Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Apr. 07, 2020 | Jun. 30, 2019 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | Synergy CHC Corp. | ||
Entity Central Index Key | 0001562733 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
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 Shell Company | false | ||
Entity Public Float | $ 5,400,000 | ||
Entity Common Stock, Shares Outstanding | 89,889,074 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash and cash equivalents | $ 1,224,514 | $ 459,736 |
Restricted cash | 100,000 | 136,180 |
Accounts receivable, net (including related party receivable of $277,432 and $0, respectively) | 1,423,786 | 4,458,225 |
Prepaid expenses | 186,143 | 828,847 |
Income taxes receivable | 251,614 | 386,686 |
Inventory, net | 1,861,038 | 2,670,305 |
Total Current Assets | 5,047,095 | 8,939,979 |
Fixed assets, net | 135,898 | 269,771 |
Goodwill | 7,793,240 | |
Intangible assets, net | 7,636 | 3,007,521 |
Total Assets | 5,190,629 | 20,010,511 |
Current Liabilities: | ||
Accounts payable and accrued liabilities (including related party payable of $956,438 and $1,775,617, respectively) | 4,674,064 | 8,397,220 |
Deferred revenue | 7,887 | 49,709 |
Current portion of long-term notes payable, net of debt discount and debt issuance cost, related party | 5,465,113 | 1,963,887 |
Total Current Liabilities | 10,147,064 | 10,410,816 |
Long-term Liabilities: | ||
Notes payable, net of debt discount and debt issuance cost, related parties | 246,916 | 5,629,002 |
Total long-term liabilities | 246,916 | 5,629,002 |
Total Liabilities | 10,393,980 | 16,039,818 |
Commitments and contingencies | ||
Stockholders' (Deficit) 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 | 19,018,955 | 18,817,800 |
Accumulated other comprehensive income | 11,364 | 179,116 |
Accumulated deficit | (24,234,569) | (15,027,122) |
Total stockholders' (deficit) equity | (5,203,351) | 3,970,693 |
Total Liabilities and Stockholders' (Deficit) Equity | $ 5,190,629 | $ 20,010,511 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, related parties, current | $ 277,432 | $ 0 |
Accounts payable and accrued liabilities, related parties, current | $ 956,438 | $ 1,775,617 |
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 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | ||
Revenue | $ 29,357,546 | $ 33,824,495 |
Cost of Sales (including related party purchases of $4,847,626 and $4,392,245, respectively) | 9,137,602 | 11,036,587 |
Gross Profit | 20,219,944 | 22,787,908 |
Operating expenses | ||
Selling and marketing | 11,471,652 | 17,698,806 |
General and administrative | 5,493,433 | 7,191,646 |
Reserve for bad debts | 283,971 | 69,070 |
Impairment of intangible assets | 9,715,137 | 924,068 |
Depreciation and amortization | 1,211,861 | 1,822,064 |
Total operating expenses | 28,176,054 | 27,705,654 |
Loss from operations | (7,956,110) | (4,917,746) |
Other (income) expenses | ||
Interest income | (414) | (235) |
Interest expense | 981,105 | 1,132,763 |
Remeasurement loss on translation of foreign subsidiary | 8,280 | 171,938 |
Amortization of debt issuance cost | 130,829 | 213,966 |
Other income | (27,794) | |
Total other expenses | 1,119,800 | 1,490,638 |
Net loss before income taxes | (9,075,910) | (6,408,384) |
Income tax (expense) benefit | (131,537) | 247,694 |
Net loss after tax | $ (9,207,447) | $ (6,160,690) |
Net loss per share - basic and diluted | $ (0.10) | $ (0.07) |
Weighted average common shares outstanding | ||
Basic and Diluted | 89,883,194 | 89,862,683 |
Comprehensive loss: | ||
Net loss | $ (9,207,447) | $ (6,160,690) |
Foreign currency translation adjustment | (167,752) | 257,106 |
Comprehensive loss | $ (9,375,199) | $ (5,903,584) |
Consolidated Statements of Op_2
Consolidated Statements of Operations and Comprehensive Loss (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | ||
Cost of Sales related party purchases | $ 4,847,626 | $ 4,392,245 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' (Deficit) Equity - 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 | $ 440,999 | $ 440,999 | |||
Foreign currency translation gain (loss) | $ 257,105 | 257,106 | |||
Net loss | $ (6,160,690) | (6,160,690) | |||
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 | 161,570 | 161,570 | |||
Foreign currency translation gain (loss) | (167,752) | (167,752) | |||
Common stock issued for Per-fekt settlement | 39,585 | 39,585 | |||
Common stock issued for Per-fekt settlement, shares | 26,391 | ||||
Net loss | (9,207,447) | (9,207,447) | |||
Balance at Dec. 31, 2019 | $ 899 | $ 19,018,955 | $ 11,364 | $ (24,234,569) | $ (5,203,351) |
Balance, shares at Dec. 31, 2019 | 89,889,074 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash Flows from Operating Activities | ||
Net loss | $ (9,207,447) | $ (6,160,690) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Amortization of debt issuance cost | 130,829 | 213,966 |
Depreciation and amortization | 1,211,861 | 1,822,064 |
Stock based compensation expense | 201,155 | 440,999 |
Impairment of intangible assets | 9,715,137 | 924,068 |
Foreign currency transaction loss | (1,308) | 131,868 |
Bad debts | 283,972 | 69,070 |
Remeasurement loss on translation of foreign subsidiary | 8,280 | 171,938 |
Non cash implied interest | 38,310 | 68,688 |
Write-off of inventory | 257,111 | 1,056,209 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 3,027,900 | (193,687) |
Accounts receivable, related party | (277,432) | |
Inventory | 552,158 | (884,141) |
Prepaid expenses | 642,704 | 314,404 |
Income taxes receivable | 135,072 | |
Deferred revenue | (41,823) | 46,652 |
Accounts payable and accrued liabilities | (2,910,949) | 2,385,196 |
Accounts payable, related party | (819,179) | 898,029 |
Net cash provided by operating activities | 2,946,350 | 1,304,632 |
Cash Flows from Investing Activities | ||
Payments for acquisition of fixed assets | (129,087) | |
Payments for brand development fees | (50,000) | |
Payments for domain name | (18,920) | |
Net cash used in investing activities | (198,007) | |
Cash Flows from Financing Activities | ||
Advances from related party | 324,102 | |
Repayments of advances to related party | (324,102) | |
Repayment of notes payable | (2,050,000) | (2,862,500) |
Net cash used in financing activities | (2,050,000) | (2,862,500) |
Effect of exchange rate on cash, cash equivalents and restricted cash | (167,752) | 257,106 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 728,598 | (1,498,769) |
Cash, Cash Equivalents and restricted cash, beginning of year | 595,916 | 2,094,685 |
Cash, Cash Equivalents and restricted cash, end of year | 1,324,514 | 595,916 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest | 939,711 | 1,249,356 |
Income taxes | 38,919 | 224,114 |
Supplemental Disclosure of Non-cash Investing and Financing Activities: |
Nature of the Business
Nature of the Business | 12 Months Ended |
Dec. 31, 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 the 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 | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). All amounts referred to in the notes to the consolidated financial statements are in United States Dollars ($) unless stated otherwise. The 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. At December 31, 2019 and 2018 significant estimates included are assumptions about collection of accounts receivable, current income taxes, deferred income taxes valuation allowance, useful life of fixed and intangible assets, impairment analysis of goodwill and intangible assets, estimates used in the fair value calculation of stock based compensation, assumptions used in Black-Scholes-Merton, or BSM, valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate. The results of any changes in accounting estimates are reflected in the financial statements in the period in which the changes become evident. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period that they are determined to be necessary. Reclassification Certain amounts in prior periods have been reclassified to conform to current period presentation. These reclassifications had no effect on the previously reported net loss. 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 December 31, 2019, and 2018, the Company had no cash equivalents. The Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (FDIC) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. At December 31, 2019 and 2018, the uninsured balances amounted to $947,312 and $162,729, respectively. 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. December 31, 2019 December 31, 2018 Cash and cash equivalents $ 1,224,514 $ 459,736 Restricted cash 100,000 136,180 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 1,324,514 $ 595,916 Amounts included in restricted cash represent amount 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. During the year ended December 31, 2019, the Company fully impaired intellectual property related to Focus Factor and charged to operations impairment loss of $1,450,000. Long-lived Assets Long-lived assets include equipment and intangible assets other than those with indefinite lives. We assess the carrying value of our long-lived asset groups when indicators of impairment exist and recognize an impairment loss when the carrying amount of a long-lived asset is not recoverable when compared to undiscounted cash flows expected to result from the use and eventual disposition of the asset. Indicators of impairment include significant underperformance relative to historical or projected future operating results, significant changes in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry or economic trends. When indications of impairment arise for a particular asset or group of assets, we assess the future recoverability of the carrying value of the asset (or asset group) based on an undiscounted cash flow analysis. If carrying value exceeds projected, net, undiscounted cash flows, an additional analysis is performed to determine the fair value of the asset (or asset group), typically a discounted cash flow analysis, and an impairment charge is recorded for the excess of carrying value over fair value. As of 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. During the year ended December 31, 2019, the Company fully impaired intangible assets and charged to operations impairment loss of $471,897. 