U.S. SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

FORM 10-Q

[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the quarterly period ended SEPTMEBER 30, 2015

  [   ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

Commission file number:  0-54892

INSYNERGY PRODUCTS, INC

 (Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (818) 760-1644

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  [X]        No  [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  [X]        No  [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  [  ]        No  [X]

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:  As of November 11, 2015, the issuer had 26,300,868 shares of its common stock issued and outstanding.

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TABLE OF CONTENTS

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 PART I – FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

INSYNERGY PRODUCTS, INC.

INDEX TO FINANCIAL STATEMENTS

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The accompanying notes are an integral part of these unaudited condensed financial statements.

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INSYNERGY PRODUCTS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Insynergy Products, Inc. (formerly Insynergy, Inc.) (the "Company") was incorporated in the State of Nevada on January 26, 2010 to engage in Direct Response marketing that has the ability to take a product from the drawing board to the consumer via sales through television and/or retail.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The Company’s unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenues and expenses during the reporting period. Actual results may differ from those estimates. The accompanying unaudited condensed financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are not necessarily indicative of the results to be expected for the full year ending December 31, 2015. These unaudited condensed financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial  statements  which  present  fairly  the financial  condition,  results  of  operations  and  cash  flows  of  the Company for the respective periods being presented.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 revenues and expenses during the reporting period.  Significant estimates include the estimated useful lives of property and equipment.  Actual results could differ from those estimates.

Concentrations of Credit Risk

We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits.  We continually monitor our banking relationships and consequently have not experienced any losses in our accounts.  We believe we are not exposed to any significant credit risk on cash.

Cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents for the nine months ended September 30, 2015 and the year ended December 31, 2014.

Reclassifications

Certain reclassifications have been made to the prior year financial information to conform to the presentation used in the financial statements for the nine months ended September 30, 2015.

Accounts Receivable

Revenues that have been recognized but not yet received are recorded as accounts receivable. Losses on receivables will be recognized when it is more likely than not that a receivable will not be collected. An allowance for estimated uncollectible amounts will be recognized to reduce the amount of receivables to its net realizable value. The allowance for uncollectible amounts is evaluated quarterly.

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Fair value of financial instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements.  To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments.  The Company’s notes payable approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at September 30, 2015 and December 31, 2014.

Fixed Assets

Fixed assets are carried at the lower of cost or net realizable value. All fixed assets with a cost of $2,000 or greater are capitalized. Major betterments that extend the useful lives of assets are also capitalized. Normal maintenance and repairs are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in operations.

Depreciation is computed using the straight-line method over the following estimated useful lives:

Equipment                       3 years

Furniture and fixtures      3 years

Revenue recognition

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company will recognize revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

Income taxes

The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires 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 based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes.  Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.  The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

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Stock-based Compensation

We account for equity-based transactions with nonemployees under the provisions of ASC Topic No. 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). ASC 505-50 establishes that equity-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.  The fair value of common stock issued for payments to nonemployees is measured at the market price on the date of grant.  The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model.  In general, we recognize the fair value of the equity instruments issued as deferred stock compensation and amortize the cost over the term of the contract.

We account for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation—Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.  The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered.

Net income (loss) per common share

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification.  Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.  Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period.  The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented.

Advertising Costs

The Company expenses the cost of advertising and promotional materials when incurred. For the nine months ended September 30, 2015 and 2014 advertising costs were $577,743 and $77,263, respectively.

Recently issued accounting pronouncements

In August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“Update”).  Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for public and nonpublic entities for annual periods ending after December 15, 2016. Early adoption is permitted.

The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 3 – INVENTORY

As of September 30, 2015 the Company has $268,817 of finished goods and $411,519 of work in process. As of December 31, 2014 there was $144,893 of finished goods inventory. Inventory is carried at the lower of cost or market.

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NOTE 4 – PROPERTY AND EQUIPMENT

Furniture, fixtures and equipment, stated at cost, less accumulated depreciation and consisted of the following at:                

Disposal of fixed assets

During the nine months ended September 30, 2015, the Company ceased using the office space for which it had capitalized prior leasehold improvement expense of $12,230. Accordingly, the Company has determined that carrying amount of such asset is not recoverable and has written it down to $0, resulting in a loss on disposal of $7,148.

