UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K/A
(Amendment
No. 1)
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): November 12, 2015
|
Synergy
CHC Corp. |
|
|
(Exact
name of registrant as specified in its charter) |
|
Nevada |
|
000-55098 |
|
99-0379440 |
(State
or other jurisdiction
of
incorporation) |
|
(Commission
File
Number) |
|
(IRS
Employer
ID
Number) |
865
Spring Street, Westbrook, ME |
|
04092 |
(Address
of principal executive offices) |
|
(Zip
Code) |
Registrant’s
telephone number, including area code |
(615)
939-9004 |
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
[ ] |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
[ ] |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
[ ] |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
[ ] |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
EXPLANATORY
NOTE
This
Current Report on Form 8-K/A (Amendment No. 1) amends the Current Report on Form 8-K we filed with the Securities and Exchange
Commission (the “SEC”) on November 18, 2015 (the “Original 8-K”). Among other things, the Original 8-K
reported our acquisition of NomadChoice Pty Limited ACN 160 729 939 trading as Flat Tummy Tea, an Australian proprietary limited
company (“NomadChoice”), through the purchase of all of its outstanding capital stock. The acquisition was consummated
on November 15, 2015.
The
purpose of this Amendment No. 1 is to provide financial statement information required by Item 9.01, which was excluded from the
Original 8-K in reliance on Items 9.01(a)(4) and 9.01(b)(2).
Item
9.01. Financial Statements and Exhibits.
(a) Financial
statements of businesses acquired.
The
financial statements for NomadChoice required by Item 9.01(a) of Form 8-K are included as Exhibit 99.1 and Exhibit 99.2 to this
Amendment No. 1 to the Original Form 8-K and incorporated herein by reference.
(b) Pro
forma financial information.
The
pro forma financial information for NomadChoice required by Item 9.01(b) of Form 8-K is included as Exhibit 99.3 to this Amendment
No. 1 to the Original Form 8-K and incorporated herein by reference.
(c) Shell
company transactions.
Not
applicable.
(d) Exhibits
|
Exhibit
No. |
|
Description |
|
|
|
|
|
99.1 |
|
Audited
financial statements for NomadChoice, including notes thereto, as of and for the years ended June 30, 2015 and 2014. |
|
|
|
|
|
99.2 |
|
Unaudited
financial statements for NomadChoice, including the notes thereto, for the three months ended September 30, 2015 and 2014. |
|
|
|
|
|
99.3 |
|
Unaudited
pro forma balance sheet of Synergy CHC Corp. as of September 30, 2015 and unaudited pro forma statement of operations of Synergy
CHC Corp. for the nine months ended September 30, 2015 and for the year ended December 31, 2014, giving effect to the NomadChoice
acquisition. |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
|
SYNERGY
CHC CORP. |
|
|
Date:
February 9, 2016 |
/s/
Jack Ross |
|
Jack
Ross |
|
President
and Chief Executive Officer |
Nomadchoice
Pty Limited
Annual
Report – June 30, 2015 and 2014
Nomadchoice
Pty Limited
June
30, 2015 and 2014
Index
to Financial Statements
Report
of Independent Registered Public Accounting Firm |
3 |
|
|
Balance
sheets at June 30, 2015 and 2014 |
4 |
|
|
Statements
of income and comprehensive income for the years ended June 30, 2015 and 2014 |
5 |
|
|
Statements
of stockholders’ equity for the two years ended June 30, 2015 |
6 |
|
|
Statements
of cash flows for the years ended June 30, 2015 and 2014 |
7 |
|
|
Notes
to the financial statements |
8 |
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
The Board of Directors and Shareholders
Nomadchoice
Pty Limited
We
have audited the accompanying balance sheets of Nomadchoice Pty Limited (the “Company”), as of June 30, 2015 and 2014,
and the related statements of operations, members’ equity and cash flows for each of the two years in the period ended June
30, 2015. These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We
have conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of
America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audits included consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nomadchoice
Pty Limited as of June 30, 2015 and 2014, and the results of its operations and its cash flows for each of the two years in the
period ended June 30, 2015, in conformity with accounting principles generally accepted in the United States of America.
/s/
RBSM LLP
New
York, New York
February
9, 2016
Nomadchoice
Pty Limited
Balance
Sheets
At
June 30, 2015 and 2014
| |
2015 | |
2014 |
| |
| |
|
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
Current
assets | |
| | | |
| | |
Cash and
cash equivalents | |
$ | 402,695 | | |
$ | 278,840 | |
Inventory | |
| 50,827 | | |
| - | |
Due
from shareholders | |
| 681,558 | | |
| - | |
Total
current assets | |
| 1,135,080 | | |
| 278,840 | |
| |
| | | |
| | |
Fixed assets, net of
accumulated depreciation of $4,582 and $1,287, respectively | |
| 2,951 | | |
| 4,470 | |
Intangibles,
net of accumulated amortization | |
| 4,166 | | |
| 780 | |
Total
other assets | |
| 7,117 | | |
| 5,250 | |
| |
| | | |
| | |
TOTAL
ASSETS | |
$ | 1,142,197 | | |
$ | 284,090 | |
| |
| | | |
| | |
LIABILITIES
AND STOCKHOLDERS’ EQUITY | |
| | | |
| | |
| |
| | | |
| | |
Current
liabilities | |
| | | |
| | |
Accounts payables and
accrued expenses | |
$ | 47,256 | | |
$ | 22,711 | |
Provision for income
tax payable | |
| 310,302 | | |
| 70,316 | |
Due
to shareholders | |
| 1,784 | | |
| 26,874 | |
Total
current liabilities | |
| 359,342 | | |
| 119,902 | |
| |
| | | |
| | |
Total
liabilities | |
| 359,342 | | |
| 119,902 | |
| |
| | | |
| | |
Commitments
and contingencies | |
| - | | |
| - | |
| |
| | | |
| | |
Stockholders’
Equity | |
| | | |
| | |
Common shares no par
value; unlimited shares authorized; 1,200 shares issued and outstanding | |
| 127 | | |
| 127 | |
Retained earnings | |
| 871,070 | | |
| 159,884 | |
Accumulated
other comprehensive (loss) income – cumulative translation adjustment | |
| (88,342 | ) | |
| 4,178 | |
Total
stockholders’ equity | |
| 782,855 | | |
| 164,189 | |
| |
| | | |
| | |
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
$ | 1,142,197 | | |
$ | 284,090 | |
The
accompanying notes are an integral part of these financial statements
Nomadchoice
Pty Limited
Statements
of income and comprehensive income
For
the years ended June 30, 2015 and 2014
| |
2015 | |
2014 |
| |
| |
|
Revenues : | |
| |
|
Net Sales
Revenue | |
$ | 2,485,654 | | |
$ | 522,053 | |
| |
| | | |
| | |
Cost
of goods sold | |
| 556,566 | | |
| 74,849 | |
| |
| | | |
| | |
Gross
profit | |
| 1,929,088 | | |
| 447,204 | |
| |
| | | |
| | |
Operating
Expenses : | |
| | | |
| | |
Sales and marketing | |
| 368,177 | | |
| 63,047 | |
General and administrative | |
| 376,256 | | |
| 154,308 | |
Depreciation
and amortization | |
| 4,576 | | |
| 1,444 | |
Total
operating expenses | |
| 749,009 | | |
| 218,799 | |
| |
| | | |
| | |
Income
from operations | |
| 1,180,079 | | |
| 228,405 | |
| |
| | | |
| | |
Other income (expense) | |
| | | |
| | |
| |
| | | |
| | |
Interest
income | |
| 8,369 | | |
| - | |
| |
| | | |
| | |
Income
before provision for income taxes | |
| 1,188,448 | | |
| 228,405 | |
| |
| | | |
| | |
Income taxes | |
| (341,619 | ) | |
| (68,521 | ) |
| |
| | | |
| | |
Net
income | |
$ | 846,829 | | |
$ | 159,884 | |
| |
| | | |
| | |
Comprehensive
income | |
| | | |
| | |
Net income | |
$ | 846,829 | | |
$ | 159,883 | |
Foreign
currency translation adjustments | |
| (92,520 | ) | |
| 4,178 | |
Comprehensive
income | |
$ | 754,309 | | |
$ | 164,061 | |
The
accompanying notes are an integral part of these financial statements
Nomadchoice
Pty Limited
Statements
of Stockholders’ Equity
For
the two years ended June 30, 2015
| |
| | |
| | |
Accumulated | | |
| |
| |
Ordinary shares | | |
Retained | | |
Other Comprehensive | | |
Total Stockholders’ | |
| |
Number | | |
Amount | | |
Earnings | | |
Income (Loss) | | |
Equity | |
| |
| | |
| | |
| | |
| | |
| |
Balance at July 1, 2013 | |
| 1,200 | | |
$ | 127 | | |
$ | - | | |
$ | - | | |
$ | 127 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net income for the year | |
| - | | |
| - | | |
| 159,884 | | |
| | | |
| 159,884 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Foreign currency translation adjustment | |
| - | | |
| | | |
| | | |
| 4,178 | | |
| 4,178 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at June 30, 2014 | |
| 1,200 | | |
| 127 | | |
| 159,884 | | |
| 4,178 | | |
| 164,189 | |
| |
| | |
| | |
Accumulated | | |
| |
| |
Ordinary shares | | |
Retained | | |
Other Comprehensive | | |
Total Stockholders’ | |
| |
Number | | |
Amount | | |
Earnings | | |
Income (Loss) | | |
Equity | |
| |
| | |
| | |
| | |
| | |
| |
Balance at July 1, 2014 | |
| 1,200 | | |
| 127 | | |
| 159,884 | | |
| 4,178 | | |
| 164,189 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Distribution to members | |
| - | | |
| - | | |
| (135,643 | ) | |
| - | | |
| (135,643 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net income for the year | |
| - | | |
| - | | |
| 846,829 | | |
| - | | |
| 846,829 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Foreign currency translation adjustment | |
| - | | |
| - | | |
| | | |
| (92,520 | ) | |
| (92,520 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at June 30, 2015 | |
| 1,200 | | |
$ | 127 | | |
$ | 871,070 | | |
$ | (88,341 | ) | |
$ | 782,855 | |
The
accompanying notes are an integral part of these financial statements