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 December 31, 2018 our qualitative analysis of goodwill did not indicate any impairment. As of December 31, 2019 our qualitative analysis of goodwill indicated potential impairment, thus the Company chose to fully impair goodwill and charged to operations impairment loss of $7,793,240. Revenue Recognition Adoption of ASU 2014-09, Revenue from Contracts with Customers On January 1, 2018, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606) using the modified retrospective (cumulative effect) transition method. Under this transition method, results for reporting periods beginning January 1, 2018 or later are presented under ASC 606, while prior period results continue to be reported in accordance with previous guidance. The cumulative effect of the initial application of ASC 606 was immaterial, no adjustment was recorded to the opening balance of retained earnings. The timing of revenue recognition for our various revenue streams was not materially impacted by the adoption of this standard. The Company believes its business processes, systems, and controls are appropriate to support recognition and disclosure under ASC 606. In addition, the adoption has led to increased footnote disclosures. Overall, the adoption of ASC 606 did not have a material impact on the Company’s consolidated balance sheet, statement of operations and comprehensive income and statement of cash flows for the year ended December 31, 2018. ASC 606 also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. As described below, the analysis of contracts under ASC 606 supports the recognition of revenue at a point in time, resulting in revenue recognition timing that is materially consistent with the Company’s historical practice of recognizing product revenue when title and risk of loss pass to the customer. Policy The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s (“FASB”), Accounting Standards Codification (“ASC”) ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied. The Company recognizes revenue upon shipment from its fulfillment centers. Certain of our distributors may also perform a separate function as a co-packer on our behalf. In such cases, ownership of and title to our products that are co-packed on our behalf by those co-packers who are also distributors, passes to such distributors when we are notified by them that they have taken transfer or possession of the relevant portion of our finished goods. Freight billed to customers is presented as revenues, and the related freight costs are presented as cost of goods sold. Cancelled orders are refunded if not already dispatched, refunds are only paid if stock is damaged in transit, discounts are only offered with specific promotions and orders will be refilled if lost in transit. The Company recognizes revenue for its digital products in the month the download by the customer occurs. Contract Assets The Company does not have any contract assets such as work-in-process. All trade receivables on the Company’s 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 December 31, 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 December 31, 2019 and 2018, allowance for doubtful accounts was $283,971 and $0, respectively. Advertising Expense The Company expenses marketing, promotions and advertising costs as incurred. Such costs are included in selling and marketing expense in the accompanying 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 FASBASC 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 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 income per share is anti-dilutive. As of December 31, 2019, and 2018, options to purchase 6,166,667 and 7,166,667 shares of common stock, respectively, were outstanding. The following is a reconciliation of the number of shares used in the calculation of basic and diluted loss per share for the years ending December 31, 2019, and 2018: For the year ending December 31, 2019 December 31, 2018 Net loss after tax $ (9,207,447 ) $ (6,160,690 ) Weighted average common shares outstanding 89,883,194 89,862,683 Net loss per share: Basic $ (0.10 ) $ (0.07 ) Diluted $ (0.10 ) $ (0.07 ) 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 December 31, 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). 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 – “AUD”). All monetary assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at period 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: December 31, December 31, 2019 2018 Period-end AUD: USD exchange rate $ 0.7030 $ 0.7046 Period-end CAD: USD exchange rate $ 0.7699 $ 0.7330 Income statement: December 31, December 31, 2019 2018 Average Yearly AUD: USD exchange rate $ 0.6954 $ 0.7476 Average Yearly CAD: USD exchange rate $ 0.7537 $ 0.7718 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 was not required. Accordingly, the Company performed credit evaluations of its customers and maintained 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 existed 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, all costs associated with getting the products into the retail stores including buying and transportation costs and the hosting of our online Application. 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 that, 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. 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 aggregated basis. Presentation of Financial Statements – Going Concern Going Concern Evaluation In connection with preparing consolidated financial statements for the year ended December 31, 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 December 31, 2019, the Company had an accumulated deficit of $24,234,569. ● At December 31, 2019, the Company had working capital deficit of $5,099,969. ● Revenue declined in 2019 by $4,466,949. ● The Company had net loss of $9,207,447 in 2019 as opposed to a net loss of $6,160,690 in 2018. ● The Company obtained waiver against not meeting financial covenants related to loans payable (minimum EBITDA). ● The Company is required to make repayment of loans payable of $500,000 and accrued interest during the three months ended March 31, 2020 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 $2.05 million of loans. ● In 2019, the Company generated $2.9 million of cash from operating activities. ● Working capital deficit of $5,099,969 at December 31, 2019, includes loans payables to related party of $5,465,113, royalty payable to related party of $94,778 and deferred revenue of $7,887. ● Revenue declines were largely the result of not overspending in marketing in 2019. ● 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, which may be impacted by the recent outbreak of COVID-19. ● Implement additional restructuring and cost reductions. ● Raise additional capital through a private placement, which may be impacted by the recent outbreak of COVID-19. At April 13, 2020 and December 31, 2019, the Company had $949,812 and $1,324,514, 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 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. Adoption of this new standard did not have any impact on the Company’s consolidated financial statements. ASU 2017 - 04, Intangibles - Goodwill and other (Topic 350) In January 2017, the FASB issued Accounting Standards Update ("ASU") 2017-04 Intangibles - Goodwill and other, which simplifies the test for goodwill impairment. This Update eliminates Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of the assets acquired and liabilities assumed in a business combination. Instead an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, however the loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. The amendments in this Update are effective for the Company for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is in the process of evaluating the impact of this standard update on its consolidated financial statements and related disclosures. ASU 2016-15 In August 2016, the FASB issued AS 2016-15, Classification of Certain Cash Receipts and Cash Payments, which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The effective date for ASU 2016-15 is for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. Adoption of this new standard did not have any impact on the Company’s consolidated financial statements. ASU 2016-13 In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendment to the initial guidance: ASU 2018-19 (collectively, Topic 326). ASU 2016-13 amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is currently assessing the potential impact of ASU 2016-13 on its consolidated financial statements. ASU 2016-02 In February 2016, the FASB issued ASU 201602, “Leases” (“ASU 201602”). This guidance, as amended by subsequent ASU’s on the topic, improves transparency and comparability among companies by recognizing right of use (ROU) assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. ASU No. 2016-02 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. We adopted ASU No. 2016-02 in our fiscal year beginning January 1, 2019 and used the optional transition method provided by the FASB in ASU No. 2018-10, “Codification Improvements to Topic 842, Leases” and ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements”, with no restatement of comparative periods. The Company notes there was no impact on adoption as the leases entered into by the Company were for less than 12 month terms. The new standard provides optional practical expedients in transition. We will only elect the package of practical expedients where, under the new standard, prior conclusions about lease identification, lease classification and initial direct costs do not need to be reassessed. The new standard also provides practical expedients for ongoing accounting where we elected the practical expedients on adoption and did not record any ROU asset with terms of less than 12 months. There were various updates recently issued, most of which represented technical c |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 3 – 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. 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 Company generated a deferred tax asset through net operating loss carry-forwards. Based upon Management’s evaluation, a valuation allowance of 100% has been established due to the uncertainty of the Company’s realization of the benefit derived from net operating loss carry-forwards. Deferred income taxes arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or noncurrent depending on the periods in which the temporary differences are expected to reverse. The Company does not have any uncertain tax positions. 