During the nine months ended September 30, 2015, the Company determined that it would no longer be using the Scrub n Slide tooling that had been capitalized at $26,500. Accordingly, the Company has determined that carrying amount of such asset is not recoverable and has written it down to $0, resulting in a loss on disposal of $9,886.

Depreciation expense

Depreciation expense for the nine months ended September 30, 2015 and 2014 was $30,283 and $29,476, respectively.

NOTE 5 – NOTES PAYABLE

During the three months ended March 31, 2015, the Company executed multiple promissory notes with a creditor for total proceeds of $298,000. The loans are uncollateralized, bear interest at 3% and mature in six months. As of September 30, 2015, the Company converted all principal and interest into 1,655,555 shares of common stock. The value of the shares was determined using the average of the most recent stock sales for cash, resulting in a loss on conversion of debt of $226,811.

During the nine months ended September 30, 2015, the Company received short term loans from three creditors for a total of $354,000. The loans are uncollateralized, non-interest bearing and are due on demand.

The Company also has financing loans for its product liability and Director and Officer Insurance. As of September 30, 2015 and December 31, 2014 the loans have a balance of $31,778 and $7,442, respectively, they bear interest at 6.15% and 5.99% and are due within one year.

NOTE 6 – CONVERTIBLE PROMISSORY NOTE

On January 16, 2015, the Company executed a convertible promissory note for $69,000 with KBM Worldwide, Inc.  The note bears interest at 8% per annum and is due on or before October 20, 2015.  The note is convertible at a 42% discount any time during the period beginning 180 days following the date of the note. The Company recorded a debt discount in the amount of $50,029 in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the interest method of accretion over the term of the note. Further, the Company recognized an initial derivative liability of $50,029 based on the Black Scholes Merton pricing model using the following inputs: stock price of $3.50, conversion price of $2.03, .75 years to maturity, .12% risk free rate, and volatility of 18.2%. On July 22, 2015, the Company repaid the $69,000 principle, and an additional $20,000 for all accrued interest and an early payment penalty. The remaining debt discount was expensed and the Company recognized a gain on derivative of $47,022 for the nine months ended September 30, 2015.

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During the nine months ended September 30, 2015 the Company had the following activity in their derivative liability account:

NOTE 7 – COMMITMENTS & CONTIGENCIES

Operating Lease

The Company currently occupies office space at 4705 Laurel Canyon Boulevard in Studio City, California. On March 15, 2015, the Company executed a new lease agreement to begin April 1, 2015. Lease payments are $6,500 per month plus parking and CAM charges. The lease expires December 31, 2015 but can be renewed for a one year extension. The original lease required a deposit of $10,610 which was paid on November 1, 2011.

Investment Agreement

On July 9, 2014, the Board of Directors approved an investment arrangement with a third party individual. Per the terms of the agreement the investor has transferred $150,000 to the Company for which he is now entitled to the following; $1 per unit sold through all retail outlets including online and retail shopping shows until the investment is paid back in full. Once the original investment is recouped the investor shall then receive a 2% royalty in perpetuity on all future retail sales of the patented fitness product. As of September 30, 2015 the amount owing is $150,000. Sales have not yet commenced on this product.

NOTE 8 – RELATED PARTY TRANSACTIONS

As of December 31, 2014, the Company owed Sanford Lang, CEO $4,100 for cash advances used to pay for general operating expenses. During the nine months ended September 30, 2015, this amount was repaid in full.

On May 15, 2015, the Company issued 25,000 shares of common stock to Rachel Boulds, CFO for services rendered. The shares were valued at $0.317 per share for a total non-cash expense of $7,925. Fair market value for the shares was determined by taking the average share price for each cash-for-stock purchase in the prior period.

On August 13, 2015, the Company, granted 15,000,000 warrants to purchase shares of common stock to Sandy Lang, CEO. The warrants will vest at 5,000,000 for each $5 million in revenue realized by the Company over the next eighteen months. The warrants have an exercise price of $0.23 and a term of ten years. The performance condition must be met for the award to vest; therefore, compensation costs will be recognized when those performance measures are met.