Nomadchoice
Pty Limited
Statements
of cash flows
For
the years ended June 30, 2015 and 2014
| |
2015 | |
2014 |
| |
| |
|
Cash
flows from operating activities | |
| | | |
| | |
Net income | |
$ | 846,829 | | |
$ | 159,884 | |
Adjustments to reconcile
net income to net cash provided by operating activities | |
| | | |
| | |
Depreciation
and amortization | |
| 4,576 | | |
| 1,444 | |
| |
| | | |
| | |
Changes in operating
assets and liabilities: | |
| | | |
| | |
Inventory | |
| (50,827 | ) | |
| - | |
Accounts payable and
accrued expenses | |
| 24,545 | | |
| 22,711 | |
Provision
for income taxes payable | |
| 239,986 | | |
| 70,316 | |
| |
| | | |
| | |
Net
cash provided by operating activities | |
| 1,065,109 | | |
| 254,355 | |
| |
| | | |
| | |
Cash flows from
investing activities | |
| | | |
| | |
Payment to shareholders | |
| (681,558 | ) | |
| - | |
Payment for intangibles | |
| (4,127 | ) | |
| (970 | ) |
Payments
for property, plant and equipment | |
| (2,316 | ) | |
| (5,724 | ) |
| |
| | | |
| | |
Net
cash used in investing activities | |
| (688,001 | ) | |
| (6,694 | ) |
| |
| | | |
| | |
Cash flows from
financing activities | |
| | | |
| | |
Proceeds from /(repayment
of) dues from shareholders | |
| (25,090 | ) | |
| 26,874 | |
Dividends
paid | |
| (135,643 | ) | |
| - | |
Net
cash (used in) provided by financing activities | |
| (160,733 | ) | |
| 26,874 | |
Effect of exchange
rate on cash and cash equivalents | |
| (92,520 | ) | |
| 4,178 | |
| |
| | | |
| | |
Net increase in cash
and cash equivalents | |
| 123,855 | | |
| 278,713 | |
Cash
and cash equivalents at the beginning of the year | |
| 278,840 | | |
| 127 | |
| |
| | | |
| | |
Cash and cash equivalents
at the end of the year | |
$ | 402,695 | | |
$ | 278,840 | |
| |
| | | |
| | |
Supplemental Disclosures
of Cash Flow Information: | |
| | | |
| | |
Cash
paid during the year for interest | |
$ | - | | |
$ | - | |
Cash
paid during the year for income taxes | |
$ | 72,074 | | |
$ | - | |
| |
| | | |
| | |
Supplemental
Disclosure of Non cash Investing and Financing Activities | |
$ | - | | |
$ | - | |
The
accompanying notes are an integral part of these financial statements
Nomadchoice
Pty Limited
Notes
to the financial statements
Note
1. Significant accounting policies
A
summary of the significant accounting policies applied in the presentation of the accompanying financial statements follows:
Organization
and nature of operations
Nomadchoice
Pty Limited (the “Company”) was incorporated on October 11, 2012 in Tasmania, Australia .During the financial year
the principal continuing activities of the company consisted of online marketing and sales of a product known as flat tummy tea.
As
a limited liability company, the members are not personally liable for any of the debts, obligations, losses, claims, or judgements
on any of the liabilities of the Company, whether arising in tort, contract, or otherwise, unless a member has signed a specific
guarantee.
Use
of estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
(“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ from those estimates.
Revenue
recognition
The
Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 605, Revenue Recognition (“ASC
605”). ASC 605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of
an arrangement exists; (2) delivery has occurred and/or service has been performed; (3) the selling price is fixed and determinable;
and (4) collectability is reasonably assured. Ownership and title of our products pass to customers upon delivery of the products
to the customers. 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.
Cash
and cash equivalents
For
financial statement purposes, the Company considers all highly-liquid investments with original maturities of three months or
less at the time of purchase to be cash equivalents.
Accounts
receivable - trade
All
sales to customers are made through the website www.flattummytea.com with payment being made at the time an order is placed. As
a result the company has no accounts receivable at any time as orders are not accepted without payment first being made via credit
card or PayPal.
Fixed
assets
Fixed
assets are carried at cost less accumulated depreciation. 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. The costs of assets sold, retired, or otherwise
disposed of, and the related accumulated depreciation, are eliminated from the accounts, and any resulting gain or loss is reflected
in income.
Depreciation
is recorded on a straight-line basis over the estimated useful lives of the respective assets as follows:
Office
equipment & furniture |
|
2-5
years |
Nomadchoice
Pty Limited
Notes
to the financial statements
Note
1. Significant accounting policies (continued)
Inventory
Inventory
consists of finished goods, raw materials and packaging material. Inventory is recorded on a first in first out basis and is valued
at lower of cost or market. Finished goods include the cost of labour to assemble the items.
Advertising
The
Company expenses advertising costs as they are incurred. Advertising includes direct online advertising and blogging. The company
spending on advertising for the year ended June 30, 2015 and 2014 was $368,177 and $63,047 respectively.
Related
Party Transactions
All
transactions with related parties are made on normal commercial terms and conditions and at market rates.
Other
Comprehensive Income
The
Company applies Statement of Accounting Standards Codification subtopic 220-10, Comprehensive Income (“ASC 220-10”).
ASC 220-10 establishes standards for the reporting and displaying of comprehensive income and its components. Comprehensive income
is defined as the change in equity of a business during a period from transactions and other events and circumstances from non-owners
sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions
to owners. ASC 220-10 requires other comprehensive income (loss) to include foreign currency translation adjustments and unrealized
gains and losses on available for sale securities.
Functional
Currency
The
Company’s reporting currency is US Dollars and functional currency is Australian Dollars (AUD). The accounts of the Company
are maintained using the local currency (Australian Dollars) as the functional currency. All assets and liabilities are translated
into U.S. Dollars at the balance sheet date, equity is translated at historical rates and revenue and expense accounts are translated
at the average exchange rate for the year or the reporting period. The translation adjustments are deferred as a separate component
of stockholders’ equity, captioned as accumulated other comprehensive (loss) gain. Transaction gains and losses arising
from exchange rate fluctuation on transactions denominated in a currency other than the functional currency are included in the
statements of operations.
The
relevant translation rates are as follows: For the year ended June 30, 2015 closing rate at 0.8012 US$:AUD, average rate at 0.8715
US$:AUD and for the year ended June 30, 2014 closing rate at 0.9756 US$:AUD, average rate at 0.9507 US$:AUD.
Concentration
of payables
The
company is dependent on Caraway Tea Company for approximately 20.8% and 0% of its’ purchases in the years ended June 30,
2015 and 2014 respectively.
The
company is dependent on Facebook for approximately 5.1% and 17.1% of its’ purchases in the years ended June 30, 2015 and
2014, respectively.
Recent
Accounting Pronouncements
ASU
2015-03
In
April 2015, the FASB issued Accounting Standards Update (“ASU”) No. 2015-03, Interest - Imputation of Interest (Subtopic
835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related
to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability,
consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments
in this ASU. The amendments are effective for financial statements issued for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2015. The amendments are to be applied on a retrospective basis, wherein the balance sheet
of each individual period presented is adjusted to reflect the period-specific effects of applying the new guidance. We do not
expect the adoption of ASU 2015-02 to have a material effect on our financial position, results of operations or cash flows.
Nomadchoice
Pty Limited
Notes
to the financial statements
ASU
2015-02
In
February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which is
intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability
corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed
security transactions). The ASU focuses on the consolidation evaluation for reporting organizations that are required to evaluate
whether they should consolidate certain legal entities. In addition to reducing the number of consolidation models from four to
two, the new standard simplifies the FASB Accounting Standards Codification and improves current U.S. GAAP by placing more emphasis
on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party
guidance when determining a controlling financial interest in a variable interest entity (“VIE”), and changing consolidation
conclusions for companies in several industries that typically make use of limited partnerships or VIEs. The ASU will be effective
for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted,
including adoption in an interim period. We do not expect the adoption of ASU 2015-02 to have a material effect on our financial
position, results of operations or cash flows.