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 several years, so such returns and liability remain open. The table below summarizes the differences between the U.S. statutory federal rate and the Company’s estimated effective tax rate for the years ended December 31, 2019 and 2018: December 31, 2019 December 31, 2018 U.S. Statutory Rate (21 )% 21 % Impairment of intangible assets 23 % - Amortization of intangible assets 3 % - U.S. effective rate in excess of AU/CA rate - % 9 % Carryback of Australian tax loss (2 )% (4 )% Utilization of U.S. net operating losses (2 )% - U.S. valuation allowance - (30 )% Foreign Tax - Australia/Canada - - Total provision for income taxes 1 % (4 )% The Company has deferred tax assets, which have been fully reserved, as follows as of December 31, 2019 and 2018: December 31, 2019 December 31, 2018 Deferred tax assets $ 8,275,000 $ 8,400,000 Valuation allowance for deferred tax assets (8,275,000 ) (8,400,000 ) Net deferred tax assets $ - $ - Tax expense (benefit) was $131,537 and $(247,694) for 2019 and 2018, respectively. The effective tax rate is attributable to the Company’s world wide income/(loss) as it relates to the income tax expense due in the United States and Australia. The “TCJA” added a one-time taxation of offshore earnings for the period ending December 31, 2017 (IRC Sec. 965), regardless of whether they are repatriated (“Deemed Repatriation”). The Company anticipates the one-time taxation of offshore earnings relating to its foreign subsidiaries is applicable for the 2017 year end. The Company is reviewing its potential tax liability at December 31, 2017, but has not fully completed the review. It is anticipated that such amount will reduce the foreign tax credits (Australia), as well as United States NOL’ at December 31, 2017. The Company also has net operating loss carryforwards of approximately $27,000,000 and $30,000,000 (United States and Canada) included in the deferred tax asset table above for 2019 and 2018, respectively, the majority attributable to the acquisition of Breakthrough Products, Inc. However, due to limitations of carryover attributes and separate return limitation year rules, it is unlikely the company will benefit from the NOL’s and thus Management has determined a 100% valuation reserved is required. Further, the Company has not completed an evaluation of the NOL’s attributable to Breakthrough Products, Inc. at the date of this report. The total deferred tax asset is calculated by multiplying a domestic federal (US) 21 percent marginal tax rate for 2019 and 21 percent marginal tax rate for 2018 by the cumulative Net Operating Loss Carryforwards (“NOL”). The Company currently has net operating loss carryforwards approximately aggregating $27,000,000 and $30,000,000 for 2019 and 2018, respectively, which expire through 2035 (estimated). The deferred tax asset related to the NOL carryforwards Management has determined based on all the available information that a 100% Valuation reserve is required. |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Accounts Receivable | Note 4 – Accounts Receivable Accounts receivable, net of allowances for doubtful accounts, consisted of the following: December 31, 2019 December 31, 2018 Trade accounts receivable (including related party receivable of $277,432 and $0, respectively – see note 9) $ 1,707,758 $ 4,458,225 Less allowances 283,972 - Total accounts receivable, net $ 1,423,786 $ 4,458,225 During the years ended December 31, 2019 and 2018, the Company charged $283,972 and $69,070, respectively to bad debt expense. |
Prepaid Expenses
Prepaid Expenses | 12 Months Ended |
Dec. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses | Note 5 – Prepaid Expenses At December 31, 2019 and 2018, prepaid expenses consisted of the following: December 31, 2019 December 31, 2018 Advances for inventory $ 9,071 $ 25,170 Media production - 20,791 Insurance 16,763 13,302 Deposits 10,234 45,144 Trademarks - 78,826 Rent - 103,912 Promotion - Bloggers - 167,220 License agreement - 58,333 Software subscriptions 9,536 34,440 Rebranding - 40,783 Clinical research - 35,617 Promotions 122,626 175,000 Miscellaneous 17,913 30,309 Total $ 186,143 $ 828,847 |
Concentration of Credit Risk
Concentration of Credit Risk | 12 Months Ended |
Dec. 31, 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 December 31, 2019 and 2018, the uninsured balance amounted to $947,312 and $162,729, respectively. Accounts receivable As of December 31, 2019 and 2018, two and three customers accounted for 52% and 83%, respectively, of the Company’s accounts receivable. Major customers For the year ended December 31, 2019, two customers accounted for approximately 51% of the Company’s net revenue. For the year ended December 31, 2018, two customers accounted for approximately 41% of the Company’s net revenue. Substantially all of the Company’s business is with companies in the United States. Accounts payable As of December 31, 2019 and 2018, two vendors accounted for 73% and 77%, respectively, of the Company’s accounts payable. This includes a related party vendor. Major suppliers For the year ended December 31, 2019, two suppliers accounted for approximately 40% of the Company’s purchases. For the year ended December 31, 2018, two suppliers accounted for approximately 45% of the Company’s purchases. Substantially all of the Company’s business is with suppliers in the United States. This includes purchases from related party supplier. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventory | Note 7 – 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: December 31, 2019 December 31, 2018 Finished goods $ 1,554,013 $ 1,956,942 Components 264,518 441,282 Inventory in transit 42,507 256,051 Raw materials - 16,030 Total inventory $ 1,861,038 $ 2,670,305 As of January 22, 2015, inventory was pledged to Knight under the Loan Agreement (see note 12). As of December 31, 2019, and 2018, $42,507 and $256,051, respectively, of the Company’s inventory was in transit. During the years ended December 31, 2019 and 2018, $257,111 and $1,056,209, respectively, of expiring and slow-moving inventory was written off to cost of sales. |
Fixed Assets and Intangible Ass
Fixed Assets and Intangible Assets | 12 Months Ended |
Dec. 31, 2019 | |
Assets | |
Fixed Assets and Intangible Assets | Note 8 – Fixed Assets and Intangible Assets As of December 31, 2019 and 2018, fixed assets and intangible assets consisted of the following: December 31, 2019 December 31, 2018 Property and equipment $ 566,445 $ 566,445 Less accumulated depreciation (430,547 ) (296,674 ) Fixed assets, net $ 135,898 $ 269,771 Depreciation expense for the years ended December 31, 2019 and 2018 was $133,873 and $152,522, respectively. December 31, 2019 December 31, 2018 FOCUSfactor intellectual property $ 1,450,000 $ 1,450,000 Per-fekt intellectual property - 10,000 Cocowhite intellectual property - 50,000 Intangible assets subject to amortization 5,388,230 7,150,165 Less accumulated amortization (4,908,696 ) (4,728,576 ) Less accumulated impairment (1,921,898 ) (924,068 ) Intangible assets, net $ 7,636 $ 3,007,521 Amortization expense for the years ended December 31, 2019 and 2018 was $1,077,987 and $1,669,542, respectively. Impairment of intangible assets for the year ended December 31, 2018 related to branding payments made during 2017. Impairment of intangible assets for the year ended December 31, 2019 related to intangible assets from brands purchased in 2015. During the year ended December 31, 2019, the Company fully impaired goodwill of $7,793,240. The estimated aggregate amortization expense over each of the next five years is as follows: 2020 $ 3,802 2021 3,834 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 9 – Related Party Transactions The Company accrued and paid consulting fees of $57,917 per month through December 2019 to a company owned by Mr. Jack Ross, Chief Executive Officer of the Company. The Company also paid thirteen months of a vehicle allowance of $1,500 per month. The Company expensed $824,413 and $648,944, respectively during 2019 and 2018 as consulting fees, and made payments totaling $852,626 and $648,944 towards services to an entity owned and controlled by an officer and shareholder of the Company for the year ended December 31, 2019 and 2018, respectively. As of December 31, 2019 and 2018, the total outstanding balance was $0 and $28,213, respectively. On January 22, 2015, the Company entered into a Loan Agreement with Knight Therapeutics (Barbados) Inc., a related party (owner of greater than 10% shares of the Company) (“Knight”), for the purchase of the Focus Factor assets. At December 31, 2017, the Company owed Knight $559,243 on this loan, net of discount, which was paid-off during 2018 (see Note 11). 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 December 31, 2019 and 2018, the Company owed Knight $475,000 and $525,000 in relation to this agreement (see Note 11). The Company recorded present value of future payments of $260,461 and $272,151 as of December 31, 2019 and 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 will pay Ms. Harshbarger $10,000 a month for one year unless the Consulting Agreement is terminated earlier by either party. The Company decided to extend the contract on a month to month basis. Hand MD, LLC is a 50% owner in Hand MD Corp. The Company expensed $120,000 through payroll for each of the years ended December 31, 2019 and 2018. As of December 31, 2019 and 2018, 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 December 31, 2019 and 2018, the Company owed Knight $5,451,568 and $7,320,739, respectively, on this loan, net of debt issuance cost (see Note 11). 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 December 31, 2019 and 2018, the total outstanding balance was $100,000 and $200,000 Canadian dollars, respectively. In US Dollars, the total outstanding balance was $70,295 and $152,834 as of December 31, 2019 and 2018, respectively. 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 December 31, 2019 and 2018, the total outstanding balance was $25,000 and $25,000 Canadian dollars, respectively. In US Dollars, the total outstanding balance was $17,574 and $18,325 as of December 31, 2019 and 2018, respectively. The Company expensed royalty of $4,867 and $16,066 for the years ended December 31, 2019 and 2018, respectively. At December 31, 2019 and 2018, the Company owed Knight Therapeutics $246 and $5,906, respectively in connection with a royalty distribution agreement. The Company expensed commissions of $9,065 and $43,374 for the years ended December 31, 2019 and 2018, respectively. At December 31, 2019 and 2018, the Company owed Founded Ventures, owned by a shareholder in the Company, $0 and $10,579, respectively in connection with a commission agreement. The Company expensed commissions of $644 and $10,016 for the years ended December 31, 2019 and 2018, respectively. At December 31, 2019 and 2018, the Company owed Founded Ventures $0 and $3,547, respectively in connection with a commission agreement. The Company expensed royalty of $0 and $2,361 for the years ended December 31, 2019 and 2018, respectively. At December 31, 2019 and 2018, the Company owed Knight Therapeutics $0 and $193, respectively in connection with a royalty distribution agreement. The Company paid $14,801 and $250,000 for the years ended December 31, 2019 and 2018, respectively, to Hand MD, Corp, related to a royalty agreement. As of both December 31, 2019 and 2018, the Company owed Hand MD Corp. $0 in minimum future royalties. The Company expensed royalty of $192,700 and $392,589 for the years ended December 31, 2019 and 2018, respectively. At December 31, 2019 and 2018, the Company owed Knight Therapeutics $5,528 and $109,329, respectively, in connection with a royalty distribution agreement. A member of the Company’s Board of Directors is an executive officer of a supplier to the Company. During the years ended December 31, 2019 and 2018, the Company acquired $4,847,626 and $4,392,245, of products from the supplier, respectively, and included in cost of sales. The Company owed the supplier $956,438 and $1,775,617, respectively at December 31, 2019 and 2018. The Company entered into transactions with a related party controlled by the CEO during the year ended December 31, 2019. The transactions were a pass through of expenses and reimbursements. During the year ended December 31, 2019, the Company received advances of $324,102 ($430,000 Canadian Dollars), which were fully repaid. As of December 31, 2019, there was $0 due or payable. The Company entered into transactions with a related party controlled by the CEO during the year ended December 31, 2019. The transactions were a pass through and allocation of expenses and reimbursements. As of December 31, 2019 the Company was owed $277,432. |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Liabilities | Note 10 – Accounts Payable and Accrued Liabilities As of December 31, 2019 and 2018, accounts payable and accrued liabilities consisted of the following: December 31, 2019 December 31, 2018 Accrued payroll $ 110,536 $ 217,069 Legal fees 68,098 71,236 Commissions 229,657 134,784 Manufacturers (including related party payable of $956,438 and $1,775,617, respectively) 2,082,256 3,898,896 Promotions 1,312,541 1,262,503 Returns allowance - 850,627 Accounting Fees 10,873 104,198 Rent - 61,738 Customers 26,206 76,617 Royalties, related party 93,643 304,434 Warehousing 13,746 64,289 Sales taxes 313,985 180,222 Payroll taxes 90,500 178,069 Severance Accrual 270,333 506,250 Related Party Reimbursements 1,135 178,825 Others 50,555 307,463 Total $ 4,674,064 $ 8,397,220 The Company has accounted for a severance accrual in the amount of $506,250 as of December 31, 2018 relating to the termination of an employee. This liability was paid out in three remaining equal installments of $168,750, net of taxes, during 2019. 