What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2025-03-27 compared with 2024-03-29 · 146 added, 72 removed, 192 unchanged (53% of the section changed)

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Fourth Quarter (October - December 2023)

On March 28, 2024, the closing price of our Common Stock was $23.81 per share.

Recent Sales of Unregistered Securities

No unregistered securities were issued during the fiscal year.

Share Repurchase Program

On August 16, 2019, the Company approved a share repurchase program, pursuant to which the Board authorized management to repurchase up to $500,000 of the Company's Common Stock over the subsequent 24 months (the " Share Repurchase Program "), as amended September 23, 2019 to increase the repurchase amount to $1,000,000, and include shares of the Company's Common Stock, its Series A Convertible Preferred Stock, par value $0.01 per share (" Series A Preferred "), and warrants to purchase shares of the Company's Common Stock (" Warrants ") in the Share Repurchase Program, to be repurchased over the next 24 months, at a purchase price, in the case of Common Stock, equal to the fair market value of the Company's Common Stock on the date of purchase, and in the case of Series A Preferred and Warrants, at a purchase price determined by management, with the exact date and amount of such purchases to be determined by management;

further amended on November 6, 2019 to increase the repurchase amount to $2,500,000 over the subsequent 24 months, and further amended on February 1, 2021 to increase the repurchase amount to up to $5,000,000 over the subsequent 24 months.

The Share Repurchase Program was amended September 23, 2019 to increase the repurchase amount to $1,000,000, and include shares of the Company's Common Stock, its Series A Convertible Preferred Stock, par value $0.01 per share (" Series A Preferred "), and warrants to purchase shares of the Company's Common Stock (" Warrants ") in the Share Repurchase Program, to be repurchased over the next 24 months, at a purchase price, in the case of Common Stock, equal to the fair market value of the Company's Common Stock on the date of purchase, and in the case of Series A Preferred and Warrants, at a purchase price determined by management, with the exact date and amount of such purchases to be determined by management;

further amended on November 6, 2019 to increase the repurchase amount to $2,500,000 over the subsequent 24 months;

and further amended on February 1, 2021 to increase the repurchase amount to up to $5,000,000 over the subsequent 24 months.

On March 17, 2023, the Board approved an extension of the Share Repurchase Program.

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As of December 31, 2024, the Company may purchase up to $5,000,000 of additional shares of Common Stock under the Share Repurchase Program.

Common Stock repurchase activity under our publicly announced Share Repurchase Program during each quarter of 2023 and 2022 was as follows:

First quarter ended March 31, 2022

Second quarter ended June 30, 2022

Third quarter ended September 30, 2022

Fourth quarter ended December 31, 2022

First quarter ended March 31, 2023

Second quarter ended June 30, 2023

Third quarter ended September 30, 2023

Fourth quarter ended December 31, 2023

Recent Sales of Unregistered Securities

No unregistered securities were issued during the fiscal year.

Transfer Agent

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Unless otherwise stated, all dollar amounts are in thousands, except per share data.

Recent Developments

Acquisition of Mimi ’ s Rock Corp

On December 4, 2022, the Company entered into an Arrangement Agreement with Mimi’s Rock Corp.

(“ MRC ”), pursuant to which the Company agreed to acquire MRC.

On February 28, 2023, the Company completed the acquisition of MRC for $17,099.

Of this amount, $12,500 was funded using proceeds from a term loan provided by First Citizens Bank, with the remainder funded from the Company’s available cash balances.

See Note 8 to the financial statements for additional disclosure regarding the acquisition.

Acquisition of MusclePharm Assets

On October 10, 2023, the Company acquired substantially all of the assets of MusclePharm Corporation (“ MusclePharm ”) through an asset purchase transaction under Section 363 of the U.S.

Bankruptcy Code.

The Company acquired substantially all of the assets and assumed none of the liabilities of MusclePharm other than de minimus cure costs relating to certain assumed contracts.

Total consideration for the acquisition was approximately $18,500.

Of this amount, $10,000 was funded using proceeds from a new term loan provided by First Citizens Bank, with the remainder funded from the Company’s available cash balances.

See Note 9 to the financial statements for additional disclosure regarding the acquisition.

Products and Recent Acquisitions

FitLife Brands, Inc.

(the “ Company ”) is a provider of innovative and proprietary nutritional supplements and wellness products for health-conscious consumers marketed under the following brand names:

(i) NDS Nutrition, PMD Sports, SirenLabs, Core Active, Nutrology, and Metis Nutrition (together, “ NDS Products ”);

(ii) iSatori, BioGenetic Laboratories, and Energize (together, the " iSatori Products ");

Tobias, All Natural Advice, and Maritime Naturals, each acquired as a result of the acquisition of Mimi’s Rock Corp.

( “ MRC ”) on February 28, 2023 (together, the “ MRC Products ");

and (iv) MusclePharm, which was acquired on October 10, 2023 as a result of the acquisition of substantially all of the assets of MusclePharm Corporation (“ MusclePharm ”).

Critical Accounting Policies

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Actual results could differ from those estimates.

Foreign Currency Translation

The functional currency of the Company is the U.S.

The functional currency of the Company’s Canadian subsidiaries is the Canadian dollar.

The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S.

dollars using end-of-period exchange rates.

Changes in reported amounts of assets and liabilities of foreign subsidiaries that occur as a result of changes in exchange rates between foreign subsidiaries’ functional currencies and the U.S.

dollar are included in foreign currency translation adjustment.

Foreign currency translation adjustment is included as a component of stockholders’ equity in the accompanying consolidated balance sheets.

Revenue and expense transactions use an average rate prevailing during the period of the related transaction.

Transaction gains and losses that arise from exchange rate fluctuations denominated in a currency other than the functional currency of each subsidiary are included in the results of operations as incurred.