ASU
2015-01
In
January 2015, the FASB issued ASU No. 2015-01, “Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying
Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” This ASU eliminates from U.S. GAAP the
concept of extraordinary items. ASU 2015-01 is effective for fiscal years, and interim periods within those fiscal years, beginning
after December 15, 2015. A reporting entity may apply the amendments prospectively. We do not expect the adoption of ASU 2015-01
to have a material effect on our financial position, results of operations or cash flows.
ASU
2014-17
In
November 2014, the FASB issued ASU No. 2014-17, “Business Combinations (Topic 805): Pushdown Accounting.” This ASU
provides an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of
an event in which an acquirer obtains control of the acquired entity. An acquired entity may elect the option to apply pushdown
accounting in the reporting period in which the change-in-control event occurs. If pushdown accounting is applied to an individual
change-in-control event, that election is irrevocable. ASU 2014-17 was effective on November 18, 2014. The adoption of ASU 2014-17
did not have any effect on financial position, results of operations or cash flows.
ASU
2014-16
In
November 2014, the FASB issued ASU 2014-16, “Derivatives and Hedging (Topic 815).” ASU 2014-16 addresses whether the
host contract in a hybrid financial instrument issued in the form of a share should be accounted for as debt or equity. ASU 2014-16
is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. We do not currently
have issued, nor are we investors in, hybrid financial instruments. Accordingly, we do not expect the adoption of ASU 2014-16
to have any effect on our financial position, results of operations or cash flows.
ASU
2014-15
In
August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40)”.
ASU 2014-15 provides guidance related to management’s responsibility to evaluate whether there is substantial doubt about
an entity’s ability to continue as a going concern and to provide related footnote disclosure. ASU 2014-15 is effective
for annual periods ending after December 15, 2016, and for interim and annual periods thereafter. Early application is permitted.
We do not expect the adoption of ASU 2014-15 to have a material effect on our financial position, results of operations or cash
flows
ASU
2014-12
In
June 2014, the FASB issued ASU No. 2014-12, “Compensation – Stock Compensation (Topic 718): Accounting for Share-Based
Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.”
This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period
be treated as a performance condition. ASU 2014-12 is effective for fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2015. We do not expect the adoption of ASU 2014-12 to have a material effect on our financial position,
results of operations or cash flows.
ASU
2014-09
In
May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 affects
any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts
for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts
or lease contracts). ASU 2014-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2016. We are still evaluating the effect of the adoption of ASU 2014-09. On April 1, 2015, the FASB voted to propose
to defer the effective date of the new revenue recognition standard by one year.
Nomadchoice
Pty Limited
Notes
to the financial statements
ASU
2014-08
In
April 2014, the FASB issued ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and
Equipment (Topic 360) and Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” ASU
2014-08 amends the definition for what types of asset disposals are to be considered discontinued operations, as well as amending
the required disclosures for discontinued operations and assets held for sale. ASU 2014-08 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15, 2014. The adoption of ASU 2014-08 did not have any
effect on our financial position, results of operations or cash flows.
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 have a material impact on the Company’s financial position, results of operations
or cash flows.
Note
2. Critical accounting judgements, estimates and assumptions
The
preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported
amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities,
contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience
and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances.
The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer
to the respective notes) within the next financial year are discussed below.
Estimation
of useful lives of assets
The
company determines the estimated useful lives and related depreciation and amortization charges for its property, plant and equipment
and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other
event. The depreciation and amortization charge will increase where the useful lives are less than previously estimated lives,
or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.
Income
tax
The
company is subject to income taxes in the jurisdictions in which it operates. Significant judgement 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 recognises 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.
The deferred tax liability was not material as of June 30, 2015 and 2014.
Nomadchoice
Pty Limited
Notes
to the financial statements
Note 3. Sales revenue | |
| |
|
| |
2015 | |
2014 |
| |
| |
|
Sales -
Australia | |
$ | 247,879 | | |
$ | 171,272 | |
Sales - export | |
| 2,144,978 | | |
| 322,247 | |
Sales
- shipping | |
| 92,797 | | |
| 28,535 | |
| |
$ | 2,485,654 | | |
$ | 522,053 | |
Note 4. Cost of sales | |
| |
|
| |
2015 | |
2014
|
| |
| |
|
Freight
& Postage | |
$ | 41,896 | | |
$ | 21,133 | |
Packaging | |
| 28,025 | | |
| 9,216 | |
Fees | |
| 80,629 | | |
| 16,440 | |
Raw Material | |
| 48,270 | | |
| 24,782 | |
Export Distribution
Charges | |
| 408,573 | | |
| 3,279 | |
Less:
Closing inventory | |
| (50,827 | ) | |
| - | |
| |
$ | 556,566 | | |
$ | 74,850 | |
Note 5. Operating
expenses | |
| |
|
| |
2015 | |
2014 |
| |
| |
|
Sales
and marketing | |
| | | |
| | |
Advertising
Facebook | |
$ | 51,860 | | |
$ | 31,091 | |
Advertising Google
Adwords | |
| 8,726 | | |
| 10,820 | |
Advertising Adroll | |
| 33,740 | | |
| - | |
Advertising- Other | |
| 14,574 | | |
| 776 | |
Blogging expenses | |
| 240,827 | | |
| 20,360 | |
Marketing | |
| 7,665 | | |
| - | |
Photography | |
| 10,785 | | |
| - | |
| |
$ | 368,177 | | |
$ | 63,047 | |
| |
| | | |
| | |
General
and administrative | |
| | | |
| | |
Accounting & book-keeping | |
$ | 6,823 | | |
$ | 1,418 | |
Bank charges | |
| 3,174 | | |
| 542 | |
Branding | |
| 40,243 | | |
| - | |
Consulting | |
| - | | |
| 6,180 | |
Insurance | |
| 7,625 | | |
| 2,592 | |
Legal Expenses | |
| 3,891 | | |
| - | |
Office supplies | |
| 4,093 | | |
| 1,386 | |
Other administrative
expenses | |
| 8,906 | | |
| 3,098 | |
Postage & courier | |
| 997 | | |
| 12,591 | |
Rent | |
| 15,617 | | |
| 3,643 | |
Sub-contractors | |
| - | | |
| 7,533 | |
Subscriptions | |
| 8,315 | | |
| 3,135 | |
Wages
& superannuation | |
| 276,574 | | |
| 112,190 | |
| |
$ | 376,258 | | |
$ | 154,308 | |
| |
| | | |
| | |
Depreciation
and amortization | |
| | | |
| | |
Depreciation of office
equipment | |
$ | 3,835 | | |
$ | 1,254 | |
Amortization
of domain name and setup costs | |
| 741 | | |
| 190 | |
| |
$ | 4,576 | | |
$ | 1,444 | |
Note 6. Income tax
expense | |
| |
|
| |
2015 | |
2014 |
Income
tax expense | |
| | | |
| | |
Current
tax | |
$ | 341,619 | | |
$ | 68,521 | |
Numerical
reconciliation of income tax expense and tax at the statutory rate | |
| | | |
| | |
Profit
before income tax expense | |
| 1,188,448 | | |
| 228,405 | |
| |
| | | |
| | |
Tax at the statutory
tax rate of 30% | |
| 356,534 | | |
| 68,521 | |
Tax effect amounts
which are not deductible/(taxable) in calculating taxable income: | |
| | | |
| | |
Entertainment
expenses | |
| 333 | | |
| - | |
| |
| | | |
| | |
Adjustment
recognized for closing stock | |
| (15,248 | ) | |
| - | |
Income
tax expense | |
| 341,619 | | |
| 68,521 | |
Nomadchoice
Pty Limited
Notes
to the financial statements
Note 7. Due from Shareholders | |
| |
|
| |
2015 | |
2014 |
| |
| |
|
Loan- Polmear
Family Trust (Shareholder) | |
$ | 681,020 | | |
$ | - | |
Loan- Polmear Holdings
Pty Ltd (Beneficiary of shareholder) | |
| 538 | | |
| - | |
| |
$ | 681,558 | | |
$ | - | |
The
receivable represents an advance to the shareholder on June 26, 2015 in anticipation of a dividend to be declared in favour of
the shareholder on July 1, 2015. The receivable is non-interest bearing and receivable on demand. Subsequent to June 30, 2015,
the Company declared dividends to offset loan receivable from shareholder (see note 16).
Note 8. Accounts Payable
and Accrued Expenses | |
| |
|
| |
2015 | |
2014 |
| |
| |
|
Credit
card | |
$ | 7,874 | | |
$ | 9 | |
Accounts payable | |
| 18,536 | | |
| 1,013 | |
GST payable/(receivable) | |
| (2,195 | ) | |
| (1,704 | ) |
PAYG withholdings payable | |
| 13,945 | | |
| 23,394 | |
Superannuation payable | |
| 9,096 | | |
| - | |
| |
$ | 47,256 | | |
$ | 22,712 | |
Note 9. Due to shareholders | |
| |
|
| |
2015 | |
2014 |
Due to
shareholders | |
$ | 1,784 | | |
$ | 26,874 | |
During
the years ended June 30, 2014, the Company received funds from shareholders of $26,874 of which $25,090 was repaid during the
year ended June 30, 2015. The payable is non-interest bearing and due on demand.