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. The Company has estimated and accrued for its sales tax liability at $273,855 for the parent entity as of December 31, 2019. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 11 – Notes Payable The Company’s loans payable at December 31, 2019 and 2018 are as follows: December 31, 2019 December 31, 2018 Loans payable $ 5,760,461 $ 7,772,151 Unamortized debt issuance cost (48,432 ) (179,261 ) Total 5,712,029 7,592,890 Less: Current portion (5,465,113 ) (1,963,887 ) Long-term portion $ 246,916 $ 5,629,003 $6,000,000 January 22, 2015 Loan: On January 22, 2015, the Company entered into a Loan and Security Agreement (“Loan Agreement”) with Knight Therapeutics (Barbados) Inc. (“Knight”), pursuant to which Knight agreed to loan the Company $6.0 million (the “Loan”), and which amount was borrowed at closing (the “Financing”) for the purpose of acquiring the Focus Factor Business (defined below). At closing, the Company paid Knight an origination fee of $120,000 and a work fee of $60,000 and also paid $40,000 of Knight’s expenses associated with the Loan. The Loan bears interest at a rate of 15% per year; provided, however, that upon the occurrence of an equity or convertible equity offering by the Company of at least $1.0 million, the interest rate will drop to 13% per year. Interest accrues quarterly and is payable in arrears on March 31, June 30, September 30 and December 31 in each year, beginning on March 31, 2015. All outstanding principal and accrued and unpaid interest was due on the earliest to occur of either January 20, 2017 (the “Maturity Date”), or the date that Knight, in its discretion, accelerates the Company’s obligations due to an event of default. The Company may extend the Maturity Date for two successive additional 12-month periods if at March 31, 2016 and March 31, 2017, respectively, the Company’s revenues exceed $13.0 million and its EBITDA exceeds $2.0 million for the respective 12-month period then ending. These covenants were achieved, therefore the Company chose to extend the loan for the first 12-month period to January 20, 2018. Principal payments under the Loan Agreement commenced on June 30, 2015 and continue quarterly as set forth on the Repayment Schedule to the Loan Agreement. This loan was repaid in full on January 20, 2018. The Company also recorded deferred financing costs of $289,045 with respect to the above loan. The Company recognized amortization of deferred financing costs of $3,257 during the year ended December 31, 2018. Unamortized debt issuance costs were fully amortized as of December 31, 2018. The Company recognized and paid interest expense of $0 and $4,611 during the years ended December 31, 2019 and 2018, respectively. Accrued interest expense was $0 as of both December 31, 2019 and 2018. Loan payable balance was $0 as of December 31, 2019 and 2018. $950,000 June 26, 2015 Security Agreement: On June 26, 2015, the Company, through its wholly owned subsidiary, Neuragen Corp. (“Neuragen”), issued a 0% promissory note in a principal amount of $950,000 in connection with an Asset Purchase Agreement. The note requires $250,000 to be paid on or before June 30, 2016, and $700,000 to be paid in quarterly installments (beginning with the quarter ending 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. Company recorded present value of future payments of $260,461 and $272,151 as of December 31, 2019 and 2018, respectively. At December 31, 2019 and 2018, the Company owed Knight $475,000 and $525,000 in relation to this agreement. The Company recorded interest expense of $38,310 and $39,911 for the year ended December 31, 2019 and 2018, respectively. The Company made payments of $50,000 during both 2019 and 2018. $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. 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 was in effect as of October 1, 2018 to June 30, 2019. Effective June 30, 2019 the interest rate referred back to 10.5%. 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 $130,829 and $210,710 during the years ended December 31, 2019 and 2018, respectively. Unamortized debt issuance cost as of December 31, 2019 and 2018 amounted to $48,432 and $179,261, respectively. The Company recognized interest expense of $912,486 and $1,057,833 during the years ended December 31, 2019 and 2018, respectively. Accrued interest was $0 as of both December 31, 2019 and 2018. The loan balance at December 31, 2019 and 2018 was $5,500,000 and $7,500,000, respectively. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | Note 12 – 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 year ended December 31, 2019, the Company issued 26,391 shares of its common stock valued at $39,585 in full and final settlement on the Perfekt transaction. As of December 31, 2019, and 2018, there were 89,889,074 and 89,862,683, respectively, shares of the Company’s common stock issued and outstanding. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 13 – Commitments and 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 will vest in three (3) equal annual installments on the first three anniversaries of Mr. McCullough’s start date with the Company, provided that Mr. McCullough remains employed by the Company on each such date. The Option Grant will be granted under the Company’s 2014 Stock Incentive Plan pursuant to a stock grant agreement between the Company and Mr. McCullough. Operating leases On August 16, 2017, the Company entered into a sublease for office space, effective October 1, 2017 through May 2021. Rent expense under this lease was $19,500 per month, and increasing annually on June 1. Effective January 31, 2019 this sublease was cancelled. Other Commitments During the year ended December 31, 2019 the Company received a 60 day Proposition 65 letter that one of its products did not have California’s Proposition 65 label. The Company has settled the matter and made a one-time payment of $85,000 in full satisfaction of the matter. |
Stock Options
Stock Options | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Options | Note 14 – Stock Options The following table summarizes the changes in options outstanding and the related prices for the shares of the Company’s common stock issued to employees and consultants under a stock option plan at December 31, 2019: Options Outstanding Options Exercisable Exercise Price ($) 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 5.6 $ 0.54 5,833,333 $ 0.53 The stock option activity for the year ended December 31, 2019 is as follows: Options Outstanding Weighted Outstanding at December 31, 2017 8,666,667 $ 0.51 Granted - - Exercised - - Expired or canceled (1,500,000 ) (0.55 ) Outstanding at December 31, 2018 7,166,667 0.50 Granted Exercised Expired or canceled (1,000,000 ) (0.25 ) Outstanding at December 31, 2019 6,166,667 $ 0.54 Stock-based compensation expense related to vested options was $161,570 and $440,999 during the years ended December 31, 2019 and 2018, respectively. The Company determined the value of share-based compensation for options vesting during the year ended December 31, 2017 using the Black-Scholes fair value option-pricing model with the following weighted average assumptions: estimated fair value of Company’s common stock of $0.48-0.50, 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 December 31, 2019, as disclosed in the above table, have an intrinsic value of $0. As of December 31, 2019, unamortized stock-based compensation costs related to options was $128,929, and will be recognized over a period of one year. |
Stock Warrants
Stock Warrants | 12 Months Ended |
Dec. 31, 2019 | |
Stock Warrants | |
Stock Warrants | Note 15 – Stock Warrants The warrant activity for the year ended December 31, 2019 is as follows: Warrants Outstanding Weighted Outstanding at December 31, 2017 1,000,000 $ 5 Granted Exercised Expired or canceled (1,000,000 ) (5 ) Outstanding at December 31, 2018 - $ - Granted Exercised Expired or canceled Outstanding at December 31, 2019 - $ - |
Segments
Segments | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Segments | Note 16 – 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 aggregated basis. Net sales attributed to customers in the United States and foreign countries for the years ended December 31, 2019 and 2018 were as follows: December 31, 2019 December 31, 2018 United States $ 27,295,126 $ 31,731,304 Foreign countries 2,062,420 2,093,191 $ 29,357,546 $ 33,824,495 Foreign countries primarily consist of Australia and Canada. The Company’s net sales by product group for the years ended December 31, 2019 and 2018 were as follows: December 31, 2019 December 31, 2018 Nutraceuticals $ 28,149,938 $ 31,332,952 Over the Counter (OTC) 62,359 427,871 Consumer Goods 706,688 987,230 Cosmeceuticals 438,561 1,076,442 $ 29,357,546 $ 33,824,495 (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 years ended December 31, 2019 and 2018 were as follows: December 31, 2019 December 31, 2018 Online $ 10,382,593 $ 16,156,081 Retail 18,974,953 17,668,414 $ 29,357,546 $ 33,824,495 Long-lived assets (net) attributable to operations in the United States and foreign countries as of December 31, 2019 and 2018 were as follows: December 31, 2019 December 31, 2018 United States $ - $ 11,058,528 Foreign countries 7,636 12,004 $ 7,636 $ 11,070,532 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 17 – Subsequent Events The Company evaluated its December 31, 2019 consolidated financial statements for subsequent events through the date the consolidated financial statements were issued. During 2020, the Company received an advance of $100,000 Canadian Dollars from a related party. The recent outbreak of COVID-19, which has been declared by the World Health Organization to be a pandemic, has spread across the globe and is impacting worldwide economic activity. A pandemic, including COVID-19, or other public health epidemic poses the risk that the Company or its employees, suppliers, and other partners may be prevented from conducting business activities at full capacity for an indefinite period of time, including due to spread of the disease within these groups or due to shutdowns that may be requested or mandated by governmental authorities. While it is not possible at this time to estimate the impact that COVID-19 could have on the Company’s business, the continued spread of COVID-19 and the measures taken by the governments of countries affected and in which the Company operates could disrupt the operation of the Company’s business. The COVID-19 outbreak and mitigation measures may also have an adverse impact on global economic conditions, which could have an adverse effect on the Company’s business and financial condition, including on its potential to conduct financings on terms acceptable to the Company, if at all. In addition, the Company may take temporary precautionary measures intended to help minimize the risk of the virus to its employees, including temporarily requiring all employees to work remotely, and discouraging employee attendance at in-person work-related meetings, which could negatively affect the Company’s business. The extent to which the COVID-19 outbreak impacts the Company’s results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). All amounts referred to in the notes to the consolidated financial statements are in United States Dollars ($) unless stated otherwise. The 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. At December 31, 2019 and 2018 significant estimates included are assumptions about collection of accounts receivable, current income taxes, deferred income taxes valuation allowance, useful life of fixed and intangible assets, impairment analysis of goodwill and intangible assets, estimates used in the fair value calculation of stock based compensation, assumptions used in Black-Scholes-Merton, or BSM, valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate. The results of any changes in accounting estimates are reflected in the financial statements in the period in which the changes become evident. