Attached files
| file | filename |
|---|---|
| 8-K/A - Synergy CHC Corp. | form8-ka.htm |
| EX-99.1 - Synergy CHC Corp. | ex99-1.htm |
| EX-99.2 - Synergy CHC Corp. | ex99-2.htm |
Exhibit 99.3
PRO FORMA FINANCIAL INFORMATION
| ● | Condensed Consolidated Pro Forma Unaudited Balance Sheet as of September 30, 2015 | |
| ● | Condensed Consolidated Pro Forma Unaudited Statement of Operations for the Year Ended December 31, 2014 | |
| ● | Condensed Consolidated Pro Forma Unaudited Statement of Operations for the Nine Months Ended September 30, 2015 | |
| ● | Notes to Condensed Consolidated Pro Forma Unaudited Financial Statements |
On November 12, 2015, Synergy CHC Corp. (“Synergy” or “the Company”) acquired Breakthrough Products, Inc. (“Breakthrough”) a distributor and producer of Urgent Rx (the “Acquisition”).
The unaudited condensed combined pro forma statements of operations are presented as if the Acquisition had been completed on January 1, 2014 combining Breakthrough’s audited condensed statement of operations for the year ended December 31, 2014 and the Company’s audited condensed statement of operations for the year ended December 31, 2014. The unaudited condensed combined pro forma balance sheet gives effect to the acquisition as if the Acquisition had taken place on September 30, 2015 and combines Breakthrough’s unaudited condensed balance sheet as of September 30, 2015 with the Company’s unaudited condensed balance sheet as of September 30, 2015.
The unaudited pro forma combined statement of income is presented for illustrative purposes only and, therefore, is not necessarily indicative of the operating results that might have been achieved had the transaction occurred as of an earlier date, nor is it necessarily indicative of the operating results that may be achieved in the future. You should not rely on the pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined companies will experience after the Acquisition.
The unaudited pro forma combined statement of operations including the notes thereto, should be read in conjunction with the Company’s audited historical consolidated financial statements for the year ended December 31, 2014 included in our Annual Report on Form 10-K for the year ended December 31, 2014, as well as Breakthrough’s audited financial statements for the year ended December 31, 2014 and unaudited condensed financial statements for the nine months ended September 30, 2015 and 2014 included in Exhibit 99.1 to this Form 8-K/A.
Synergy CHC Corp.
Unaudited Pro Forma Balance Sheet
September 30, 2015
| Balance Sheet Synergy CHC Corp. September 30, 2015 | Balance Sheet Breakthrough Products, Inc. September 30, 2015 | Pro Forma Adjustments | Balance Sheet Consolidated Pro Forma September 30, 2015 | ||||||||||||||||
| Dr | Cr | ||||||||||||||||||
| Assets | |||||||||||||||||||
| Current Assets | |||||||||||||||||||
| Cash and cash equivalents | $ | 824,948 | $ | 2,969,028 | $ | 3,793,976 | |||||||||||||
| Accounts receivable | 1,327,154 | 345,411 | 1,672,565 | ||||||||||||||||
| Receivable from related party | 175,422 | 175,422 | |||||||||||||||||
| Inventory | 499,448 | 230,201 | 729,649 | ||||||||||||||||
| Prepaid expenses | 122,576 | 96,941 | 219,517 | ||||||||||||||||
| Total current assets | 2,949,548 | 3,641,581 | 6,591,129 | ||||||||||||||||
| Other assets | |||||||||||||||||||
| Fixed assets, net | 3,614 | 3,614 | |||||||||||||||||
| Investment in Hand MD Corp. | 1,500,000 | 1,500,000 | |||||||||||||||||
| Goodwill | 2,935,383 | 2,380,411 | (1) | 5,315,794 | |||||||||||||||
| Intangible assets, net | 2,759,201 | 2,759,201 | |||||||||||||||||
| Debt issuance cost, net | 198,429 | 198,429 | |||||||||||||||||
| Total other assets | 7,396,627 | 0 | 9,796,627 | ||||||||||||||||
| Total Assets | $ | 10,346,175 | $ | 3,641,581 | $ | 16,368,167 | |||||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||||||
| Current liabilities | |||||||||||||||||||