Nomadchoice
Pty Limited
Notes
to the financial statements
30
June 2015
Note 10. Equity -
issued capital | |
| |
| |
| |
|
| |
2015 | |
2014 | |
2015 | |
2014 |
| |
Shares | |
Shares | |
| |
|
Ordinary
shares - fully paid | |
| 1,200 | | |
| 1,200 | | |
$ | 127 | | |
$ | 127 | |
Ordinary
shares
Ordinary
shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number
of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited
amount of authorised capital.
On
a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have
one vote.
Dividend
Dividends
paid during the financial year were as follows :
| | |
2015 | | |
2014 | |
| | |
| | | |
| | |
Dividend
for the year ended June 30, 2015 of $1,130.36 per ordinary share | | |
$ | 135,643 | | |
| - | |
During
the year ended June 30, 2015, the Company declared and paid dividends to shareholder of the Company of $135,643.
Note
11. Contingent liabilities
The
company had no contingent liabilities as at June 30, 2015 and 2014.
Note
12. Commitments
The
company had no commitments for expenditure as at June 30, 2015 and 2014.
Nomadchoice
Pty Limited
Notes
to the financial statements
Note
13. Fixed assets
| |
2015 | | |
2014 | |
| |
| | |
| |
Office equipment and computers | |
$ | 7,533 | | |
$ | 5,757 | |
Less : Accumulated depreciation | |
| (4,582 | ) | |
| (1,287 | ) |
| |
$ | 2,951 | | |
$ | 4,470 | |
Depreciation
expense for the years ended June 30, 2015 and 2014 was $3,835 and $1,254, respectively.
Note
14. Inventory
| |
2015 | | |
2014 | |
| |
| | |
| |
Raw materials and packaging material | |
$ | 50,827 | | |
| - | |
| |
| 50,827 | | |
| - | |
Note
15. Intangible assets
| |
2015 | | |
2014 | |
| |
| | |
| |
Organisational costs | |
$ | 801 | | |
$ | 976 | |
Domain name | |
| 4,206 | | |
| - | |
Less : Accumulated amortization | |
| (841 | ) | |
| (196 | ) |
| |
$ | 4,166 | | |
$ | 780 | |
Amortization
expense for the years ended June 30, 2015 and 2014 was $741 and $190, respectively.
Note
16. Subsequent Events
The
company declared a dividend of $700,113 on July 1, 2015 out of retained earnings to offset against the loan receivable identified
in Note 7.
On
November 15, 2015 the Company entered into a stock purchase agreement with Synergy CHC Corp., a United States of America based
consumer health care company, for the purchase of all of the issued and outstanding capital stock for $4,000,000 Australian dollars
in cash and 3,571,428 shares of Synergy’s common stock. In addition to the cash and equity consideration, Synergy will pay
the Company certain earn-out payments of up to $3,500,000 Australian dollars in aggregate upon certain EBITDA thresholds as of
June 30, 2016.
Nomadchoice
Pty Limited
Quarterly
Report – September 30, 2015 and 2014
Index
to Unaudited Condensed Financial Statements
Condensed
balance sheets at September 30, 2015 (unaudited) and June 30, 2015 |
|
3 |
|
|
|
Unaudited
condensed statements of income and comprehensive income for three months ended September 30, 2015 and 2014 |
|
4 |
|
|
|
Unaudited
condensed statements of stockholders’ equity for the three months ended September 30, 2015 |
|
5 |
|
|
|
Unaudited
condensed statements of cash flows for the three months ended September 30, 2015 and 2014 |
|
6 |
|
|
|
Notes
to the unaudited condensed financial statements |
|
7 |
Nomadchoice
Pty Limited
Condensed
Balance Sheets
At
September 30, 2015 and June 30, 2015
| |
September 30, 2015 | | |
June 30, 2015 | |
| |
(unaudited) | | |
| |
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
Current assets | |
| | | |
| | |
Cash and cash equivalents | |
$ | 1,240,595 | | |
$ | 402,695 | |
Inventory | |
| 52,248 | | |
| 50,827 | |
Prepayment | |
| 36,464 | | |
| - | |
Due from shareholders | |
| 31,463 | | |
| 681,558 | |
Total current assets | |
| 1,360,770 | | |
| 333,551 | |
| |
| | | |
| | |
Fixed assets, net of accumulated depreciation of $4,596 and $4,582 respectively | |
| 3,497 | | |
| 2,951 | |
Intangibles, net of accumulated amortization | |
| 3,659 | | |
| 4,166 | |
Total other assets | |
| 7,156 | | |
| 7,117 | |
| |
| | | |
| | |
TOTAL ASSETS | |
$ | 1,367,926 | | |
$ | 1,142,197 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | |
| |
| | | |
| | |
Current liabilities | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 120,096 | | |
$ | 47,256 | |
Provision for income tax payable | |
| 439,046 | | |
| 310,302 | |
Provision for dividend payable | |
| 47,633 | | |
| - | |
Due to shareholders | |
| - | | |
| 1,784 | |
Total current liabilities | |
| 606,775 | | |
| 359,342 | |
| |
| | | |
| | |
Total liabilities | |
| 606,775 | | |
| 359,342 | |
| |
| | | |
| | |
Commitments and contingencies | |
| - | | |
| - | |
| |
| | | |
| | |
Stockholders’ Equity | |
| | | |
| | |
Common shares no par value; unlimited shares authorized; 1,200 shares issued and outstanding | |
| 127 | | |
| 127 | |
Retained earnings | |
| 875,256 | | |
| 871,070 | |
Accumulated other comprehensive loss - cumulative translation adjustment | |
| (114,232 | ) | |
| (88,342 | ) |
Total stockholders’ equity | |
| 761,151 | | |
| 782,855 | |
| |
| | | |
| | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | |
$ | 1,367,926 | | |
$ | 1,142,197 | |
The
accompanying notes are an integral part of these unaudited condensed financial statements
Nomadchoice
Pty Limited
Unaudited
Condensed Statements of income and comprehensive income
For
the three month periods ended September 30, 2015 and 2014
| |
2015 | | |
2014 | |
| |
| | |
| |
Revenues : | |
| | | |
| | |
Net Sales Revenue | |
$ | 2,188,134 | | |
$ | 256,350 | |
| |
| | | |
| | |
Cost of goods sold | |
| 548,092 | | |
| 55,232 | |
| |
| | | |
| | |
Gross profit | |
| 1,640,042 | | |
| 201,118 | |
| |
| | | |
| | |
Operating Expenses : | |
| | | |
| | |
Sales and marketing | |
| 439,471 | | |
| 36,910 | |
General and administrative | |
| 143,051 | | |
| 76,617 | |
Depreciation and amortization | |
| 662 | | |
| - | |
Total operating expenses | |
| 583,184 | | |
| 113,527 | |
| |
| | | |
| | |
Income from operations | |
| 1,056,858 | | |
| 87,592 | |
| |
| | | |
| | |
Other income (expense) | |
| | | |
| | |
| |
| | | |
| | |
Interest income | |
| 1,557 | | |
| 637 | |
| |
| | | |
| | |
Income before provision for income taxes | |
| 1,058,415 | | |
| 88,229 | |
| |
| | | |
| | |
Income taxes | |
| (319,556 | ) | |
| - | |
| |
| | | |
| | |
Net income | |
$ | 738,859 | | |
$ | 88,229 | |
| |
| | | |
| | |
Comprehensive income | |
| | | |
| | |
Net income | |
$ | 738,859 | | |
$ | 88,229 | |
Foreign currency translation adjustments | |
| (25,889 | ) | |
| 8,409 | |
Comprehensive income | |
$ | 712,970 | | |
$ | 96,638 | |
The
accompanying notes are an integral part of these unaudited condensed financial statements
Nomadchoice
Pty Limited
Unaudited
Condensed Statements of Stockholders’ Equity
For
the three month period ended September 30, 2015
| |
Ordinary Shares | | |
Retained | | |
Accumulated Other Comprehensive | | |
Total Stockholders | |
| |
Shares | | |
Amount | | |
Earnings | | |
Income (loss) | | |
Equity | |
| |
| | |
| | |
| | |
| | |
| |
Balance at June 30, 2015 | |
| 1,200 | | |
$ | 127 | | |
$ | 871,070 | | |
| (88,342 | ) | |
$ | 782,855 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Dividends to stockholders | |
| - | | |
| - | | |
| (734,673 | ) | |
| - | | |
| (734,673 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net income for the period | |
| - | | |
| - | | |
| 738,859 | | |
| - | | |
| 738,859 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Foreign currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| (25,889 | ) | |
| (25,889 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at September 30, 2015 | |
| 1,200 | | |
$ | 127 | | |
$ | 875,256 | | |
$ | (114,231 | ) | |
$ | 1,367,926 | |
The
accompanying notes are an integral part of these unaudited condensed financial statements
Nomadchoice
Pty Limited
Unaudited
Condensed Statements of cash flows
For
the three month periods ended September 30, 2015 and 2014
| |
2015 | | |
2014 | |
Cash flows from operating activities | |
| | | |
| | |
Net income | |
$ | 738,859 | | |
$ | 88,229 | |
| |
| | | |
| | |
Adjustments to reconcile net income to net cash provided by operating activities Depreciation
and amortisation | |
| 662 | | |
| - | |
| |
| | | |
| | |
Change in operating assets and liabilities: | |
| | | |
| | |
(Increase)/decrease in inventory | |
| (1,421 | ) | |
| - | |
(Increase)/decrease in prepayments | |
| (36,464 | ) | |
| - | |
Increase/(decrease) in trade and other payables | |
| 72,840 | | |
| (10,128 | ) |
Increase/(decrease) in provision for income tax | |
| 128,744 | | |
| (5,067 | ) |
| |
| | | |
| | |
Net cash provided by operating activities | |
| 903,220 | | |
| 73,034 | |
| |
| | | |
| | |
Cash flows from investing activities | |
| | | |
| | |
Payment for fixed & intangibles assets | |
| (701 | ) | |
| 378 | |
| |
| | | |
| | |
Net cash (used in) provided by investing activities | |
| (701 | ) | |
| 378 | |
| |
| | | |
| | |
Cash flows from financing activities | |
| | | |
| | |
Repayment of dues from shareholders | |
| (1,784 | ) | |
| (1,937 | ) |
Dividends paid | |
| (36,945 | ) | |
| - | |
| |
| | | |
| | |
Net cash used in financing activities | |
| (38,729 | ) | |
| (1,937 | ) |
| |
| | | |
| | |
Effect of exchange rate on cash and cash equivalents | |
| (25,891 | ) | |
| (16,764 | ) |
Net increase in cash and cash equivalents | |
| 837,900 | | |
| 54,711 | |
Cash and cash equivalents at the beginning of the period | |
| 402,695 | | |
| 278,840 | |
| |
| | | |
| | |
Cash and cash equivalents at the end of the period | |
$ | 1,240,595 | | |
$ | 333,351 | |
| |
| | | |
| | |