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period that they are determined to be necessary. |
Reclassification | Reclassification Certain amounts in prior periods have been reclassified to conform to current period presentation. These reclassifications had no effect on the previously reported net loss. |
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 December 31, 2019, and 2018, the Company had no cash equivalents. The Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (FDIC) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. At December 31, 2019 and 2018, the uninsured balances amounted to $947,312 and $162,729, respectively. |
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. December 31, 2019 December 31, 2018 Cash and cash equivalents $ 1,224,514 $ 459,736 Restricted cash 100,000 136,180 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 1,324,514 $ 595,916 Amounts included in restricted cash represent amount 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. During the year ended December 31, 2019, the Company fully impaired intellectual property related to Focus Factor and charged to operations impairment loss of $1,450,000. |
Long-lived Assets | Long-lived Assets Long-lived assets include equipment and intangible assets other than those with indefinite lives. We assess the carrying value of our long-lived asset groups when indicators of impairment exist and recognize an impairment loss when the carrying amount of a long-lived asset is not recoverable when compared to undiscounted cash flows expected to result from the use and eventual disposition of the asset. Indicators of impairment include significant underperformance relative to historical or projected future operating results, significant changes in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry or economic trends. When indications of impairment arise for a particular asset or group of assets, we assess the future recoverability of the carrying value of the asset (or asset group) based on an undiscounted cash flow analysis. If carrying value exceeds projected, net, undiscounted cash flows, an additional analysis is performed to determine the fair value of the asset (or asset group), typically a discounted cash flow analysis, and an impairment charge is recorded for the excess of carrying value over fair value. As of 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. During the year ended December 31, 2019, the Company fully impaired intangible assets and charged to operations impairment loss of $471,897. |
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 December 31, 2018 our qualitative analysis of goodwill did not indicate any impairment. As of December 31, 2019 our qualitative analysis of goodwill indicated potential impairment, thus the Company chose to fully impair goodwill and charged to operations impairment loss of $7,793,240. |
Revenue Recognition | Revenue Recognition Adoption of ASU 2014-09, Revenue from Contracts with Customers On January 1, 2018, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606) using the modified retrospective (cumulative effect) transition method. Under this transition method, results for reporting periods beginning January 1, 2018 or later are presented under ASC 606, while prior period results continue to be reported in accordance with previous guidance. The cumulative effect of the initial application of ASC 606 was immaterial, no adjustment was recorded to the opening balance of retained earnings. The timing of revenue recognition for our various revenue streams was not materially impacted by the adoption of this standard. The Company believes its business processes, systems, and controls are appropriate to support recognition and disclosure under ASC 606. In addition, the adoption has led to increased footnote disclosures. Overall, the adoption of ASC 606 did not have a material impact on the Company’s consolidated balance sheet, statement of operations and comprehensive income and statement of cash flows for the year ended December 31, 2018. ASC 606 also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. As described below, the analysis of contracts under ASC 606 supports the recognition of revenue at a point in time, resulting in revenue recognition timing that is materially consistent with the Company’s historical practice of recognizing product revenue when title and risk of loss pass to the customer. Policy The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s (“FASB”), Accounting Standards Codification (“ASC”) ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied. The Company recognizes revenue upon shipment from its fulfillment centers. Certain of our distributors may also perform a separate function as a co-packer on our behalf. In such cases, ownership of and title to our products that are co-packed on our behalf by those co-packers who are also distributors, passes to such distributors when we are notified by them that they have taken transfer or possession of the relevant portion of our finished goods. Freight billed to customers is presented as revenues, and the related freight costs are presented as cost of goods sold. Cancelled orders are refunded if not already dispatched, refunds are only paid if stock is damaged in transit, discounts are only offered with specific promotions and orders will be refilled if lost in transit. The Company recognizes revenue for its digital products in the month the download by the customer occurs. |
Contract Assets | Contract Assets The Company does not have any contract assets such as work-in-process. All trade receivables on the Company’s 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 December 31, 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 December 31, 2019 and 2018, allowance for doubtful accounts was $283,971 and $0, respectively. |
Advertising Expense | Advertising Expense The Company expenses marketing, promotions and advertising costs as incurred. Such costs are included in selling and marketing expense in the accompanying 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 FASBASC 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 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 income per share is anti-dilutive. As of December 31, 2019, and 2018, options to purchase 6,166,667 and 7,166,667 shares of common stock, respectively, were outstanding. The following is a reconciliation of the number of shares used in the calculation of basic and diluted loss per share for the years ending December 31, 2019, and 2018: For the year ending December 31, 2019 December 31, 2018 Net loss after tax $ (9,207,447 ) $ (6,160,690 ) Weighted average common shares outstanding 89,883,194 89,862,683 Net loss per share: Basic $ (0.10 ) $ (0.07 ) Diluted $ (0.10 ) $ (0.07 ) |
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 December 31, 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). |
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 – “AUD”). All monetary assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at period 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: December 31, December 31, 2019 2018 Period-end AUD: USD exchange rate $ 0.7030 $ 0.7046 Period-end CAD: USD exchange rate $ 0.7699 $ 0.7330 Income statement: December 31, December 31, 2019 2018 Average Yearly AUD: USD exchange rate $ 0.6954 $ 0.7476 Average Yearly CAD: USD exchange rate $ 0.7537 $ 0.7718 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 was not required. Accordingly, the Company performed credit evaluations of its customers and maintained 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 existed 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, all costs associated with getting the products into the retail stores including buying and transportation costs and the hosting of our online Application. |
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 that, 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. |
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 aggregated basis. |
