred financing costs | 34,594 | 72,962 | |||||||
Unamortized debt issuance costs | 106,298 | 106,298 | |||||||
Accrued interest | $ 49,306 | $ 49,306 | |||||||
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | Origination Fee [Member] | |||||||||
Expenses associated with loan | $ 200,000 | ||||||||
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | Work Fee [Member] | |||||||||
Expenses associated with loan | $ 100,000 | ||||||||
Loan Amendment Agreement [Member] | |||||||||
Debt instrument interest rate percentage | 13.00% | 13.00% | 13.00% |
Notes Payable - Schedule of Loa
Notes Payable - Schedule of Loans Payable (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
Loans payable | $ 6,766,520 | $ 7,772,150 |
Unamortized debt issuance cost | (106,298) | (179,261) |
Total | 6,660,222 | 7,592,889 |
Less: Current portion | (1,979,876) | (1,963,887) |
Long-term portion | $ 4,680,346 | $ 5,629,002 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Number of capital stock shares authorized | 300,000,000 | 300,000,000 |
Common stock par value | $ 0.00001 | $ 0.00001 |
Common stock, shares issued | 89,889,074 | 89,862,683 |
Common stock, shares outstanding | 89,889,074 | 89,862,683 |
Perfekt Beauty Holdings LLC [Member] | ||
Number of common stock issued shares | 26,391 | |
Number of common stock issued | $ 39,585 |
Commitments & Contingencies (De
Commitments & Contingencies (Details Narrative) - Employment Agreement [Member] | Oct. 17, 2017USD ($)Integershares |
Agreement initial term | 3 years |
Mr. McCullough [Member] | |
Salary received | $ 340,000 |
Mr. McCullough [Member] | Retail Sales [Member] | |
Percentage of sale revenue net | 5.00% |
Mr. McCullough [Member] | Maximum [Member] | |
Percentage of bonus based salary | 25.00% |
Mr. McCullough [Member] | January 1, 2018 [Member] | |
Received annual bonus | $ 37,500 |
Mr. McCullough [Member] | July 1, 2018 [Member] | |
Received annual bonus | $ 37,500 |
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 |
Stock Options (Details Narrativ
Stock Options (Details Narrative) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019USD ($)$ / shares | Jun. 30, 2019USD ($)$ / shares | |
Stock-based compensation expense | $ 38,679 | $ 84,212 |
Expected lives | 10 years | |
Dividend yield | 0.00% | |
Unamortized stock-based compensation | 206,287 | $ 206,287 |
Recognized, period for recognition | 1 year 3 months 29 days | |
Stock Option [Member] | ||
Stock option outstanding intrinsic value | $ 0 | $ 0 |
Minimum [Member] | ||
Estimated fair value of company's common stock | $ / shares | $ 0.48 | $ 0.48 |
Risk-free interest rate | 1.95% | |
Volatility rate | 116.00% | |
Maximum [Member] | ||
Estimated fair value of company's common stock | $ / shares | $ 0.50 | $ 0.50 |
Risk-free interest rate | 1.99% | |
Volatility rate | 117.00% |
Stock Options - Summary of Opti
Stock Options - Summary of Options Outstanding by Price Range (Details) | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Options Outstanding, Exercise Prices Lower Limit | $ 0.25 |
Options Outstanding, Exercise Prices Upper Limit | $ 0.70 |
Options Outstanding, Number Outstanding | shares | 6,166,667 |
Options Outstanding, Weighted Average Remaining Contractual Life (Years) | 6 years 22 days |
Options Outstanding, Weighted Average Exercise Price | $ 0.54 |
Options Exercisable, Number Exercisable | shares | 5,666,667 |
Options Exercisable, Weighted Average Exercise Price | $ 0.52 |
Stock Options - Schedule of Sto
Stock Options - Schedule of Stock Options Activity (Details) - Stock Option Plan [Member] | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Options Outstanding, at Beginning balance | shares | 7,166,667 |
Options Outstanding, Granted | shares | |
Options Outstanding, Exercised | shares | |
Options Outstanding, Expired or canceled | shares | (1,000,000) |
Options Outstanding, at Ending balance | shares | 6,166,667 |
Weighted Average Exercise Price, at Beginning balance | $ / shares | $ 0.50 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Expired or canceled | $ / shares | 0.25 |
Weighted Average Exercise Price, at Ending balance | $ / shares | $ 0.54 |
Segments (Details Narrative)
Segments (Details Narrative) - Segment | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Number of operating segments | 1 | |
Sales Revenue, Net [Member] | ||
Concentration risk percentage | 10.00% | 10.00% |
Segments - Summary of Net Sales
Segments - Summary of Net Sales Attributed to Customers Geographical Segment (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue | $ 6,336,721 | $ 9,728,712 | $ 15,805,676 | $ 19,429,573 |
United States [Member] | ||||
Revenue | 5,979,538 | 9,242,986 | 14,592,059 | 18,270,848 |
Foreign Countries [Member] | ||||
Revenue | $ 357,183 | $ 485,726 | $ 1,213,617 | $ 1,158,725 |
Segments - Summary of Net Sal_2
Segments - Summary of Net Sales Attributed to Customers Product Group (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue | $ 6,336,721 | $ 9,728,712 | $ 15,805,676 | $ 19,429,573 |
Nutraceuticals [Member] | ||||
Revenue | 6,001,392 | 8,895,489 | 15,056,836 | 17,910,268 |
Over the Counter (OTC) [Member] | ||||
Revenue | 20,734 | 171,918 | 29,066 | 334,102 |
Consumer Goods [Member] | ||||
Revenue | 194,407 | 370,664 | 352,030 | 562,932 |
Cosmeceuticals [Member] | ||||
Revenue | $ 120,188 | $ 290,641 | $ 367,744 | $ 622,271 |
Segments - Summary of Net Sal_3
Segments - Summary of Net Sales Attributed to Major Sales Channel (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue | $ 6,336,721 | $ 9,728,712 | $ 15,805,676 | $ 19,429,573 |
Online [Member] | ||||
Revenue | 2,669,794 | 3,611,997 | 6,522,818 | 9,024,597 |
Retail [Member] | ||||
Revenue | $ 3,666,927 | $ 6,116,715 | $ 9,282,858 | $ 10,404,976 |
Segments - Summary of Long-live
Segments - Summary of Long-lived Assets (Net) Attributable to Operations Geographical Segment (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Long-lived assets net | $ 10,460,661 | $ 11,070,532 |
United States [Member] | ||
Long-lived assets net | 10,451,087 | 11,058,528 |
Foreign Countries [Member] | ||
Long-lived assets net | $ 9,574 | $ 12,004 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | Dec. 22, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 |
Income tax (benefit) | $ 40,456 | $ 222,389 | $ 34,548 | $ 383,002 | |
Effective corporate income tax rate | 35.00% | ||||
Percentage of marginal tax rate used for calculation of deferred tax asset | 21.00% | ||||
Operating loss carryforwards expiration year | 2035 | ||||
Valuation allowance percentage | 100.00% | ||||
Interest Income [Member] | |||||
Deduction of tax rate | 30.00% | ||||
Net Operating Income (Loss) [Member] | |||||
Deduction of tax rate | 80.00% | ||||
Flat Rate [Member] | |||||
Effective corporate income tax rate | 21.00% |