| Accounts payable and accrued liabilities | $ | 1,653,296 | $ | 2,305,390 | $ | 3,958,686 | |||||||||||||
| Current portion of long-term debt | 750,000 | 750,000 | |||||||||||||||||
| Current portion of long-term debt, related party | 300,000 | - | 300,000 | ||||||||||||||||
| Total current liabilities | 2,703,296 | 2,305,390 | 5,008,686 | ||||||||||||||||
| Long-term liabilities | |||||||||||||||||||
| Note payable | 750,000 | 750,000 | |||||||||||||||||
| Note payable, net of debt discount, related party | 5,047,178 | 5,047,178 | |||||||||||||||||
| Total long-term liabilities | 5,797,178 | 5,797,178 | |||||||||||||||||
| Total Liabilities | 8,500,474 | 2,305,390 | 10,805,864 | ||||||||||||||||
| Stockholders’ Equity | |||||||||||||||||||
| Preferred stock, $0.0001 par value; 6,882,241shares authorized and outstanding | 688 | 688 | (2) | 0 | |||||||||||||||
| Preferred stock, $0.0001 par value; 9,780,073 shares authorized and outstanding | 978 | 978 | (2) | 0 | |||||||||||||||
| Preferred stock, $0.0001 par value; 15,226,581 shares authorized and outstanding | 1523 | 1523 | (2) | 0 | |||||||||||||||
| Common stock, $0.00001 par value; 300,000,000 shares authorized; 69,238,044 shares issued and outstanding | 692 | - | 30 | (1) | 722 | ||||||||||||||
| Common stock, $0.00001 par value; 42,786,899 shares authorized, 4,371,793 outstanding | 437 | 437 | (2) | 0 | |||||||||||||||
| Common stock to be issued | 68,000 | - | 68,000 | ||||||||||||||||
| Additional paid in capital | 5,882,448 | 26,932,664 | 1,949,970 | (1) | 9,599,020 | ||||||||||||||
| 430,411 | (1) | ||||||||||||||||||
| 26,932,664 | 1,336,191 | (2) | |||||||||||||||||
| Accumulated (deficit) | (4,105,439 | ) | (25,600,099 | ) | 25,600,099 | (2) | (4,105,439 | ) | |||||||||||
| Total stockholders’ equity | 1,845,701 | 1,336,191 | 5,562,303 | ||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 10,346,175 | $ | 3,641,581 | $ | 16,368,167 | |||||||||||||
| (1) | To record the issuance of 3,000,000 shares and warrants in connection with the acquisition of Breakthrough Products, Inc. |
| (2) | To elimiate the equity section of Breakthrough Products, Inc. as of September 30, 2015 |
Synergy CHC Corp.
Unaudited Pro Statement of Operations
September 30, 2015
| Synergy CHC Corp. Nine months ended September 30, 2015 | Breakthrough Products, Inc. Nine months ended September 30, 2015 | Pro Forma Adjustments | Consolidated Pro Forma Nine months ended September 30, 2015 | |||||||||||||
| Revenue, Less returns, allowances and discounts | $ | 3,181,623 | $ | 597,014 | $ | 3,778,637 | ||||||||||
| Cost of sales | 1,469,910 | 1,145,571 | 2,615,481 | |||||||||||||
| Gross profit (loss) | 1,711,713 | (548,557 | ) | 1,163,156 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling and marketing | 814,640 | 5,428,337 | 6,242,977 | |||||||||||||
| General and administrative | 706,806 | 3,934,017 | 4,640,823 | |||||||||||||
| Depreciation and amortization | 103,103 | 20,069 | 123,172 | |||||||||||||
| Total operating expenses | 1,624,549 | 9,382,423 | 11,006,972 | |||||||||||||
| Income (loss) from operations | 87,164 | (9,930,980 | ) | (9,843,816 | ) | |||||||||||
| Other income (expenses) | - | - | ||||||||||||||
| Interest expense | (212,904 | ) | - | (212,904 | ) | |||||||||||
| Interest income | 6,805 | 6,805 | ||||||||||||||
| Amortization of debt discount | (304,117 | ) | - | (304,117 | ) | |||||||||||
| Amortization of debt issuance cost | (37,753 | ) | - | (37,753 | ) | |||||||||||
| Loss on disposal of assets | (127,841 | ) | (127,841 | ) | ||||||||||||
| Total other expenses | (554,774 | ) | (121,036 | ) | (675,810 | ) | ||||||||||
| Net income (loss) | $ | (467,610 | ) | $ | (10,052,016 | ) | $ | (10,519,626 | ) | |||||||
| Net loss per share - basic and diluted | $ | (0.01 | ) | $ | (2.30 | ) | $ | (0.15 | ) | |||||||
| Weighted average common shares - basic | ||||||||||||||||
| and diluted | 68,096,740 | 4,371,793 | 68,096,740 | |||||||||||||
Synergy CHC Corp.