Presentation of Financial Statements - Going Concern | Presentation of Financial Statements – Going Concern Going Concern Evaluation In connection with preparing consolidated financial statements for the year ended December 31, 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 December 31, 2019, the Company had an accumulated deficit of $24,234,569. ● At December 31, 2019, the Company had working capital deficit of $5,099,969. ● Revenue declined in 2019 by $4,466,949. ● The Company had net loss of $9,207,447 in 2019 as opposed to a net loss of $6,160,690 in 2018. ● The Company obtained waiver against not meeting financial covenants related to loans payable (minimum EBITDA). ● The Company is required to make repayment of loans payable of $500,000 and accrued interest during the three months ended March 31, 2020 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 $2.05 million of loans. ● In 2019, the Company generated $2.9 million of cash from operating activities. ● Working capital deficit of $5,099,969 at December 31, 2019, includes loans payables to related party of $5,465,113, royalty payable to related party of $94,778 and deferred revenue of $7,887. ● Revenue declines were largely the result of not overspending in marketing in 2019. ● 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, which may be impacted by the recent outbreak of COVID-19. ● Implement additional restructuring and cost reductions. ● Raise additional capital through a private placement, which may be impacted by the recent outbreak of COVID-19. At April 13, 2020 and December 31, 2019, the Company had $949,812 and $1,324,514, 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 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. Adoption of this new standard did not have any impact on the Company’s consolidated financial statements. ASU 2017 - 04, Intangibles - Goodwill and other (Topic 350) In January 2017, the FASB issued Accounting Standards Update ("ASU") 2017-04 Intangibles - Goodwill and other, which simplifies the test for goodwill impairment. This Update eliminates Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of the assets acquired and liabilities assumed in a business combination. Instead an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, however the loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. The amendments in this Update are effective for the Company for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is in the process of evaluating the impact of this standard update on its consolidated financial statements and related disclosures. ASU 2016-15 In August 2016, the FASB issued AS 2016-15, Classification of Certain Cash Receipts and Cash Payments, which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The effective date for ASU 2016-15 is for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. Adoption of this new standard did not have any impact on the Company’s consolidated financial statements. ASU 2016-13 In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendment to the initial guidance: ASU 2018-19 (collectively, Topic 326). ASU 2016-13 amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is currently assessing the potential impact of ASU 2016-13 on its consolidated financial statements. ASU 2016-02 In February 2016, the FASB issued ASU 201602, “Leases” (“ASU 201602”). This guidance, as amended by subsequent ASU’s on the topic, improves transparency and comparability among companies by recognizing right of use (ROU) assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. ASU No. 2016-02 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. We adopted ASU No. 2016-02 in our fiscal year beginning January 1, 2019 and used the optional transition method provided by the FASB in ASU No. 2018-10, “Codification Improvements to Topic 842, Leases” and ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements”, with no restatement of comparative periods. The Company notes there was no impact on adoption as the leases entered into by the Company were for less than 12 month terms. The new standard provides optional practical expedients in transition. We will only elect the package of practical expedients where, under the new standard, prior conclusions about lease identification, lease classification and initial direct costs do not need to be reassessed. The new standard also provides practical expedients for ongoing accounting where we elected the practical expedients on adoption and did not record any ROU asset with terms of less than 12 months. There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 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. December 31, 2019 December 31, 2018 Cash and cash equivalents $ 1,224,514 $ 459,736 Restricted cash 100,000 136,180 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 1,324,514 $ 595,916 |
Schedule of Number of Shares Used in the Calculation of Basic and Diluted Loss Per Share | The following is a reconciliation of the number of shares used in the calculation of basic and diluted loss per share for the years ending December 31, 2019, and 2018: For the year ending December 31, 2019 December 31, 2018 Net loss after tax $ (9,207,447 ) $ (6,160,690 ) Weighted average common shares outstanding 89,883,194 89,862,683 Net loss per share: Basic $ (0.10 ) $ (0.07 ) Diluted $ (0.10 ) $ (0.07 ) |
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: December 31, December 31, 2019 2018 Period-end AUD: USD exchange rate $ 0.7030 $ 0.7046 Period-end CAD: USD exchange rate $ 0.7699 $ 0.7330 Income statement: December 31, December 31, 2019 2018 Average Yearly AUD: USD exchange rate $ 0.6954 $ 0.7476 Average Yearly CAD: USD exchange rate $ 0.7537 $ 0.7718 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate | The table below summarizes the differences between the U.S. statutory federal rate and the Company’s estimated effective tax rate for the years ended December 31, 2019 and 2018: December 31, 2019 December 31, 2018 U.S. Statutory Rate (21 )% 21 % Impairment of intangible assets 23 % - Amortization of intangible assets 3 % - U.S. effective rate in excess of AU/CA rate - % 9 % Carryback of Australian tax loss (2 )% (4 )% Utilization of U.S. net operating losses (2 )% - U.S. valuation allowance - (30 )% Foreign Tax - Australia/Canada - - Total provision for income taxes 1 % (4 )% |
Schedule of Deferred Income Tax Assets | The Company has deferred tax assets, which have been fully reserved, as follows as of December 31, 2019 and 2018: December 31, 2019 December 31, 2018 Deferred tax assets $ 8,275,000 $ 8,400,000 Valuation allowance for deferred tax assets (8,275,000 ) (8,400,000 ) Net deferred tax assets $ - $ - |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable, Net of Allowances for Doubtful Accounts | Accounts receivable, net of allowances for doubtful accounts, consisted of the following: December 31, 2019 December 31, 2018 Trade accounts receivable (including related party receivable of $277,432 and $0, respectively – see note 9) $ 1,707,758 $ 4,458,225 Less allowances 283,972 - Total accounts receivable, net $ 1,423,786 $ 4,458,225 |
Prepaid Expenses (Tables)
Prepaid Expenses (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Prepaid Expenses | At December 31, 2019 and 2018, prepaid expenses consisted of the following: December 31, 2019 December 31, 2018 Advances for inventory $ 9,071 $ 25,170 Media production - 20,791 Insurance 16,763 13,302 Deposits 10,234 45,144 Trademarks - 78,826 Rent - 103,912 Promotion - Bloggers - 167,220 License agreement - 58,333 Software subscriptions 9,536 34,440 Rebranding - 40,783 Clinical research - 35,617 Promotions 122,626 175,000 Miscellaneous 17,913 30,309 Total $ 186,143 $ 828,847 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Carrying Value of Inventory | The carrying value of inventory consisted of the following: December 31, 2019 December 31, 2018 Finished goods $ 1,554,013 $ 1,956,942 Components 264,518 441,282 Inventory in transit 42,507 256,051 Raw materials - 16,030 Total inventory $ 1,861,038 $ 2,670,305 |
Fixed Assets and Intangible A_2
Fixed Assets and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Assets | |
Summary of Fixed and Intangible Assets | As of December 31, 2019 and 2018, fixed assets and intangible assets consisted of the following: December 31, 2019 December 31, 2018 Property and equipment $ 566,445 $ 566,445 Less accumulated depreciation (430,547 ) (296,674 ) Fixed assets, net $ 135,898 $ 269,771 Depreciation expense for the years ended December 31, 2019 and 2018 was $133,873 and $152,522, respectively. December 31, 2019 December 31, 2018 FOCUSfactor intellectual property $ 1,450,000 $ 1,450,000 Per-fekt intellectual property - 10,000 Cocowhite intellectual property - 50,000 Intangible assets subject to amortization 5,388,230 7,150,165 Less accumulated amortization (4,908,696 ) (4,728,576 ) Less accumulated impairment (1,921,898 ) (924,068 ) Intangible assets, net $ 7,636 $ 3,007,521 |
Summary of Estimated Aggregate Amortization Expense | The estimated aggregate amortization expense over each of the next five years is as follows: 2020 $ 3,802 2021 3,834 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities | As of December 31, 2019 and 2018, accounts payable and accrued liabilities consisted of the following: December 31, 2019 December 31, 2018 Accrued payroll $ 110,536 $ 217,069 Legal fees 68,098 71,236 Commissions 229,657 134,784 Manufacturers (including related party payable of $956,438 and $1,775,617, respectively) 2,082,256 3,898,896 Promotions 1,312,541 1,262,503 Returns allowance - 850,627 Accounting Fees 10,873 104,198 Rent - 61,738 Customers 26,206 76,617 Royalties, related party 93,643 304,434 Warehousing 13,746 64,289 Sales taxes 313,985 180,222 Payroll taxes 90,500 178,069 Severance Accrual 270,333 506,250 Related Party Reimbursements 1,135 178,825 Others 50,555 307,463 Total $ 4,674,064 $ 8,397,220 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Loans Payable | The Company’s loans payable at December 31, 2019 and 2018 are as follows: December 31, 2019 December 31, 2018 Loans payable $ 5,760,461 $ 7,772,151 Unamortized debt issuance cost (48,432 ) (179,261 ) Total 5,712,029 7,592,890 Less: Current portion (5,465,113 ) (1,963,887 ) Long-term portion $ 246,916 $ 5,629,003 |
Stock Options (Tables)
Stock Options (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Options Outstanding by Price Range | The following table summarizes the changes in options outstanding and the related prices for the shares of the Company’s common stock issued to employees and consultants under a stock option plan at December 31, 2019: Options Outstanding Options Exercisable Exercise Price ($) Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price ($) Number Exercisable Weighted Average Exercise Price ($) $ 0.25 – 0.70 6,166,667 5.6 $ 0.54 5,833,333 $ 0.53 |
Schedule of Stock Options Activity | The stock option activity for the year ended December 31, 2019 is as follows: Options Outstanding Weighted Outstanding at December 31, 2017 8,666,667 $ 0.51 Granted - - Exercised - - Expired or canceled (1,500,000 ) (0.55 ) Outstanding at December 31, 2018 7,166,667 0.50 Granted Exercised Expired or canceled (1,000,000 ) (0.25 ) Outstanding at December 31, 2019 6,166,667 $ 0.54 |
Stock Warrants (Tables)
Stock Warrants (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stock Warrants | |
Schedule of Stock Warrants Activity | The warrant activity for the year ended December 31, 2019 is as follows: Warrants Outstanding Weighted Outstanding at December 31, 2017 1,000,000 $ 5 Granted Exercised Expired or canceled (1,000,000 ) (5 ) Outstanding at December 31, 2018 - $ - Granted Exercised Expired or canceled Outstanding at December 31, 2019 - $ - |
Segments (Tables)
Segments (Tables) | 12 Months Ended |
Dec. 31, 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 years ended December 31, 2019 and 2018 were as follows: December 31, 2019 December 31, 2018 United States $ 27,295,126 $ 31,731,304 Foreign countries 2,062,420 2,093,191 $ 29,357,546 $ 33,824,495 |
Summary of Net Sales Attributed to Customers Product Group | The Company’s net sales by product group for the years ended December 31, 2019 and 2018 were as follows: December 31, 2019 December 31, 2018 Nutraceuticals $ 28,149,938 $ 31,332,952 Over the Counter (OTC) 62,359 427,871 Consumer Goods 706,688 987,230 Cosmeceuticals 438,561 1,076,442 $ 29,357,546 $ 33,824,495 (1) Net sales for any other product group of similar products are less than 10% of consolidated net sales. |
Summary of Net Sales Attributed to Major Sales Channel | The Company’s net sales by major sales channel for the years ended December 31, 2019 and 2018 were as follows: December 31, 2019 December 31, 2018 Online $ 10,382,593 $ 16,156,081 Retail 18,974,953 17,668,414 $ 29,357,546 $ 33,824,495 |