On August 13, 2015, the Company, granted 1,000,000 warrants to purchase shares of common stock to Marty Goldrod, COO. The warrants will vest at 333,000 for each $5 million in revenue realized by the Company over the next eighteen months. The warrants have an exercise price of $0.23 and a term of ten years. The performance condition must be met for the award to vest; therefore, compensation costs will be recognized when those performance measures are met.

As of September 30, 2015, the Company owed an officer $5,000 for a cash advance used to pay for general operating expenses. The advance is uncollateralized, non-interest bearing and due on demand.

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NOTE 9 – STOCK OPTIONS

On January 29, 2014, the Company authorized the issuance of 1,000,000 stock options to Full Service Marketing. The aggregate fair value of the options totaled $195,885 based on the Black Scholes Merton pricing model using the following estimates: exercise price of $0.27, 0.71% risk free rate, 125% volatility and expected life of the options of 3 years. The Company has booked the $195,885 to additional paid in capital and a deferred expense account, to be amortized over the term of the options. On July 20, 2015 the term of the options was reduced to two years, thus the options have been revalued on that date. The new aggregate fair value of the options totaled $204,291 based on the Black Scholes Merton pricing model using the following estimates: exercise price of $0.27, 0.14% risk free rate, 140% volatility and expected remaining life of the options of .53 years. The Company has booked an additional $8,406 to additional paid in capital and adjusted the deferred expense account accordingly.  For the nine months ended September 30, 2015, $170,242 has been amortized to expense.

A summary of the status of the Company’s outstanding stock options and changes during the periods is presented below:

NOTE 10 – STOCK WARRANTS

Pursuant to a binding Letter of Intent with Ross Sklar (“Sklar”), a related party, dated August 13, 2015, the Company granted warrants to purchase 35 million shares of common stock to Sklar on September 15, 2015.  The warrants were granted in consideration for licensing rights to a series of products. The warrants have an exercise price of $0.23 and a term of ten years.  The aggregate fair value of the warrants totaled $6,501,715 based on the Black Scholes Merton pricing model using the following estimates: exercise price of $0.23, 2.28% risk free rate, 65.24% volatility and expected life of the options of 10 years. Mr. Sklar was also appointed to the Board of Directors designating him a related party.

A summary of the status of the Company’s outstanding stock warrants and changes during the periods is presented below:

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NOTE 11 – STOCKHOLDERS’ EQUITY (DEFICIT)

During the nine months ended September 30, 2015, the Company issued 45,500 shares of common stock for services to service providers. The shares were valued at $0.317 per share for a total non-cash expense of $14,424. Fair market value for the shares was determined by taking the average share price for each cash-for-stock purchase in the prior period.

During the nine months ended September 30, 2015, the Company converted loans due to a creditor totaling $298,000 into 1,655,555 shares of common stock. The shares were valued at $0.317 which was determined using the average of the most recent stock sales for cash.

NOTE 12 – LOSS PER SHARE APPLICABLE TO COMMON SHAREHOLDERS

The following table sets forth the computations of loss per share amounts applicable to common stockholders for the three and nine months ended August 31, 2015 and 2014. Potentially dilutive shares were excluded from the computation as of August 31, 2015 and 2014 since they would have been anti-dilutive.

NOTE 13 – FACTORING AND SECURITY AGREEMENT

On February 20, 2015, the Company executed a Factoring and Security Agreement with LSQ Funding Group L.C. (“LSQ”) Pursuant to the terms of the agreement LSQ will purchase, as absolute owner, certain accounts receivable as agreed upon by both parties. LSQ will credit the Company’s account the purchase price less applicable fees. During the nine months ended September 30, 2015 LSQ has purchased $1,261,644 of the Company’s receivables. Pursuant to the terms of contract LSQ holds back a 19% reserve on purchased receivables. Once the receivable is collected these funds are released to the Company. As of September 30, 2015 LSQ had disbursed all available funds, except $190, less applicable fees.