Unaudited Pro Forma Balance Sheet
December 31, 2014
| Balance
Sheet Synergy CHC Corp. December 31, 2014 |
Balance
Sheet Breakthrough Products, Inc. December 31, 2014 |
Pro Forma Adjustments | Balance
Sheet Consolidated Pro Forma December 31, 2014 |
||||||||||||||||
| Dr | Cr | ||||||||||||||||||
| Assets | |||||||||||||||||||
| Current Assets | |||||||||||||||||||
| Cash and cash equivalents | $ | 338 | $ | 9,130,895 | $ | 9,131,233 | |||||||||||||
| Accounts receivable | 2,897 | 806,076 | 808,973 | ||||||||||||||||
| Receivable from related party | 16,077 | - | 16,077 | ||||||||||||||||
| Inventory | 26,064 | 1,287,684 | 1,313,748 | ||||||||||||||||
| Prepaid expenses | 10,000 | 874,239 | 884,239 | ||||||||||||||||
| Total current assets | 55,376 | 12,098,894 | 12,154,270 | ||||||||||||||||
| Other assets | |||||||||||||||||||
| Fixed assets, net | 133,278 | 133,278 | |||||||||||||||||
| Goodwill | 2,380,411 | (1) | 2,380,411 | ||||||||||||||||
| Deposits | 41,026 | 41,026 | |||||||||||||||||
| Total other assets | - | 174,304 | 2,574,304 | ||||||||||||||||
| Total Assets | $ | 55,376 | $ | 12,273,198 | $ | 14,708,985 | |||||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||||||
| Current liabilities | |||||||||||||||||||
| Accounts payable and accrued liabilities | $ | 74,642 | $ | 876,558 | $ | 951,200 | |||||||||||||
| Current portion of long-term debt | 6,400 | 6,400 | |||||||||||||||||
| Current portion of long-term debt, related party | 100,000 | 100,000 | |||||||||||||||||
| Total current liabilities | 181,042 | 876,558 | 1,057,600 | ||||||||||||||||
| Total Liabilities | 181,042 | 876,558 | 1,057,600 | ||||||||||||||||
| Stockholders’ Equity | |||||||||||||||||||
| Preferred stock, $0.0001 par value; 6,882,241shares authorized and outstanding | 688 | 688 | (2) | 0 | |||||||||||||||
| Preferred stock, $0.0001 par value; 9,780,073 shares authorized and outstanding | 978 | 978 | (2) | 0 | |||||||||||||||
| Preferred stock, $0.0001 par value; 15,226,581 shares authorized and outstanding | 1523 | 1523 | (2) | 0 | |||||||||||||||
| Common stock, $0.00001 par value; 75,000,000 shares authorized, 62100000 shares issued and outstanding | 437 | 437 | (2) | 0 | |||||||||||||||
| Common stock, $0.00001 par value; 75,000,000 shares authorized, 62100000 shares issued and outstanding | 621 | - | 30 | (1) | 651 | ||||||||||||||
| Common stock to be issued | 40,000 | - | 40,000 | ||||||||||||||||
| Additional paid in capital | 867,004 | 26,941,097 | 1,949,970 | (1) | 14,644,025 | ||||||||||||||
| 430,411 | (1) | ||||||||||||||||||
| 26,941,097 | (2) | 11,396,640 | (2) | ||||||||||||||||
| Accumulated (deficit) | (1,033,291 | ) | (15,548,083 | ) | 15,548,083 | (2) | (1,033,291) | ||||||||||||
| Total stockholders’ equity | (125,666 | ) | 11,396,640 | 13,651,385 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 55,376 | $ | 12,273,198 | $ | 14,708,985 | |||||||||||||
(1) To record the issuance of 3,000,000 shares and warrants in connection with the acquisition of Breakthrough Products, Inc.