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 December 31, 2019 and 2018 were as follows: December 31, 2019 December 31, 2018 United States $ - $ 11,058,528 Foreign countries 7,636 12,004 $ 7,636 $ 11,070,532 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) | 3 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($)Segmentshares | Dec. 31, 2018USD ($)shares | Apr. 13, 2020USD ($) | May 22, 2018USD ($) | Dec. 31, 2017USD ($) | Jun. 21, 2017USD ($) | Jan. 22, 2015USD ($) | |
Cash equivalents | $ 1,324,514 | |||||||
Cash federally insured limit per bank | 250,000 | |||||||
Cash uninsured amount | 947,312 | 162,729 | ||||||
Intangible assets and charged to operations impairment loss | 60,000 | |||||||
Impairment loss on intangible assets | 471,897 | 864,067 | ||||||
Impairment of long lived assets | 471,897 | |||||||
Impairment loss of goodwill | 7,793,240 | |||||||
Allowance for doubtful accounts | $ 283,971 | $ 0 | ||||||
Percentage of valuation allowance | 100.00% | |||||||
Anti-dilutive securities | shares | 6,166,667 | 7,166,667 | ||||||
Number of operating segment | Segment | 1 | |||||||
Accumulated deficit | $ (24,234,569) | $ (15,027,122) | ||||||
Working capital deficit | 5,099,969 | |||||||
Revenue decline | 4,466,949 | |||||||
Net loss | (9,207,447) | (6,160,690) | ||||||
Repayment of loans payable | 2,050,000 | |||||||
Debt financing | $ 10,000,000 | |||||||
Cash from operating activities | 2,946,350 | 1,304,632 | ||||||
Due to related party | 5,465,113 | |||||||
Royalty payable to related party | 94,778 | |||||||
Deferred revenue | 7,887 | |||||||
Available line of credit | 20,000,000 | |||||||
Cash and cash equivalents | 1,224,514 | 459,736 | ||||||
Subsequent Event [Member] | ||||||||
Cash equivalents | $ 949,812 | |||||||
Repayment of loans payable | $ 500,000 | |||||||
Cash and cash equivalents | $ 949,812 | |||||||
Focus Factor [Member] | ||||||||
Intellectual property | $ 1,450,000 | $ 1,450,000 | ||||||
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 ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | |||
Cash and cash equivalents | $ 1,224,514 | $ 459,736 | |
Restricted cash | 100,000 | 136,180 | |
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ 1,324,514 | $ 595,916 | $ 2,094,685 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Number of Shares Used in the Calculation of Basic and Diluted Loss Per Share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Net loss after tax | $ (9,207,447) | $ (6,160,690) |
Weighted average common shares outstanding | 89,883,194 | 89,862,683 |
Net loss per share - Basic | $ (0.10) | $ (0.07) |
Net loss per share - Diluted | $ (0.10) | $ (0.07) |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Foreign Currencies Translation Exchange Rate (Details) | Dec. 31, 2019 | Dec. 31, 2018 |
Period-End AUD: USD Exchange Rate [Member] | ||
Foreign currency translation exchange rate | 0.7030 | 0.7046 |
Period-End CAD: USD Exchange Rate [Member] | ||
Foreign currency translation exchange rate | 0.7699 | 0.7330 |
Average Yearly AUD: USD Exchange Rate [Member] | ||
Foreign currency translation exchange rate | 0.6954 | 0.7476 |
Average Yearly CAD: USD Exchange Rate [Member] | ||
Foreign currency translation exchange rate | 0.7537 | 0.7718 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income tax examination description | 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). | |
Valuation allowance percentage | 100.00% | |
Tax expense (benefit) | $ 131,537 | $ (247,694) |
Net operating loss carryforwards | $ 27,000,000 | $ 30,000,000 |
Percentage of marginal tax rate used for calculation of deferred tax asset | 21.00% | 21.00% |
Operating loss carryforwards expiration year | 2035 | |
US Tax Authority [Member] | Internal Revenue Service (IRS) [Member] | ||
Net operating loss carryforwards | $ 27,000,000 | |
Canada Tax Authority [Member] | California Franchise Tax Board [Member] | ||
Net operating loss carryforwards | $ 30,000,000 |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
U.S. Statutory Rate | (21.00%) | 21.00% |
Impairment of intangible assets | 23.00% | 0.00% |
Amortization of intangible assets | 3.00% | 0.00% |
U.S. effective rate in excess of AU/CA rate | 0.00% | 9.00% |
Carryback of Australian tax loss | (2.00%) | (4.00%) |
Utilization of U.S. net operating losses | (0.02) | 0 |
U.S. valuation allowance | 0.00% | (30.00%) |
Foreign Tax - Australia/Canada | 0.00% | 0.00% |
Total provision for income taxes | 1.00% | (4.00%) |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Income Tax Assets (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Income Tax Disclosure [Abstract] | ||
Deferred tax assets | $ 8,275,000 | $ 8,400,000 |
Valuation allowance for deferred tax assets | (8,275,000) | (8,400,000) |
Net deferred tax assets |
Accounts Receivable (Details Na
Accounts Receivable (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Receivables [Abstract] | ||
Bad debts | $ 283,972 | $ 69,070 |
Accounts Receivable - Schedule
Accounts Receivable - Schedule of Accounts Receivable, Net of Allowances for Doubtful Accounts (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||
Trade accounts receivable (including related party receivable of $277,432 and $0, respectively - see note 9) | $ 1,707,758 | $ 4,458,225 |
Less allowances | 283,972 | |
Total accounts receivable, net | $ 1,423,786 | $ 4,458,225 |
Accounts Receivable - Schedul_2
Accounts Receivable - Schedule of Accounts Receivable, Net of Allowances for Doubtful Accounts (Details) (Parenthetical) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||
Accounts receivable, related parties, current | $ 277,432 | $ 0 |
Prepaid Expenses - Schedule of
Prepaid Expenses - Schedule of Prepaid Expenses (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Advances for inventory | $ 9,071 | $ 25,170 |
Media production | 20,791 | |
Insurance | 16,763 | 13,302 |
Deposits | 10,234 | 45,144 |
Trademarks | 78,826 | |
Rent | 103,912 | |
Promotion - Bloggers | 167,220 | |
License agreement | 58,333 | |
Software subscriptions | 9,536 | 34,440 |
Rebranding | 40,783 | |
Clinical research | 35,617 | |
Promotions | 122,626 | 175,000 |
Miscellaneous | 17,913 | 30,309 |
Total | $ 186,143 | $ 828,847 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash federally insured limit per bank | $ 250,000 | |
Cash uninsured amount | $ 947,312 | $ 162,729 |
Two Customers [Member] | Accounts Receivable [Member] | ||
Concentration risk percentage | 52.00% | |
Two Customers [Member] | Sales Revenue, Net [Member] | ||
Concentration risk percentage | 51.00% | 41.00% |
Three Customers [Member] | Accounts Receivable [Member] | ||
Concentration risk percentage | 83.00% | |
Two Vendors [Member] | Accounts Payable [Member] | ||
Concentration risk percentage | 73.00% | 77.00% |
Two Suppliers [Member] | ||
Concentration risk percentage | 40.00% | 45.00% |
Inventory (Details Narrative)
Inventory (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | ||
Inventory in transit | $ 42,507 | $ 256,051 |
Write-off of inventory | $ 257,111 | $ 1,056,209 |
Inventory - Schedule of Carryin
Inventory - Schedule of Carrying Value of Inventory (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 1,554,013 | $ 1,956,942 |
Components | 264,518 | 441,282 |
Inventory in transit | 42,507 | 256,051 |
Raw materials | 16,030 | |
Total inventory | $ 1,861,038 | $ 2,670,305 |
Fixed Assets and Intangible A_3
Fixed Assets and Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Assets | ||
Depreciation expense | $ 133,873 | $ 152,522 |
Amortization expense | 1,077,987 | $ 1,669,542 |
Impairment loss of goodwill | $ 7,793,240 |
Fixed Assets and Intangible A_4
Fixed Assets and Intangible Assets - Summary of Fixed and Intangible Assets (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Property and equipment | $ 566,445 | $ 566,445 |
Less accumulated depreciation | (430,547) | (296,674) |
Fixed assets, net | 135,898 | 269,771 |
Intangible assets subject to amortization | 5,388,230 | 7,150,165 |
Less accumulated amortization | (4,908,696) | (4,728,576) |
Less accumulated impairment | (1,921,898) | (924,068) |
Intangible assets, net | 7,636 | 3,007,521 |
Focus Factor [Member] | ||
Intellectual property | 1,450,000 | 1,450,000 |
Per-fekt [Member] | ||
Intellectual property | 10,000 | |
Cocowhite [Member] | ||
Intellectual property | $ 50,000 |
Fixed Assets and Intangible A_5
Fixed Assets and Intangible Assets - Summary of Estimated Aggregate Amortization Expense (Details) | Dec. 31, 2019USD ($) |
Assets | |
2020 | $ 3,802 |
2021 | $ 3,834 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | Dec. 23, 2016CAD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2019CAD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2019CAD ($) | Dec. 31, 2018CAD ($) | Dec. 31, 2017USD ($) | Aug. 18, 2015USD ($) | Jan. 22, 2015 |
Consulting fees | $ 824,413 | $ 648,944 | |||||||
Outstanding balance of consulting fees and reimbursement | 0 | 28,213 | |||||||
Due to related party | 5,465,113 | ||||||||
Present value of future payments | 260,461 | 272,151 | |||||||
Cost of Sales related party purchases | 4,847,626 | 4,392,245 | |||||||
Suppliers owned | 956,438 | 1,775,617 | |||||||
Receivables related to services | 277,432 | 0 | |||||||
Advances from related party | 324,102 | ||||||||
NomadChoice Pty Limited's [Member] | |||||||||
Royal expense | 4,867 | 16,066 | |||||||
Hand MD Corp [Member] | |||||||||
Royal expense | 14,801 | 250,000 | |||||||
Minimum royalty payment | 0 | ||||||||
CAD [Member] | |||||||||
Advances from related party | $ 430,000 | ||||||||
Hand MD LLC [Member] | |||||||||
Percentage of ownership interest | 50.00% | ||||||||
Payroll expense | 120,000 | 120,000 | |||||||
Debt outstanding balance | 0 | 0 | |||||||
Knight Therapeutics Inc [Member] | |||||||||
Debt outstanding balance | 70,295 | 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. | ||||||||
Knight Therapeutics Inc [Member] | CAD [Member] | |||||||||
Due to related party | $ 100,000 | ||||||||
Debt outstanding balance | $ 100,000 | $ 200,000 | |||||||
Hand MD [Member] | |||||||||
Debt outstanding balance | 17,574 | 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. | ||||||||
Hand MD [Member] | CAD [Member] | |||||||||
Due to related party | $ 25,000 | ||||||||
Debt outstanding balance | 25,000 | $ 25,000 | |||||||
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | |||||||||
Ownership interest rate | 12.00% | ||||||||
Loan Agreement [Member] | Knight Therapeutics Barbados Inc [Member] | |||||||||
Due to related party | 5,451,568 | 7,320,739 | |||||||
Security Agreement [Member] | Knight Therapeutics Inc [Member] | |||||||||
Amount owed to related party | $ 559,243 | ||||||||
Due to related party | 475,000 | 525,000 | |||||||
Royalty Distribution Agreement [Member] | |||||||||
Royal expense | 0 | 2,361 | |||||||
Royalty Distribution Agreement [Member] | NomadChoice Pty Limited's [Member] | |||||||||
Royal expense | 246 | 5,906 | |||||||
Royalty Distribution Agreement [Member] | Knight Therapeutics Barbados Inc [Member] | |||||||||
Royal expense | 0 | 193 | |||||||
Commission Agreement [Member] | |||||||||
Amount owed to related party | 0 | 10,579 | |||||||
Commissions expense | 9,065 | 43,374 | |||||||
Commission Agreement One [Member] | |||||||||
Amount owed to related party | 0 | 3,547 | |||||||
Commissions expense | 644 | 10,016 | |||||||
Royalty Distribution Agreement One [Member] | |||||||||
Royal expense | 192,700 | 392,589 | |||||||
Royalty Distribution Agreement One [Member] | Knight Therapeutics Barbados Inc [Member] | |||||||||