NOTE 14 – LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2015, the Company believes that it will generate sufficient capital to satisfy working capital requirements for the next 12 months. As of September 30, 2015 we have accounts receivable of $108,153 to be collected and new purchase orders to be fulfilled totaling $360,000 for which the inventory is already on hand and has been shipped. At present we are working on the development of four new products, followed closely by others. Through a Licensing Agreement we have multiple products available in the areas of personal care, household cleaning/laundry, hardware, automotive, pet care and foods

Based on the before mentioned working capital components, revenue realized in the first nine months of 2015, revenue projections beyond the third quarter and the debt that was eliminated in 2014, management believes that it will generate sufficient capital over the next year to fund its operations.

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following information should be read in conjunction with our financial statements and related notes thereto included in Part I, Item 1, above. We also urge you to review and consider our disclosures describing various risks that may affect our business, which are set forth under the heading "Risk Factors," below.

Forward Looking Statements

Certain matters discussed herein are forward-looking statements. Such forward-looking statements contained in this Form 10-Q involve risks and uncertainties, including statements as to:

        ·our future operating results;

        ·our business prospects;

        ·our contractual arrangements and relationships with third parties;

        ·the dependence of our future success on the general economy;

        ·our possible future financings; and

        ·the adequacy of our cash resources and working capital.

These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe,” “anticipate,” “expect,” “estimate” or words of similar meaning. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Executive Overview

Insynergy Products (“Insynergy”) is a company with deep experience in commercializing consumer products.  Beyond developing products, a core competency is commercial and infomercial production development combined with specific expertise in traditional and digital media acquisition.  The foundation of Insynergy and the continued corporate goal is to develop intellectual property (“IP”) internally or via a license from a third party. The path to monetization and value creation is realized as the Company then exploits our growing distribution footprint.  Beyond the goal of extensive profitability, the intent is to engineer sustained and long term value by building the portfolio of IP inclusive of products and brands.  The Board of Directors is cognizant of the Company’s stage, size, limitations, attributes short and long term goals.  Ultimately the Company envisions a healthy organic growth path coupled by strategic acquisitions.  This will lead the Company to an upgrade onto a primary securities exchange by 2018.  Insynergy has a keen eye for strategic acquisitions and has identified certain takeover targets that the Company expects to start to capitalize on in 2017.  

The Company’s commercialization path intently depends on identifying a novel product(s).  Once found, a series of due diligence steps are taken ensuring the product’s success.  From technology to marketing to feasibility, the product as a whole is intently examined.  The Company consistently and with discipline follows a SWOT Analysis in understanding a product from a 360 vantage point that sets the stage for sound and low risk commercialization inferences.  SWOT is the analysis of Strengths, Weaknesses, Opportunities and Threats.  Everything from patent and trademark searches to liability analysis to broad retail shelf sweeps are undertaken until the Board of Directors approves a product as a candidate for launch.  Then a series of intimate customer engagements begins.  From focus groups to trial runs to engagement with corporate buyers for their privileged views, this all provides a level of insight that strategically positions Insynergy as a unique and formative player in the consumer products industry.

Insynergy today has established vendor numbers with key retailors across the nation, including Home Depot, Walgreens, Kroger, Bed Bath & Beyond and Dollar General, to name a few, all due to our first product’s success Plumbers Hero – www.plumbershero.com.

This unique drain clearing aerosol product was launched in the first quarter of 2015 in an expedited fashion in order to accomplish a few key tactical goals being revenue growth, vendor number acquisition and brand development.  Due to our CEO’s past experience, commercializing Plumbers Hero was a quick process.  With a cumulative media spend over the first three quarters of approximately $500,000 not only was national retail distribution gained but total gross revenues topped $1.5M in under eight months.  The project was designed as a short term run with a critical start and stop time line.  This provided enough market inertia to not only generate sales and brand development but it positioned the Company to gain retail vendor numbers and shelf space.  Due to the media and direct to consumer response the strategy to then pull the product through retail was a comprehensive success.  The nature of this project was to commercialize, market and distribute via Direct Response TV and retail with the understanding the product will not have long term shelf stability as the goal was not to reinvest in media.  A quick controlled investment with specific and measured goals.  As this product had a relatively low cost to commercialize, the Company desired a big splash, easy consumer acceptance, DR sales, vendor numbers, shelf space and retail sales that now set the stage for our future, which includes a remarkable and broad portfolio of recently acquired IP.