Supplemental Disclosure of Non cash Investing and Financing Activities | |
| | | |
| | |
Dividends declared and paid to partially set off loan amounts due to shareholders | |
$ | 734,673 | | |
$ | - | |
The
accompanying notes are an integral part of these unaudited condensed financial statements
Nomadchoice
Pty Limited
Notes
to the unaudited condensed financial statements
Note
1. Significant accounting policies
A
summary of the significant accounting policies applied in the presentation of the accompanying financial statements follows:
Organization
and nature of operations
Nomadchoice
Pty Limited (the “Company”) was incorporated on October 11, 2012 in Tasmania, Australia .During the financial year
the principal continuing activities of the company consisted of online marketing and sales of a product known as flat tummy tea.
As
a limited liability company, the members are not personally liable for any of the debts, obligations, losses, claims, or judgements
on any of the liabilities of the Company, whether arising in tort, contract, or otherwise, unless a member has signed a specific
guarantee.
Use
of estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
(“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ from those estimates.
Revenue
recognition
The
Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 605, Revenue Recognition (“ASC
605”). ASC 605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of
an arrangement exists; (2) delivery has occurred and/or service has been performed; (3) the selling price is fixed and determinable;
and (4) collectability is reasonably assured. Ownership and title of our products pass to customers upon delivery of the products
to the customers. 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.
Cash
and cash equivalents
For
financial statement purposes, the Company considers all highly-liquid investments with original maturities of three months or
less at the time of purchase to be cash equivalents.
Accounts
receivable - trade
All
sales to customers are made through the website flattummytea.com with payment being made at the time an order is placed. As a
result the company has no accounts receivable at any time as orders are not accepted without payment first being made via credit
card or PayPal.
Fixed
assets
Fixed
assets are carried at cost less accumulated depreciation. 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. The costs of assets sold, retired, or otherwise
disposed of, and the related accumulated depreciation, are eliminated from the accounts, and any resulting gain or loss is reflected
in income.
Depreciation
is recorded on a straight-line basis over the estimated useful lives of the respective assets as follows:
Office
equipment & furniture |
2-5
years |
Nomadchoice
Pty Limited
Notes
to the unaudited condensed financial statements
Note
1. Significant accounting policies (continued)
Inventory
Inventory
consists of finished goods, raw materials and packaging material. Inventory is recorded on a first in first out basis and is valued
at lower of cost or market. Finished goods include the cost of labour to assemble the items.
Advertising
The
Company expenses advertising costs as they are incurred. Advertising includes direct online advertising and blogging. The company
spending on advertising for the three months ended September 30, 2015 and 2014 was $51,956 and $14,043, respectively.
Related
Party Transactions
All
transactions with related parties are made on normal commercial terms and conditions and at market rates.
Other
Comprehensive Income
The
Company applies Statement of Accounting Standards Codification subtopic 220-10, Comprehensive Income (“ASC 220-10”).
ASC 220-10 establishes standards for the reporting and displaying of comprehensive income and its components. Comprehensive income
is defined as the change in equity of a business during a period from transactions and other events and circumstances from non-owners
sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions
to owners. ASC 220-10 requires other comprehensive income (loss) to include foreign currency translation adjustments and unrealized
gains and losses on available for sale securities.
Foreign
Currency Translation Adjustment
The
Company’s reporting currency is US Dollars and functional currency is Australian Dollars (AUD). The accounts of the Company
are maintained using the local currency (Australian Dollars) as the functional currency. All assets and liabilities are translated
into U.S. Dollars at the balance sheet date, equity is translated at historical rates and revenue and expense accounts are translated
at the average exchange rate for the year or the reporting period. The translation adjustments are deferred as a separate component
of stockholders’ equity, captioned as accumulated other comprehensive (loss) gain. Transaction gains and losses arising
from exchange rate fluctuation on transactions denominated in a currency other than the functional currency are included in the
statements of operations.
The
relevant translation rates are as follows: For the three months ended September 30, 2015 closing rate at 0.7317 US$:AUD, average
rate at 0.7570 US$:AUD and for the three months ended September 30, 2014 closing rate at 0.9083 US$:AUD, average rate at 0.9589
US$:AUD.
Concentration
of payables
The
company is dependent on Caraway Tea Company for approximately 21.8% and 0% of its’ purchases in the three month periods
ended September 30, 2015 and 2014 respectively.
Recent
Accounting Pronouncements
ASU
2015-03
In
April 2015, the FASB issued Accounting Standards Update (“ASU”) No. 2015-03, Interest - Imputation of Interest (Subtopic
835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related
to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability,
consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments
in this ASU. The amendments are effective for financial statements issued for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2015. The amendments are to be applied on a retrospective basis, wherein the balance sheet
of each individual period presented is adjusted to reflect the period-specific effects of applying the new guidance. We do not
expect the adoption of ASU 2015-02 to have a material effect on our financial position, results of operations or cash flows.
Nomadchoice
Pty Limited
Notes
to the unaudited condensed financial statements
ASU
2015-02
In
February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which is
intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability
corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed
security transactions). The ASU focuses on the consolidation evaluation for reporting organizations that are required to evaluate
whether they should consolidate certain legal entities. In addition to reducing the number of consolidation models from four to
two, the new standard simplifies the FASB Accounting Standards Codification and improves current U.S. GAAP by placing more emphasis
on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party
guidance when determining a controlling financial interest in a variable interest entity (“VIE”), and changing consolidation
conclusions for companies in several industries that typically make use of limited partnerships or VIEs. The ASU will be effective
for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted,
including adoption in an interim period. We do not expect the adoption of ASU 2015-02 to have a material effect on our financial
position, results of operations or cash flows.
ASU
2014-16
In
November 2014, the FASB issued ASU 2014-16, “Derivatives and Hedging (Topic 815).” ASU 2014-16 addresses whether the
host contract in a hybrid financial instrument issued in the form of a share should be accounted for as debt or equity. ASU 2014-16
is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. We do not currently
have issued, nor are we investors in, hybrid financial instruments. Accordingly, we do not expect the adoption of ASU 2014-16
to have any effect on our financial position, results of operations or cash flows.
ASU
2014-15
In
August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40)”.
ASU 2014-15 provides guidance related to management’s responsibility to evaluate whether there is substantial doubt about
an entity’s ability to continue as a going concern and to provide related footnote disclosure. ASU 2014-15 is effective
for annual periods ending after December 15, 2016, and for interim and annual periods thereafter. Early application is permitted.
We do not expect the adoption of ASU 2014-15 to have a material effect on our financial position, results of operations or cash
flows.
ASU
2014-12
In
June 2014, the FASB issued ASU No. 2014-12, “Compensation – Stock Compensation (Topic 718): Accounting for Share-Based
Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.”
This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period
be treated as a performance condition. ASU 2014-12 is effective for fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2015. We do not expect the adoption of ASU 2014-12 to have a material effect on our financial position,
results of operations or cash flows.
ASU
2014-09
In
May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 affects
any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts
for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts
or lease contracts). ASU 2014-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2016. We are still evaluating the effect of the adoption of ASU 2014-09. On April 1, 2015, the FASB voted to propose
to defer the effective date of the new revenue recognition standard by one year.