Royal expense | 5,528 | 109,329 | |||||||
Mr. Jack Ross [Member] | |||||||||
Accrued consulting fees per month | 57,917 | ||||||||
Vehicle allowance | 1,500 | ||||||||
Due to related party | 277,432 | ||||||||
Officer and Shareholder [Member] | |||||||||
Consulting fees | $ 852,626 | $ 648,944 | |||||||
Ms. Harshbarger [Member] | Consulting Agreement [Member] | |||||||||
Due to related party | $ 10,000 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Liabilities (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Payables and Accruals [Abstract] | ||
Severance accrual | $ 270,333 | $ 506,250 |
Severance accrual paid in installment | 168,750 | |
Sales tax liability | $ 273,855 |
Accounts Payable and Accrued _4
Accounts Payable and Accrued Liabilities - Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Accrued payroll | $ 110,536 | $ 217,069 |
Legal fees | 68,098 | 71,236 |
Commissions | 229,657 | 134,784 |
Manufacturers (including related party payable of $956,438 and $1,775,617, respectively) | 2,082,256 | 3,898,896 |
Promotions | 1,312,541 | 1,262,503 |
Returns allowance | 850,627 | |
Accounting Fees | 10,873 | 104,198 |
Rent | 61,738 | |
Customers | 26,206 | 76,617 |
Royalties, related party | 93,643 | 304,434 |
Warehousing | 13,746 | 64,289 |
Sales taxes | 313,985 | 180,222 |
Payroll taxes | 90,500 | 178,069 |
Severance Accrual | 270,333 | 506,250 |
Related Party Reimbursements | 1,135 | 178,825 |
Others | 50,555 | 307,463 |
Total | $ 4,674,064 | $ 8,397,220 |
Accounts Payable and Accrued _5
Accounts Payable and Accrued Liabilities - Schedule of Accounts Payable and Accrued Liabilities (Details) (Parenthetical) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Related party payable | $ 956,438 | $ 1,775,617 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Mar. 31, 2018 | Aug. 09, 2017 | Jun. 26, 2015 | Jan. 22, 2015 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2019 | May 14, 2018 |
Debt instrument interest rate percentage | 10.50% | ||||||||
Deferred financing costs | $ 10,000,000 | ||||||||
Recognized amortization of deferred financing costs | $ 130,829 | $ 213,966 | |||||||
Amount of loan obligation | 5,712,029 | 7,592,890 | |||||||
Present value of future payments | 260,461 | 272,151 | |||||||
Payments made during period | 2,050,000 | 2,862,500 | |||||||
Unamortized debt issuance costs | 48,432 | 179,261 | |||||||
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 | ||||||||
Knight Therapeutics Inc [Member] | |||||||||
Note payable | $ 475,000 | $ 525,000 | |||||||
Neuragen Corp [Member] | June 26, 2015 Security Agreement [Member] | |||||||||
Debt instrument interest rate percentage | 0.00% | ||||||||
Note principal amount | $ 950,000 | ||||||||
Total payments of acquire assets | $ 1,200,000 | ||||||||
Neuragen Corp [Member] | June 26, 2015 Security Agreement [Member] | 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% | ||||||
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% | |||||||
Debt covenants, minimum EBITDA | $ 1,900,000 | ||||||||
Debt covenants, minimum cash balance | $ 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 | ||||||||
Debt covenants, minimum cash balance | 1,000,000 | ||||||||
Loan Agreement [Member] | Minimum [Member] | Quarters Ending After March 31, 2019 [Member] | |||||||||
Debt covenants, minimum cash balance | $ 750,000 | ||||||||
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% | |||||||
Payment for business acquisition consideration | 100,000 | ||||||||
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | |||||||||
Loan amount | 10,000,000 | $ 6,000,000 | |||||||
Expenses associated with loan | $ 100,000 | $ 40,000 | |||||||
Debt instrument interest rate percentage | 10.50% | 15.00% | |||||||
Convertible equity offering | $ 1,000,000 | ||||||||
Change in loan interest rate | 13.00% | ||||||||
Note maturity date | Aug. 8, 2020 | Jan. 20, 2017 | |||||||
Revenue | $ 13,000,000 | ||||||||
Net income (loss) | 2,000,000 | ||||||||
Deferred financing costs | 289,045 | ||||||||
Recognized amortization of deferred financing costs | 3,257 | ||||||||
Interest expense paid | $ 0 | 4,611 | |||||||
Accrued interest expense | 0 | 0 | |||||||
Amount of loan obligation | 0 | 0 | |||||||
Credit facility maximum borrowing amount | $ 20,000,000 | ||||||||
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | Second Amendment [Member] | |||||||||
Deferred financing costs | 452,869 | ||||||||
Recognized amortization of deferred financing costs | 130,829 | 210,710 | |||||||
Interest expense paid | 912,486 | 1,057,833 | |||||||
Accrued interest expense | 0 | 0 | |||||||
Note payable | 5,500,000 | 7,500,000 | |||||||
Unamortized debt issuance costs | 48,432 | 179,261 | |||||||
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | Origination Fee [Member] | |||||||||
Expenses associated with loan | 200,000 | 120,000 | |||||||
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | Work Fee [Member] | |||||||||
Expenses associated with loan | $ 100,000 | $ 60,000 | |||||||
Security Agreement [Member] | June 26, 2015 Security Agreement [Member] | |||||||||
Interest expense paid | 38,310 | 39,911 | |||||||
Present value of future payments | 260,461 | 272,151 | |||||||
Payments made during period | $ 50,000 | $ 50,000 | |||||||
Loan Amendment Agreement [Member] | |||||||||
Debt instrument interest rate percentage | 13.00% |
Notes Payable - Schedule of Loa
Notes Payable - Schedule of Loans Payable (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
Loans payable | $ 5,760,461 | $ 7,772,151 |
Unamortized debt issuance cost | (48,432) | (179,261) |
Total | 5,712,029 | 7,592,890 |
Less: Current portion | (5,465,113) | (1,963,887) |
Long-term portion | $ 246,916 | $ 5,629,003 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 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 and Contingencies (
Commitments and Contingencies (Details Narrative) | Oct. 17, 2017USD ($)Integershares | Aug. 16, 2017USD ($) | Dec. 31, 2019USD ($) |
Litigation settlement | $ 85,000 | ||
October 1, 2017 through May 2021 [Member] | |||
Rent expense | $ 19,500 | ||
Lease description | Effective January 31, 2019 this sublease was cancelled. | ||
Employment Agreement [Member] | |||
Agreement initial term | 3 years | ||
Employment Agreement [Member] | Mr. McCullough [Member] | |||
Salary received | $ 340,000 | ||
Employment Agreement [Member] | Mr. McCullough [Member] | Option Grant [Member] | |||
Purchase of granted option of stock based payments | shares | 1,000,000 | ||
Number of vesting annual installments | Integer | 3 | ||
Employment Agreement [Member] | Mr. McCullough [Member] | Retail Sales [Member] | |||
Percentage of sale revenue net | 5.00% | ||
Employment Agreement [Member] | Mr. McCullough [Member] | Maximum [Member] | |||
Percentage of bonus based salary | 25.00% | ||
Employment Agreement [Member] | Mr. McCullough [Member] | January 1, 2018 [Member] | |||
Received annual bonus | $ 37,500 | ||
Employment Agreement [Member] | Mr. McCullough [Member] | July 1, 2018 [Member] | |||
Received annual bonus | $ 37,500 |
Stock Options (Details Narrativ
Stock Options (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock-based compensation expense | $ 161,570 | $ 440,999 | |
Expected lives | 10 years | ||
Dividend yield | 0.00% | ||
Unamortized stock-based compensation | $ 128,929 | ||
Recognized, period for recognition | 1 year | ||
Stock Option [Member] | |||
Stock option outstanding intrinsic value | $ 0 | ||
Minimum [Member] | |||
Estimated fair value of company's common stock | $ 0.48 | ||
Risk-free interest rate | 1.95% | ||
Volatility rate | 116.00% | ||
Maximum [Member] | |||
Estimated fair value of company's common stock | $ 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) | 12 Months Ended |
Dec. 31, 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) | 5 years 7 months 6 days |
Options Outstanding, Weighted Average Exercise Price | $ 0.54 |
Options Exercisable, Number Exercisable | shares | 5,833,333 |
Options Exercisable, Weighted Average Exercise Price | $ 0.53 |
Stock Options - Schedule of Sto
Stock Options - Schedule of Stock Options Activity (Details) - Stock Option Plan [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Options Outstanding, at Beginning balance | 7,166,667 | 8,666,667 |
Options Outstanding, Granted | ||
Options Outstanding, Exercised | ||
Options Outstanding, Expired or canceled | (1,000,000) | (1,500,000) |
Options Outstanding, at Ending balance | 6,166,667 | 7,166,667 |
Weighted Average Exercise Price, at Beginning balance | $ 0.50 | $ 0.51 |
Weighted Average Exercise Price, Granted | ||
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Expired or canceled | (0.25) | (0.55) |
Weighted Average Exercise Price, at Ending balance | $ 0.54 | $ 0.50 |
Stock Warrants - Schedule of St
Stock Warrants - Schedule of Stock Warrants Activity (Details) - Warrant [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Warrants Outstanding, Beginning Balance | 1,000,000 | |
Warrants Outstanding, Granted | ||
Warrants Outstanding, Exercised | ||
Warrants Outstanding, Expired or canceled | (1,000,000) | |
Warrants Outstanding, Ending Balance | ||
Weighted Average Exercise Price, Outstanding Beginning Balance | $ 5 | |
Weighted Average Exercise Price, Granted | ||
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Expired or canceled | (5) | |
Weighted Average Exercise Price, Outstanding Ending Balance |
Segments (Details Narrative)
Segments (Details Narrative) - Segment | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
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 ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue | $ 29,357,546 | $ 33,824,495 |
United States [Member] | ||
Revenue | 27,295,126 | 31,731,304 |
Foreign Countries [Member] | ||
Revenue | $ 2,062,420 | $ 2,093,191 |
Segments - Summary of Net Sal_2
Segments - Summary of Net Sales Attributed to Customers Product Group (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue | $ 29,357,546 | $ 33,824,495 |
Nutraceuticals [Member] | ||
Revenue | 28,149,938 | 31,332,952 |
Over the Counter (OTC) [Member] | ||
Revenue | 62,359 | 427,871 |
Consumer Goods [Member] | ||
Revenue | 706,688 | 987,230 |
Cosmeceuticals [Member] | ||
Revenue | $ 438,561 | $ 1,076,442 |
Segments - Summary of Net Sal_3
Segments - Summary of Net Sales Attributed to Major Sales Channel (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue | $ 29,357,546 | $ 33,824,495 |
Online [Member] | ||
Revenue | 10,382,593 | 16,156,081 |
Retail [Member] | ||
Revenue | $ 18,974,953 | $ 17,668,414 |
Segments - Summary of Long-live
Segments - Summary of Long-lived Assets (Net) Attributable to Operations Geographical Segment (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Long-lived assets net | $ 7,636 | $ 11,070,532 |
United States [Member] | ||
Long-lived assets net | 11,058,528 | |
Foreign Countries [Member] | ||
Long-lived assets net | $ 7,636 | $ 12,004 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | 12 Months Ended | |||
Dec. 31, 2020CAD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2019CAD ($) | Dec. 31, 2018USD ($) | |
Advances from related party | $ 324,102 | |||
CAD [Member] | ||||
Advances from related party | $ 430,000 | |||
Subsequent Event [Member] | CAD [Member] | ||||
Advances from related party | $ 100,000 |