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In the third quarter of 2015, we struck a land mark license deal with Mr. Ross Sklar of The Starco Group.  Insynergy secured the exclusive license to a broad body of novel products and technologies in the following categories:

-Consumer Food

-Cosmetic

-OTC Personal Care

-House hold cleaning

-Hardware, Automotive

-Pet Care

-Seasonal

-Arts & Crafts

The products in the aforementioned categories will fill our pipeline until 2025.

The significance of the license agreement is that it enables the Company access to cutting edge products that spans multiple categories.  This allows Insynergy the ability to focus on our core competencies in branding, media production/buying and distribution. With the ground work done in this first year Insynergy has opened retail channels with many of the major retail accounts and will commercialize unique IP while strategically marketing and placing our products into their distribution.

Mr. Sklar currently oversees a very broad manufacturing infrastructure that produces products in the aforementioned categories.  This adds a portfolio of leading-edge IP that not only vertically integrates Insynergy’s research and development efforts but it completely builds out our product pipeline for years to come.  It is our belief that no one in the space has our technological depth.  While there are competitive players in Insynergy’s DRTV / retail vertical, the resources and depth Insynergy now has positions the Company to take a dominating role over the next five years.  

The Company is headed towards year end and a busy and successful year it has been.  To top things off we secured a very large order from the big box leader, Menards.  This order, totaling over $350,000, if successfully sold at an approved flow through rate, sets the stage for a Menards’ follow up order projected to total over $700,000 by the second quarter of 2016.

2015 has been a wonderful developmental year for Insynergy, while we have experienced some recent cash flow rigidity the Company is well structured with very low overhead.  In the following months we will be announcing further strategic corporate joint ventures involving a shopping channel combined with cross category product launches and management is thrilled to execute on our strategic plan in 2016 and beyond.

Results of Operation for the Three Months Ended September 30, 2015 and 2014

Revenues

For the three months ended September 30, 2015 the Company recorded negative revenue, net of sales returns of $115,335 compared to revenue of $4,662 for the three months ended September 30, 2014. Cost of goods sold was $5,887 compared to $664 in the prior period. Revenue in the current period was offset by $128,298, resulting in negative net revenue for the three months of $115,335. This offset was a reduction to our accounts receivable as a result of a mark down program for the Plumber’s Hero at two major retailers. We experienced a decrease in revenue in the second and third quarters largely due to sales to Walmart and Walgreens, our two largest vendors to date. Both vendors made large initial purchases in the first quarter providing them with enough inventory through the third quarter so that they have not yet had to order additional product. In addition, initial orders from new retailers have been more conservative as they introduce the Plumber’s Hero to their customers.

Operating Expenses

For the three months ended September 30, 2015, the Company incurred compensation expense of $71,522 compared to $39,561 for the three months ended September 30, 2014; an increase of $31,961 or 81%. The increase is due to increased salaries for officers.

For the three months ended September 30, 2015, the Company incurred $14,639 in advertising and promotional expense as compared to $10,171 for three months ended September 30, 2014; an increase of $4,468, or 44%. The increase is primarily due to spending on promotional activities for the Plumber’s Hero.

For the three months ended September 30, 2015, the Company incurred $14,276 in professional fees compared to $23,025 for the same period in the prior year. Professional fees are mainly for accounting, auditing and legal services associated with our quarterly filings as a public company.

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On August 13, 2015, the Company signed a binding Letter of Intent with a third party whereby the Company will acquire the license rights to a series of products. Per the terms of the Letter of Intent, and the Warrant Agreement dated September 15, 2015, the Company issued 35 million warrants to the third party to purchase common stock. (See Part II, Item 2, below). The aggregate fair value of the warrants totaled $6,501,715 which has been recorded as licensing expense.