ASU
2014-08
In
April 2014, the FASB issued ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and
Equipment (Topic 360) and Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” ASU
2014-08 amends the definition for what types of asset disposals are to be considered discontinued operations, as well as amending
the required disclosures for discontinued operations and assets held for sale. ASU 2014-08 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15, 2014. The adoption of ASU 2014-08 did not have any
effect on our financial position, results of operations or cash flows.
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 have a material impact on the Company’s financial position, results of operations
or cash flows.
Nomadchoice
Pty Limited
Notes
to the unaudited condensed financial statements
Note
2. Critical accounting judgements, estimates and assumptions
The
preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported
amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities,
contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience
and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances.
The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer
to the respective notes) within the next financial year are discussed below.
Estimation
of useful lives of assets
The
company determines the estimated useful lives and related depreciation and amortization charges for its property, plant and equipment
and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other
event. The depreciation and amortization charge will increase where the useful lives are less than previously estimated lives,
or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.
Impairment
of long-lived assets to be held and used
The
company assesses impairment of long-lived assets to be held and used at each reporting date by evaluating conditions specific
to the company and to the particular asset that may lead to impairment. If an impairment trigger exists, the undiscounted future
cash flows related to use and disposal of asset is determined, which is then compared with the carrying amount of the asset. This
involves a number of key estimates and assumptions.
Income
tax
The
company is subject to income taxes in the jurisdictions in which it operates. Significant judgement 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 recognises 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.
The deferred tax liability was not material as of September 30, 2015 and 2014.
Nomadchoice
Pty Limited
Notes
to the unaudited condensed financial statements
Note
3. Sales revenue
| |
2015 | |
2014 |
| |
| |
|
Sales - Australia | |
$ | 60,534 | | |
$ | 49,544 | |
Sales - export | |
| 2,030,732 | | |
| 196,367 | |
Sales - shipping | |
| 96,869 | | |
| 10,439 | |
| |
$ | 2,188,134 | | |
$ | 256,350 | |
Note
4. Cost of sales
| |
2015 | |
2014 |
| |
| |
|
Freight & Postage | |
$ | 710 | | |
$ | 14,864 | |
Packaging | |
| 191,720 | | |
| 5,955 | |
Fees | |
| 73,206 | | |
| 15,040 | |
Raw Material | |
| 326,213 | | |
| 19,373 | |
Less Closing stock | |
| (43,757 | ) | |
| — | |
| |
$ | 548,092 | | |
$ | 55,232 | |
Note
5. Operating expenses
| |
2015 | |
2014 |
| |
| |
|
Sales and marketing | |
| | | |
| | |
Advertising Facebook | |
$ | 18,984 | | |
$ | 8,502 | |
Advertising Google Adwords | |
| 8,526 | | |
| 67 | |
Advertising Adroll | |
| 21,914 | | |
| 3,744 | |
Advertising- Other | |
| 2,531 | | |
| 1,730 | |
Blogging expenses | |
| 378,164 | | |
| 22,867 | |
Marketing | |
| 9,351 | | |
| — | |
| |
$ | 439,471 | | |
$ | 36,910 | |
| |
| | | |
| | |
General and administrative | |
| | | |
| | |
Accounting & book-keeping | |
$ | 5,110 | | |
$ | 1,050 | |
Bank charges | |
| 2,045 | | |
| 287 | |
Branding | |
| 4,941 | | |
| 14,518 | |
Consulting | |
| 7,570 | | |
| — | |
Insurance | |
| — | | |
| 4,361 | |
Office supplies | |
| 684 | | |
| 2,002 | |
Other administrative expenses | |
| 4,425 | | |
| 2,161 | |
Postage & courier | |
| 2,221 | | |
| 250 | |
Rent | |
| 3,653 | | |
| 3,416 | |
| |
| | | |
| | |
Subscriptions | |
| 5,601 | | |
| 831 | |
Wages & superannuation and other payroll related costs | |
| 106,801 | | |
| 47,741 | |
| |
$ | 143,051 | | |
$ | 76,584 | |
| |
| | | |
| | |
Depreciation and amortization | |
| | | |
| | |
Depreciation of office equipment | |
$ | 425 | | |
$ | — | |
Amortisation of domain name and setup costs | |
| 237 | | |
| — | |
| |
$ | 662 | | |
$ | — | |
Nomadchoice
Pty Limited
Notes
to the unaudited condensed financial statements
Note
6. Income tax expense
| |
2015 | |
2014 |
| |
| |
|
Income tax expense | |
| | | |
| | |
Current tax | |
$ | 319,056 | | |
$ | — | |
Numerical reconciliation of income tax expense and tax at the statutory rate | |
| | | |
| | |
Profit before income tax expense | |
| 1,058,415 | | |
| 88,231 | |
| |
| | | |
| | |
Tax at the statutory tax rate of 30% | |
| 317,525 | | |
| 26,469 | |
Tax effect amounts which are not deductible/(taxable) in calculating taxable income: | |
| | | |
| | |
Others | |
| 1,531 | | |
| (26,469 | ) |
| |
| | | |
| | |
Income tax expense | |
$ | 319,056 | | |
$ | — | |
Note
7. Due from shareholders
| |
September 30, 2015 | |
June 30, 2015 |
| |
| |
|
Loan- Tim Polmear (Shareholder) | |
$ | 31,463 | | |
$ | 681,020 | |
Loan- Polmear Holdings Pty Ltd (Beneficiary of shareholder) | |
| — | | |
| 538 | |
| |
$ | 31,463 | | |
$ | 681,558 | |
The
receivable at June 30, 2015 represented an advance to the shareholder in anticipation of a dividend to be declared in favour of
the shareholder. The receivable is non-interest bearing and receivable on demand. The Company declared dividends to offset loan
receivable from shareholder (see note 10).
Note
8. Accounts Payable and Accrued Expenses
| |
September 30, 2015 | |
June 30, 2015 |
| |
| |
|
Credit card | |
$ | 6,113 | | |
$ | 7,874 | |
Accounts payable | |
| 89,091 | | |
| 18,536 | |
GST payable/(receivable) | |
| (4,702 | ) | |
| (2,195 | ) |
Superannuation and other payable | |
| 13,862 | | |
| 9,096 | |
PAYG withholdings payable | |
| 15,732 | | |
| 13,945 | |
| |
$ | 120,096 | | |
$ | 47,256 | |
Note
9. Due to shareholders
| |
September 30, 2015 | |
June 30, 2015 |
| |
| | | |
| | |
Due to shareholders | |
$ | — | | |
$ | 1,784 | |
During
the years ended June 30, 2014, the Company received funds from shareholders of $26,874 of which $25,090 was repaid during the
year ended June 30, 2015. Remaining balance of $1,784 was repaid during the three months ended September 30, 2015. The payable
is non-interest bearing and due on demand.
Nomadchoice
Pty Limited
Notes
to the unaudited condensed financial statements
Note
10. Equity - issued capital
| |
September 30, 2015 | |
June 30, 2015 | |
September 30, 2015 | |
June 30, 2015 |
| |
Shares | |
Shares | |
| |
|
| |
| | | |
| | | |
| | | |
| | |
Ordinary shares - fully paid | |
| 1,200 | | |
| 1,200 | | |
$ | 127 | | |
$ | 127 | |
Ordinary
shares
Ordinary
shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number
of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited
amount of authorised capital.
On
a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have
one vote.
Dividend
Dividends
paid during the period were as follows :
| | |
2015 | | |
2014 | |
| | |
| | | |
| | |
Dividend
for the three months ended September 30, 2015 of $612.20 per ordinary share | | |
$ | 734,673 | | |
| — | |
During
the three months ended September 30, 2015, the Company adjusted dues from receivable by $687,040, paid dividend of $36,945 by
cash and balance of $47,633 of dividend is payable as of September 30, 2015.
Note
11. Contingent liabilities
The
company had no contingent liabilities as at September 30, 2015 and June 30, 2015.
Note
12. Commitments
The
company had no commitments for expenditure as at September 30, 2015 and June 30, 2015.
Nomadchoice
Pty Limited
Notes
to the unaudited condensed financial statements
Note
13. Fixed assets
| |
September 30, 2015 | | |
June 30, 2015 | |
| |
| | |
| |
Office equipment and computers | |
$ | 8,093 | | |
$ | 7,533 | |
Less : Accumulated depreciation | |
| (4,596 | ) | |
| (4,582 | ) |
| |
$ | 3,497 | | |
$ | 2,951 | |
Depreciation
expense for the three months ended September 30, 2015 and 2014 was $155 and $0, respectively.
Note
14. Inventory
| |
September 30, 2015 | | |
June 30, 2015 | |
| |
| | |
| |
Raw materials and packaging material | |
$ | 52,248 | | |
$ | 50,827 | |
| |
$ | 52,248 | | |
$ | 50,827 | |
Note
15. Intangible assets
| |
September 30, 2015 | | |
June 30, 2015 | |
| |
| | |
| |
Organisational costs | |
$ | 732 | | |
$ | 801 | |
Domain name | |
| 3,841 | | |
| 4,206 | |
Trademark | |
| 88 | | |
| — | |
Less : Accumulated depreciation | |
| (1,001 | ) | |
| (841 | ) |
| |
$ | 3,659 | | |
$ | 4,166 | |
Amortization
expense for the three months ended September 30, 2015 and 2014 was $507 and $0, respectively.