(2) To elimiate the equity section of Breakthrough Products, Inc. as of December 31, 2014
Synergy CHC Corp.
Unaudited Pro Statement of Operations
Twelve months ended December 31, 2014
| Synergy CHC Corp. Twelve months ended December 31, 2014 | Breakthrough Products, Inc. Twelve months ended December 31, 2014 | Pro Forma Adjustments | Consolidated Pro Forma Twelve months ended December 31, 2014 | |||||||||||||
| ` | ||||||||||||||||
| Revenue less: returns, allowances and discounts | $ | 9,158 | 2,713,130 | $ | 2,722,288 | |||||||||||
| Cost of sales | 5,616 | 1,573,285 | 1,578,901 | |||||||||||||
| Gross profit | 3,542 | 1,139,845 | 1,143,387 | |||||||||||||
| Operating expenses | ||||||||||||||||
| Selling and marketing | 5,111,184 | 5,111,184 | ||||||||||||||
| Payroll and employee benefits | 2,574,353 | 2,574,353 | ||||||||||||||
| General and administrative | 961,636 | 1,294,674 | 2,256,310 | |||||||||||||
| Research and development | 131,287 | 131,287 | ||||||||||||||
| Warehousing costs | 530,448 | 530,448 | ||||||||||||||
| Depreciation and amortization | 72,777 | 72,777 | ||||||||||||||
| Product display costs | 1,028,406 | 1,028,406 | ||||||||||||||
| Total operating expenses | 961,636 | 10,743,129 | 11,704,765 | |||||||||||||
| Loss from operations | (958,094 | ) | (9,603,284 | ) | (10,561,378 | ) | ||||||||||
| Other income (expenses) | - | - | ||||||||||||||
| Interest expense | (1,998 | ) | (75,195 | ) | (77,193 | ) | ||||||||||
| Interest income | 17,241 | 17,241 | ||||||||||||||
| Total other expenses | (1,998 | ) | (57,954 | ) | (59,952 | ) | ||||||||||
| Net loss | $ | (960,092 | ) | $ | (9,661,238 | ) | $ | (10,621,330 | ) | |||||||
| Net loss per share - basic and diluted | $ | (0.01 | ) | (2.22 | ) | $ | (0.11 | ) | ||||||||
| Weighted average common shares - basic and diluted | 97,165,479 | 4,360,886 | 97,165,479 | |||||||||||||
SYNERGY CHC CORP.
NOTES TO CONDENSED PRO FORMA UNAUDITED FINANCIAL STATEMENTS
Unaudited Pro Forma Condensed Financial Information.
The Pro Forma Unaudited Condensed Financial Statements have been prepared in order to present consolidated financial position and results of operations of Synergy CHC Corp. (the “Company”) and Breakthrough Products, Inc. (“Breakthrough”) as if the Acquisition had occurred as of September 30, 2015 for the pro forma condensed consolidated balance sheet and to give effect to the Acquisition by the Company, as if the transaction had taken place at January 1, 2014 for the pro forma condensed consolidated statements of operations for the year ended December 31, 2014 and the nine months ended September 30, 2015, respectively.
The following pro forma adjustments are incorporated into the pro forma condensed consolidated balance sheet as of September 30, 2015 and the pro forma condensed consolidated statement of operations for the year ended December 31, 2014 and nine months ended September 30, 2015, respectively.
| (1) | Acquisition of Breakthrough via issuance of shares |
The Acquisition has been accounted for under the acquisition method of accounting. Under the acquisition method of accounting, the total acquisition consideration price was allocated to the assets acquired and liabilities assumed based on their preliminary estimated fair values. In order to ultimately determine the fair values of tangible and intangible assets acquired and liabilities assumed for Breakthrough we may engage a third party independent valuation specialist, however as of the date of this report, the valuation has not been undertaken.
During the measurement period (which is the period required to obtain all necessary information that existed at the acquisition date, or to conclude that such information is unavailable, not to exceed one year), additional assets or liabilities may be recognized, or there could be changes to the amounts of assets. The Company expects the purchase price allocations for the acquisition of Breakthrough to be completed by the end of the fourth quarter of 2016.
This pro forma adjustments do not reflect the amortization of intangible assets acquired, if any, in the Acquisition
| (2) | To eliminate Breakthrough’s retained earnings and capital structure |