For the three months ended September 30, 2015, the Company incurred $179,681 in general and administrative expense as compared to $305,525 for the same period in the prior year; a decrease of $125,844 or 41%. In the prior year there was $220,117 of non-cash expense for stock based compensation.

Other Income and Expense

For the three months ended September 30, 2015 we had total other expense of $53,871 compared to $5,214 for the same period in the prior year. For the three months ended September 30, 2015, the Company recorded interest expense of $15,332 and a loss on disposal of fixed assets of $17,034. In addition, as a result of the convertible Promissory Note with KBM Worldwide, Inc., we recorded amortization of debt discount of $20,228 and a loss on derivative of $1,277.

Net Loss

For the three months ended September 30, 2015 we realized a net loss of $6,956,926 as compared to a net loss of $379,498 for the same period in the prior year. The increase is a result of the licensing expense as well as the adjustment required for the markdown of inventory by two of our retailers.

Results of Operation for the Nine Months Ended September 30, 2015 and 2014

Revenues

For the nine months ended 30, 2015 the Company recorded revenue, net of sales returns of $1,761,693 compared to $7,877 for the nine months ended September 30, 2014. Cost of goods sold was $904,180 compared to $3,584 in the prior period. Revenue in the current period was offset by $128,298, resulting in net revenue for the nine months of $1,761,693. This offset was a reduction to our accounts receivable as a result of a mark down program for the Plumber’s Hero at two major retailers. We experienced a decrease in revenue in the second and third quarters largely due to sales to Walmart and Walgreens, our two largest vendors to date. Both vendors made large initial purchases in the first quarter providing them with enough inventory through the third quarter so that they have not yet had to order additional product. In addition, initial orders from new retailers have been more conservative as they introduce the Plumber’s Hero to their customers.

We introduced the Plumber’s Hero to the retail market with great success in the first quarter of 2015. In the second quarter we saw an increase in our cost of goods sold as a percentage of sales. A portion of this was the result of the cost and sale price for the Plumber’s Hero packaged specifically for Dollar General. For this particular item the cost is approximately 10% more of the sale price than for other retailers. In addition, we experienced a shift in sales reported by Pacific Entertainment, the vendor of record for Walmart, as they accounted for commissions and other fees in their second quarter reported to us. We also determined that it was in our best interest to no longer pursue the marketing and production of two of our products, the Best Ball and the Scrub n Slide. The remaining inventory for these products has been donated to charity. As a result we recognized impairment expense of $42,232.

Operating Expenses

For the nine months ended September 30, 2015, the Company incurred compensation expense of $187,521 compared to $165,644 for the nine months ended September 30, 2014; an increase of $21,877 or 13%. The increase is due to increased salaries for officers.

For the nine months ended September 30, 2015, the Company incurred $577,743 in advertising and promotional expense as compared to $77,263 for nine months ended September 30, 2014; an increase of $500,480. The increase is primarily due to spending on promotional activities for the Plumber’s Hero including infomercial production.

For the nine months ended September 30, 2015, the Company incurred $84,551 in professional fees compared to $54,434 for the same period in the prior year. Professional fees are mainly for accounting, auditing and legal services associated with our quarterly filings as a public company.

On August 13, 2015, the Company signed a binding Letter of Intent with a third party whereby the Company will acquire the license rights to a series of products. Per the terms of the Letter of Intent, and the Warrant Agreement dated September 15, 2015, the Company issued 35 million warrants to the third party to purchase common stock.  (See Part II, Item 2, below). The aggregate fair value of the warrants totaled $6,501,715 which has been recorded as licensing expense.

For the nine months ended September 30, 2015, the Company incurred $749,174 in general and administrative expense as compared to $483,995 for the same period in the prior year; a decrease of $265,179 or 55%. In the prior year there was $266,799 of non-cash expense for stock based compensation.

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Other Income and Expense

For the nine months ended September 30, 2015 we had total other expense of $263,212 compared to $14,666 for the same period in the prior year. For the nine months ended September 30, 2015, the Company recorded interest expense of $19,148 and a loss on disposal of fixed assets of $17,034 and a loss on conversion of debt of $226,811. In addition, as a result of the convertible Promissory Note with KBM Worldwide, Inc. we recorded amortization of debt discount of $50,029 and a gain on derivative of $47,022.