Note
16. Subsequent Events
On
November 15, 2015 the Company entered into a stock purchase agreement with Synergy CHC Corp., a United States of America based
consumer health care company, for the purchase of all of the issued and outstanding capital stock for $4,000,000 Australian dollars
in cash and 3,571,428 shares of Synergy’s common stock. In addition to the cash and equity consideration, Synergy will pay
the Company certain earn-out payments of up to $3,500,000 Australian dollars in aggregate upon certain EBITDA thresholds as of
June 30, 2016.
PRO
FORMA FINANCIAL INFORMATION
|
● |
Condensed
Consolidated Pro Forma Unaudited Balance Sheet as of September 30, 2015 |
|
|
|
|
● |
Condensed
Consolidated Pro Forma Unaudited Statement of Operations and Comprehensive Loss for the Year Ended December 31, 2014 |
|
|
|
|
● |
Condensed
Consolidated Pro Forma Unaudited Statement of Operations and Comprehensive Loss for the Nine Months Ended September 30, 2015 |
|
|
|
|
● |
Notes
to Condensed Consolidated Pro Forma Unaudited Financial Statements |
On
November 15, 2015, Synergy CHC Corp. (“Synergy” or “the Company”) acquired Nomadchoice Pty Ltd. (“Nomad”),
a distributor and producer of flat tummy teas (the “Acquisition”).
The
unaudited condensed combined pro forma statements of operations are presented as if the Acquisition had been completed on January
1, 2014 combining Nomad’s audited condensed statement of operations for the year ended June 30, 2015 and the Company’s
audited condensed statement of operations for the year ended December 31, 2014 and the Company’s condensed unaudited statement
of operations for the nine months ended September 30, 2015, respectively. The unaudited condensed combined pro forma balance sheet
gives effect to the acquisition as if the Acquisition had taken place on September 30, 2015 and combines Nomad’s unaudited
condensed balance sheet as of September 30, 2015 with the Company’s unaudited condensed balance sheet as of September 30,
2015.
The
unaudited pro forma combined statement of income is presented for illustrative purposes only and, therefore, is not necessarily
indicative of the operating results that might have been achieved had the transaction occurred as of an earlier date, nor is it
necessarily indicative of the operating results that may be achieved in the future. You should not rely on the pro forma condensed
combined financial information as being indicative of the historical results that would have been achieved had the companies always
been combined or the future results that the combined companies will experience after the Acquisition.
The
unaudited pro forma combined statement of operations and comprehensive loss, including the notes thereto, should be read in conjunction
with the Company’s audited historical consolidated financial statements for the year ended December 31, 2014 included in
our Annual Report on Form 10-K for the year ended December 31, 2014, as well as Nomad’s audited financial statements for
the years ended June 30, 2015 and 2014 and unaudited condensed financial statements for the three month ended September 30, 2015
and 2014 included in Exhibit 99.1 to this Form 8-K/A.
Synergy
CHC Corp.
Unaudited
Pro Forma Balance Sheet
September
30, 2015
|
|
Balance Sheet Synergy CHC Corp.
September 30, 2015 |
|
NomadChoice Pty Ltd.
September 30, 2015 |
|
Pro Forma Adjustments |
|
Balance Sheet Consolidated Pro Forma
September 30, 2015 |
|
|
|
|
|
|
Dr |
|
Cr |
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents |
|
$ |
824,948 |
|
|
$ |
1,240,595 |
|
|
|
2,307,825 |
|
|
|
|
(1) |
|
$ |
4,373,368 |
|
Accounts receivable |
|
|
1,327,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,327,154 |
|
Receivable from
related party |
|
|
175,422 |
|
|
|
31,463 |
|
|
|
|
|
|
|
|
|
|
|
206,885 |
|
Inventory |
|
|
499,448 |
|
|
|
52,248 |
|
|
|
|
|
|
|
|
|
|
|
551,696 |
|
Prepaid expenses |
|
|
122,576 |
|
|
|
36,464 |
|
|
|
|
|
|
|
|
|
|
|
159,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
2,949,548 |
|
|
|
1,360,770 |
|
|
|
|
|
|
|
|
|
|
|
6,618,143 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed assets, net |
|
|
3,614 |
|
|
|
3,497 |
|
|
|
|
|
|
|
|
|
|
|
7,111 |
|
Investment in Hand
MD Corp. |
|
|
1,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500,000 |
|
Goodwill and Intangible
assets, net |
|
|
5,694,584 |
|
|
|
3,659 |
|
|
|
2,316,792 |
|
|
|
|
(1) |
|
|
8,015,035 |
|
Debt issuance cost,
net |
|
|
198,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,515,221 |
|
Total other assets |
|
|
7,396,627 |
|
|
|
7,156 |
|
|
|
|
|
|
|
|
|
|
|
12,037,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
10,346,175 |
|
|
$ |
1,367,926 |
|
|
|
|
|
|
|
|
|
|
$ |
18,655,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
and accrued liabilities |
|
$ |
1,653,296 |
|
|
$ |
120,096 |
|
|
|
|
|
|
|
|
|
|
$ |
1,773,392 |
|
Provision for income
taxes payable |
|
|
|
|
|
|
439,046 |
|
|
|
|
|
|
|
|
|
|
|
439,046 |
|
Provision for dividends
payable |
|
|
|
|
|
|
47,633 |
|
|
|
|
|
|
|
|
|
|
|
47,633 |
|
Current portion
of long-term debt |
|
|
750,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
750,000 |
|
Current portion
of long-term debt, related party |
|
|
300,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
300,000 |
|
Total current liabilities |
|
|
2,703,296 |
|
|
|
606,775 |
|
|
|
|
|
|
|
|
|
|
|
3,310,071 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note payable |
|
|
750,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
750,000 |
|
Note payable, net
of debt discount, related party |
|
|
5,047,178 |
|
|
|
|
|
|
|
|
|
|
|
5,500,000 |
(1)(2) |
|
|
10,547,178 |
|
Total long-term liabilities |
|
|
5,797,178 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,297,178 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
8,500,474 |
|
|
|
606,775 |
|
|
|
|
|
|
|
|
|
|
|
14,607,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.00 par value
unlimited shares authorized, 1,200 issued and
outstanding |
|
|
|
|
|
|
127 |
|
|
|
127 |
(2) |
|
|
|
|
|
|
0 |
|
Common stock, $0.00001 par value; 300,000,000
shares authorized, 69,238,044 issued and outstanding |
|
|
692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock to
be issued |
|
|
68,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,000 |
|
Additional paid
in capital |
|
|
5,882,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,882,448 |
|
Cumulative translation
adjustment |
|
|
|
|
|
|
(114,232 |
) |
|
|
|
|
|
|
|
|
|
|
(114,232 |
) |
Accumulated (deficit)/Retained
earnings |
|
|
(4,105,439 |
) |
|
|
875,256 |
|
|
|
875,256 |
(2) |
|
|
|
|
|
|
(4,105,439 |
) |
Total stockholders’ equity |
|
|
1,845,701 |
|
|
|
761,151 |
|
|
|
|
|
|
|
|
|
|
|
1,731,469 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’
equity |
|
$ |
10,346,175 |
|
|
$ |
1,367,926 |
|
|
|
5,500,000 |
|
|
|
5,500,000 |
|
|
$ |
16,338,718 |
|
(1) |
To record the issuance
of $5,500,000 of debt in connection with the acquisition of NomadChoice and eliminate NomadChoice’s equity as of September
30, 2015 |
|
|
(2) |
To eliminate Nomad’s retained earnings and capital structure. |
Synergy
CHC Corp.
