Synergy CHC Corp. (SNYR) - Q1 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. Synergy CHC Corp. is a consumer health care company focused on building a portfolio of brands, primarily FOCUSfactor (brain health) and Flat Tummy (weight management). The company operates as a non-accelerated filer and smaller reporting company. As of May 11, 2026, there were 14,899,883 shares of common stock outstanding.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenue | $5,492,705 | $8,170,534 |
| Gross Profit | $3,970,795 (72.3% margin) | $6,164,021 (75.4% margin) |
| Net Loss | $(2,568,899) | $876,264 (Income) |
| EBITDA | $(537,505) | $1,979,624 |
| Cash & Restricted Cash | $392,115 | $277,882 |
| Total Debt (Notes Payable) | $27,749,036 (Gross) | $26,714,661 (Gross) |
| Working Capital | $(503,862) Deficit | Not explicitly stated |
Material Changes vs. Prior Period
- Revenue Decline: Total revenue decreased by approximately 33% ($2.68M) year-over-year. This was driven by a $1.81M drop in Nutraceutical sales and the absence of a one-time $1.5M license revenue recognized in Q1 2025 (which was reversed in late 2025 due to contract termination). Beverage revenue increased significantly ($0.64M) due to new retail distribution.
- Profitability Shift: The company swung from a net income of $876k in Q1 2025 to a net loss of $2.57M in Q1 2026. Operating expenses increased by $321k, primarily due to higher G&A costs (salaries, stock-based compensation, professional fees).
- Interest Expense Surge: Interest expense more than doubled to $2.01M from $1.10M, attributed to new debt facilities and the amortization of original debt discounts on the May 2025 loan.
- Cash Flow: Net cash used in operating activities increased to $2.04M from $0.82M. However, the company collected $1.94M in accounts receivable, offsetting some cash burn.
Outlook, Risks, and Management Commentary
- Going Concern: Management has evaluated conditions raising substantial doubt about the company's ability to continue as a going concern due to an accumulated deficit of $59M and a working capital deficit. Mitigation strategies include a recent debt amendment, workforce reduction (13 layoffs), and equity financing.
- Debt Restructuring: On March 24, 2026, the company entered a Second Amendment to its credit agreement with ACP Agency, LLC. This adjusted covenants, payment terms, and interest mechanics (including interest paid in kind). The lender has informally alleged a default, which the company disputes.
- Equity Financing: Subsequent to the quarter end, the company raised $2.67M via its ATM program and entered an Equity Line of Credit (ELOC) agreement.
- Controls: Management concluded that disclosure controls and procedures were not effective as of March 31, 2026.
Investor Verification Checklist
- Debt Default Status: Verify the status of the "informal" default allegation by ACP Agency, LLC and the potential impact on liquidity if formally declared.
- Revenue Quality: Confirm the sustainability of the $0.67M beverage revenue increase and the impact of the terminated UAE/Turkey license agreement on future growth.
- Covenant Compliance: Review the specific financial covenants in the amended credit agreement (e.g., Minimum Consolidated Adjusted EBITDA of $500k for Q2 2026) and the company's ability to meet them.
- Related Party Transactions: Scrutinize the $638k prepaid expense related to the CEO and the $193k payable to a shareholder for distribution rights.
- Internal Controls: Assess the remediation plan for the ineffective disclosure controls and procedures.