Net Loss

For the nine months ended September 30, 2015 we realized a net loss of $7,506,403 as compared to a net loss of $791,709 for the same period in the prior year. The increase is a result of the licensing expense as well as the adjustment required for the markdown of inventory by two of our retailers.

Liquidity and Capital Resources

As of September 30, 2015, the Company believes that it will generate sufficient capital to satisfy working capital requirements for the next 12 months. As of September 30, 2015 we have accounts receivable of $108,153 to be collected and new purchase orders to be fulfilled totaling $360,000 for which the inventory is already on hand. At present we are working on the development of four new products followed closely by others. Through a Licensing Agreement we have multiple products available in the areas of personal care, household cleaning/laundry, hardware, automotive, pet care and foods.

Based on the before mentioned working capital components, revenue realized in the first six months of 2015, revenue projections beyond the second quarter and the debt that was eliminated in 2014, management believes that it will generate sufficient capital over the next year to fund its operations.

During the nine months ended September 30, 2015, net cash used by operating activities was $675,809 compared to $344,472 for the same period in the prior year.  The increase in net cash used by operating activities was primarily the result of increased accounts receivable and the purchase of inventory.

During the nine months ended September 30, 2015, net cash used by investing activities was $0 compared to $59,954 for the same period in the prior year.  Investing activity in the prior year was for the purchase of fixed assets. No new fixed assets have been purchased in the current year.

Net cash flows from financing activities for the nine months ended September 30, 2015 were $677,235 compared to $396,883 for the nine months ended September 30, 2014.  During the nine months ended September 30, 2015, we received $776,199 from the issuance of notes payable to third parties.

Our net loss for the nine months ended September 30, 2015 was significantly increased as a result of non-cash expense transactions. Taking into account these non-cash transactions the reconciled net loss would be $597,603. The table below is not a GAAP presentation of the financial statements and is presented only to show the reconciled net loss.

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The Company needs to locate investment capital sources and privately raise $1,000,000 which will be used for product testing, product manufacture, video production, air time purchase, and operation of the initial marketing campaigns, and for overhead expenses and working capital.

Obligations and Commitments

On July 9, 2014, the Board of Directors approved an investment arrangement with a third party individual. Per the terms of the agreement the investor has transferred $150,000 to the Company for which he is now entitled to the following:  $1 per unit sold through all retail outlets including online and retail shopping shows until the investment is paid back in full. Once the original investment is recouped the investor shall then receive a 2% royalty in perpetuity on all future retail sales of our patented fitness product.

During the three months ended March 31, 2015, the Company executed multiple promissory notes with a creditor for total proceeds of $298,000. The loans are uncollateralized, bear interest at 3% and mature in six months. As of March 31, 2015, the Company converted all principal and interest into 1,655,555 shares of common stock. The value of the shares was determined using the average of the most recent stock sales for cash, resulting in a loss on conversion of debt of $226,811.

During the nine months ended September 30, 2015, the Company received short term loans from three creditors for a total of $354,000. The loans are uncollateralized, non-interest bearing and are due on demand.

The Company also has financing loans for its product liability and Director and Officer Insurance. As of September 30, 2015 and December 31, 2014 the loans have a balance of $31,778 and $7,442, respectively, they bear interest at 6.15% and 5.99% and are due within one year.

Critical Accounting Estimates and Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Note 1 to the Financial Statements describes the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingencies and taxes.  Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company will recognize revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

We are subject to various loss contingencies arising in the ordinary course of business.  We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies.  An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated.  We regularly evaluate current information available to us to determine whether such accruals should be adjusted.

We recognize deferred tax assets (future tax benefits) and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities.  The deferred tax assets and liabilities represent the expected future tax return consequences of those differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered or settled.  Future tax benefits have been fully offset by a 100% valuation allowance as management is unable to determine that it is more likely than not that this deferred tax asset will be realized.

Off-Balance Sheet Arrangements 

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

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Recent Accounting Pronouncements

In August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“Update”).  Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for public and nonpublic entities for annual periods ending after December 15, 2016. Early adoption is permitted.