Unaudited
Pro Forma Statement of Operations and Comprehensive Loss
Nine
months ended September 30, 2015
| |
Synergy
CHC Corp. Nine months ended
September 30, 2015 | |
NomadChoice
Pty Ltd. Twelve months ended
June 30, 2015 | |
Add:NomadChoice
Pty Ltd. Three months ended
September 30, 2015 | |
Less:
NomadChoice Pty Ltd. Three months ended
September 30, 2014 | |
Pro
Forma Adjustments | |
Consolidated
Pro Forma Nine months ended
September 30, 2015 |
| |
| |
| |
| |
| |
| |
| |
|
Revenue, Less returns, allowances
and discounts | |
$ | 7,237,619 | | |
$ | 2,485,654 | | |
$ | 2,188,134 | | |
$ | 256,350 | | |
| | | |
| | | |
$ | 11,655,057 | |
Cost of sales | |
| 3,103,244 | | |
| 556,566 | | |
| 548,092 | | |
| 55,232 | | |
| | | |
| | | |
| 4,152,670 | |
Gross
profit | |
| 4,134,375 | | |
| 1,929,088 | | |
| 1,640,042 | | |
| 201,118 | | |
| | | |
| | | |
| 7,502,387 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Operating expenses | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Selling and marketing | |
| 2,228,418 | | |
| 368,177 | | |
| 439,471 | | |
| 36,910 | | |
| | | |
| | | |
| 2,999,156 | |
General and administrative | |
| 1,407,458 | | |
| 376,256 | | |
| 143,051 | | |
| 76,617 | | |
| | | |
| | | |
| 1,850,148 | |
Depreciation
and amortization | |
| 282,256 | | |
| 4,576 | | |
| 662 | | |
| - | | |
| | | |
| | | |
| 287,494 | |
Total operating
expenses | |
| 3,918,132 | | |
| 749,009 | | |
| 583,184 | | |
| 113,527 | | |
| | | |
| | | |
| 5,136,798 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Income (loss) from operations | |
| 216,243 | | |
| 1,180,079 | | |
| 1,056,858 | | |
| 87,591 | | |
| | | |
| | | |
| 2,365,589 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other income (expenses) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Interest expense | |
| (612,094 | ) | |
| | | |
| | | |
| | | |
| (615,548 | ) | |
| | (1) | |
| (1,227,642 | ) |
Interest income | |
| | | |
| 8,369 | | |
| 1,557 | | |
| 637 | | |
| | | |
| | | |
| 9,289 | |
Amortization of
debt discount | |
| (2,575,192 | ) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (2,575,192 | ) |
Amortization of
debt issuance cost | |
| (101,105 | ) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (101,105 | ) |
Total other expenses | |
| (3,288,391 | ) | |
| 8,369 | | |
| 1,557 | | |
| 637 | | |
| | | |
| | | |
| (3,279,102 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net income (loss)
before provision for income taxes | |
| (3,072,148 | ) | |
$ | 1,188,448 | | |
$ | 1,058,415 | | |
$ | 88,228 | | |
| | | |
| | | |
$ | (913,513 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Income Taxes | |
| | | |
| 341,619 | | |
| 319,556 | | |
| - | | |
| | | |
| | | |
| 661,175 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net income (loss) | |
$ | (3,072,148 | ) | |
$ | 846,829 | | |
$ | 738,859 | | |
$ | 88,228 | | |
| | | |
| | | |
| (1,574,688 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Comprehensive income (loss) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net
income (loss) | |
| (3,072,148 | ) | |
| 846,829 | | |
| 738,859 | | |
| 88,228 | | |
| | | |
| | | |
| (1,574,688 | ) |
Foreign
currency translation adjustments | |
| — | | |
| (92,520 | ) | |
| (25,889 | ) | |
| 8,409 | | |
| | | |
| | | |
| (126,818 | ) |
Total Comprehensive
income | |
$ | (3,072,148 | ) | |
$ | 754,309 | | |
$ | 712,970 | | |
$ | 96,637 | | |
| | | |
| | | |
$ | (1,701,506 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss per share - basic and diluted | |
$ | (0.05 | ) | |
| - | | |
| | | |
| | | |
| | | |
| | | |
$ | (0.02 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Weighted average common shares - basic | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
and diluted | |
| 67,033,094 | | |
| - | | |
| | | |
| | | |
| | | |
| | | |
| 67,033,094 | |
(1)
To record interest expense in connection with the debt issuance of $5,500,000
The
pro forma condensed statement of income for the nine months ended September 30, 2015 is presented using the Company’s quarter
ended September 30, 2015 and Nomad’s fiscal year end of June 30, 2015 plus their next quarter ended September 30, 2015,
less the quarter ended September 30, 2014. Due to different year ends, this is the most practical way to reconcile to the quarter
ended September 30, 2015.
Synergy
CHC Corp.
Unaudited
Pro Forma Statement of Operations and Comprehensive Loss
Twelve
months ended December 31, 2014
| |
Synergy
CHC Corp. Twelve months ended
December 31, 2014 | |
NomadChoice
Pty Ltd. Twelve months ended
June 30, 2015 | |
Pro
Forma Adjustments | |
Consolidated
Pro Forma Twelve Months |
| |
| |
| |
| |
| |
|
Revenue less: returns, allowances
and discounts | |
$ | 9,158 | | |
$ | 2,485,654 | | |
| | | |
| | | |
$ | 2,494,812 | |
Cost of sales | |
| 5,616 | | |
| 556,566 | | |
| | | |
| | | |
| 562,182 | |
Gross profit | |
| 3,542 | | |
| 1,929,088 | | |
| | | |
| | | |
| 1,932,630 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Operating expenses | |
| | | |
| | | |
| | | |
| | | |
| | |
Selling and marketing | |
| | | |
| 368,177 | | |
| | | |
| | | |
| 368,177 | |
General and administrative | |
| 961,636 | | |
| 376,256 | | |
| | | |
| | | |
| 1,337,892 | |
Depreciation
and amortization | |
| | | |
| 4,576 | | |
| | | |
| | | |
| 4,576 | |
Total operating
expenses | |
| 961,636 | | |
| 749,009 | | |
| | | |
| | | |
| 1,710,645 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Income (loss) from operations | |
| (958,094 | ) | |
| 1,180,079 | | |
| | | |
| | | |
| 221,985 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Other income
(expenses) | |
| — | | |
| | | |
| | | |
| | | |
| - | |
Interest
expense | |
| (1,998 | ) | |
| | | |
| (796,017 | ) | |
| | (1) | |
| (798,015 | ) |
Interest income | |
| | | |
| 8,369 | | |
| | | |
| | | |
| 8,369 | |
Other
expenses | |
| | | |
| | | |
| | | |
| | | |
| - | |
Total other income
(expenses) | |
| (1,998 | ) | |
| 8,369 | | |
| | | |
| | | |
| (789,646 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net income (loss)
before provision for income taxes | |
| (960,092 | ) | |
$ | 1,188,448 | | |
| | | |
| | | |
$ | (567,661 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Income Taxes | |
| | | |
| 341,619 | | |
| | | |
| | | |
| 341,619 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net income (loss) | |
$ | (960,092 | ) | |
$ | 846,829 | | |
| | | |
| | | |
$ | (909,280 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Comprehensive income (loss) | |
| | | |
| | | |
| | | |
| | | |
| | |
Net income (loss) | |
| (960,092
| ) | |
| 846,829
| | |
| | | |
| | | |
| (909,280
| ) |
Foreign currency translation adjustments | |
| - | | |
| (92,520
| ) | |
| | | |
| | | |
| (92,520
| ) |
Comprehensive income (loss) | |
$
| (960,092
| ) | |
$
| 754,309
| | |
| | | |
| | | |
$
| (1,001,800
| ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss per share - basic and diluted | |
$ | (0.01 | ) | |
| - | | |
| | | |
| | | |
$ | (0.01 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Weighted average common shares
- basic and diluted | |
| 97,165,479 | | |
| - | | |
| | | |
| | | |
| 97,165,479 | |
(1)
To record interest expense in connection with the debt issuance of $5,500,000
The
pro forma condensed statement of income for the year ended December 31, 2014 is presented using the Company’s fiscal year
end of December 31, 2014 and Nomad’s fiscal year end of June 30, 2015, a difference greater than 93 days. Management has
determined it is not practicable for Nomad’s fiscal year end to be brought up to within 93 days of the Company’s fiscal
year end.
SYNERGY CHC CORP.
NOTES TO CONDENSED
PRO FORMA UNAUDITED FINANCIAL STATEMENTS
Unaudited Pro Forma Condensed Financial
Information.
The Pro Forma Unaudited Condensed Financial
Statements have been prepared in order to present consolidated financial position and results of operations of Synergy CHC Corp.
(the “Company”) and Nomadchoice Pty Ltd. (“Nomad”) as if the Acquisition had occurred as of September
30, 2015 for the pro forma condensed consolidated balance sheet and to give effect to the Acquisition by the Company, as if the
transaction had taken place at January 1, 2014 for the pro forma condensed consolidated statements of operations and comprehensive
loss for the year ended December 31, 2014 and the nine months ended September 30, 2015, respectively.
The following pro forma adjustments are incorporated
into the pro forma condensed consolidated balance sheet as of September 30, 2015 and the pro forma condensed consolidated statement
of operations and comprehensive loss for the year ended December 31, 2014 and nine months ended September 30, 2015, respectively.
(1) Acquisition of Nomad and issuance of note
payable
The Acquisition has been accounted for under
the acquisition method of accounting. Under the acquisition method of accounting, the total acquisition consideration price was
allocated to the assets acquired and liabilities assumed based on their preliminary estimated fair values. In order to ultimately
determine the fair values of tangible and intangible assets acquired and liabilities assumed for Nomad, we may engage a third
party independent valuation specialist, however as of the date of this report, the valuation has not been undertaken.
During the measurement period (which is the
period required to obtain all necessary information that existed at the acquisition date, or to conclude that such information
is unavailable, not to exceed one year), additional assets or liabilities may be recognized, or there could be changes to the
amounts of assets. The Company expects the purchase price allocations for the acquisition of Nomad to be completed by the end
of the fourth quarter of 2016.
This pro forma adjustments do not reflect
the amortization of intangible assets acquired, if any, in the Acquisition
(2) To eliminate Nomad’s retained earnings
and capital structure
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