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.  Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report.  Based on that evaluation, they concluded that our disclosure controls and procedures were not effective for the quarterly period ended September 30, 2015.  A material weakness was identified associated with the closing procedures for the preparation of the financial statements resulting in material adjusting journal entries. Management is currently in the process of implementing new processes to improve the accuracy and efficiency of its closing procedures so that they are effective going forward.

In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.

Changes in Internal Controls

Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that no change occurred in the Company's internal controls over financial reporting during the quarter ended September 30, 2015 that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are not presently any material pending legal proceedings to which the Company is a party or as to which any of our property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.

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ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On April 30, 2015, the Company issued 2,000 shares of common stock for services to a service provider. The shares were valued at $0.317 per share for a total non-cash expense of $634. Fair market value for the shares was determined by taking the average share price for each cash-for-stock purchase in the prior period. All shares were privately issued with a restrictive legend, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

On May 15, 2015, the Company issued 25,000 shares of common stock to Rachel Boulds, CFO for services rendered. The shares were valued at $0.317 per share for a total non-cash expense of $7,925. Fair market value for the shares was determined by taking the average share price for each cash-for-stock purchase in the prior period.

On May 15, 2015, the Company issued 25,000 shares of common stock for services to a service provider. The shares were valued at $0.317 per share for a total non-cash expense of $7,925. Fair market value for the shares was determined by taking the average share price for each cash-for-stock purchase in the prior period. All shares were privately issued with a restrictive legend, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

On May 20, 2015, the Company issued 12,500 shares of common stock for services to a service provider. The shares were valued at $0.317 per share for a total non-cash expense of $3,963. Fair market value for the shares was determined by taking the average share price for each cash-for-stock purchase in the prior period. All shares were privately issued with a restrictive legend, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

On May 31, 2015, the Company issued 2,000 shares of common stock for services to a service provider. The shares were valued at $0.317 per share for a total non-cash expense of $634. Fair market value for the shares was determined by taking the average share price for each cash-for-stock purchase in the prior period. All shares were privately issued with a restrictive legend, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

On August 13, 2015, the Company granted 15,000,000 warrants to purchase shares of common stock to Sandy Lang, CEO. The warrants will vest at 5,000,000 for each $5 million in revenue realized by the Company over the next eighteen months. The warrants have an exercise price of $0.23 and a term of ten years. The warrants were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

On August 13, 2015, the Company, granted 1,000,000 warrants to purchase shares of common stock to Marty Goldrod, COO. The warrants will vest at 333,000 for each $5 million in revenue realized by the Company over the next eighteen months. The warrants have an exercise price of $0.23 and a term of ten years. The warrants were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

On September 15, 2015, the Company granted warrants to purchase 35 million shares of common stock to Ross Sklar in consideration for licensing rights to a series of products. The warrants have an exercise price of $0.23 and a term of ten years.  The warrants were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINING SAFETY DISCLOSURES

Not applicable.

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ITEM 5. OTHER INFORMATION.

The following information was required to be disclosed on Form 8-K during the period covered by this Form 10-Q. Pursuant to a binding Letter of Intent with Ross Sklar (“Sklar”), dated August 13, 2015,  the Company granted warrants to purchase 35 million shares of common stock Sklar on September 15, 2015.  The warrants were granted in consideration for licensing rights to a series of products, discussed below. The warrants have an exercise price of $0.23 and a term of ten years.

In consideration for the warrants, the Company expects to  acquire licenses to products that fall in the categories of personal care/cosmetics-7 products, personal care/OTC/FDA- 7 products, household cleaning/laundry- 14 products, hardware- 16 products, automotive- 7 products, pet care- 4 products, consumer foods- 12 products, seasonal- 7 products and arts and crafts 6 products. The licenses are exclusive to the Company and the term is up to 99 years in all territories of the world (the “Territory”).

Pursuant to the Letter of Intent, the Company appointed Mr. Sklar as a member of its Board of Directors on August 13, 2015.

ITEM 6. EXHIBITS

Part I Exhibits

Part II Exhibits

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SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INSYNERGY PRODUCTS, INC.

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