Accounts Receivable and Allowance for Doubtful Accounts

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As of December 31, 2024 and 2023, the Company had provided a reserve for doubtful accounts of $41 and $17, respectively.

The Company accounts for income taxes under FASB ASC Topic 740, Income Taxes (“ ASC 740 ”).

The Company accounts for income taxes under FASB Accounting Standards Codification (“ ASC ”) Topic 740, Income Taxes (“ ASC 740 ”).

Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns.

Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

The deferred tax assets of the Company relate primarily to operating loss carryforwards for federal income tax purposes.

The deferred tax liabilities of the Company relate primarily to intangible assets that are not deductible for tax purposes in the jurisdictions to which they relate.

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Based on these considerations, the Company is the principal in this arrangement.

Advertising fees paid to Amazon are recorded in selling, general and administrative expense in the consolidated statements of income and comprehensive income.

The Company disaggregates revenue into geographical regions and distribution channels.

Advertising fees paid to Amazon are recorded in advertising and marketing expense in the consolidated statements of income and comprehensive income.

The Company disaggregates revenue into distribution channels, geographical regions, and collections of brands (Legacy FitLife and recently acquired brands).

The Company determines that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

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We assess our contracts and the reasonableness of our conclusions on a quarterly basis.

Stock Compensation.Expense

Stock-Based Compensation

The Company periodically issues restricted share units (“ RSUs ”), stock options and warrants to employees and non-employees in non-capital raising transactions for services rendered.

Such issuances vest and expire according to the terms established at the issuance date.

Stock-based payments to officers, directors, employees and consultants for acquiring goods and services from nonemployees, which include grants of employee stock options, are recognized in the financial statements based on their grant date fair values in accordance with ASC 718, Compensation-Stock Compensation .

Stock-based payments to officers, directors, employees and consultants for acquiring goods and services from non-employees, which include grants of employee stock options, are recognized in the financial statements based on their grant date fair values in accordance with ASC 718, Compensation-Stock Compensation .

Stock-based payments to officers, directors, and employees that are time vested are measured at the grant date fair value and compensation cost is recognized on a straight-line basis over the vesting period.

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Operating expense:

Selling, general and administrative expense

Advertising and marketing

Selling, general and administrative (“ SG&A ”)

Merger and acquisition related expense

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Revenue for the year ended December 31, 2024 increased 22% to $64,469 as compared to $52,700 for the year ended December 31, 2023.

The increased revenue for the year ended December 31, 2023 compared to the prior year is primarily due to revenue generated from MRC, which was acquired in the first quarter of 2023.

The increased revenue for the year ended December 31, 2024 compared to the prior year is primarily due to the acquisition of MRC and the MusclePharm assets, partially offset by a decline in Legacy FitLife revenue.

MRC was acquired February 28, 2023, and as such, only ten months of MRC revenue were included in the Company’s financial statements for the year ended December 31, 2023.

The MusclePharm assets were acquired on October 10, 2023.

Legacy FitLife revenue for the year ended December 31, 2024 was $25,387, a 10% decrease compared to the previous year, driven by a 16% decline in wholesale revenue, partially offset by a 3% increase in online revenue.

The acquisition of MusclePharm had minimal impact on revenue due to (1) the transaction closing during the fourth quarter, (2) the need to procure inventory since only $195 of inventory was acquired in the asset purchase, and (3) the need to negotiate new commercial agreements with MusclePharm’s existing customers.

The Company’s wholesale revenue continues to be challenged by declining customer counts in the brick-and-mortar stores of our wholesale partners.

MRC revenue for the year ended December 31, 2024 was $29,036.

MRC revenue for the period from February 28, 2023 to December 31, 2023 was $24,370.

During the year ended December 31, 2024, MusclePharm generated revenue of $10,046, of which approximately half was generated from wholesale customers and half from online sales.

Online revenue during the year ended December 31, 2024 was approximately 67% of total revenue, compared to roughly 63% of total revenue during the same twelve-month period in 2023.

Although no assurances can be given, management believes that online revenue will continue to increase in subsequent periods relative to prior comparable periods given management’s focus on higher margin online sales and the acquisition of both MRC and MusclePharm, which were consummated in the first and fourth quarters of fiscal 2023, respectively.

Sales to customers in the U.S.

were approximately 95% and 93% for the year ended December 31, 2024 and 2023, respectively, with the balance of sales primarily to customers in Canada.

The Company continually reformulates and introduces new products, as well as seeks to increase both the number of stores and number of approved products that can be sold within the GNC franchise system that comprise its domestic and international distribution footprint.

The Company continually reformulates and introduces new products across its various brands, while also seeking to increase both the number of stores and number of approved products that can be sold within the GNC franchise system that comprises a significant portion its domestic and international distribution footprint.

Management also believes that its focus on developing its e-commerce capabilities will drive additional incremental sales in the short-term, while yielding substantial benefits in the longer-term.

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Cost of goods sold for the year ended December 31, 2024 increased 16% to $36,389 as compared to $31,268 for the year ended December 31, 2023.

The increase of $14,499 is primarily due to an increase in revenue attributable to the acquisition of MRC as well as higher distribution costs resulting from increased sales through online channels.

The increase of $5,121 is primarily due to an increase in revenue attributable to the acquisitions of MRC and the MusclePharm assets.

Gross Profit.

Gross profit for the year ended December 31, 2024 increased to $28,080 as compared to $21,432 for the year ended December 31, 2023.

This 78% increase in gross profit is attributable to higher revenue driven primarily by the acquisition of MRC.

This 31% increase in gross profit is principally attributable to higher MRC gross profit as well as incremental gross profit from MusclePharm.

Gross Margin .

Gross margin for the year ended December 31, 2023 decreased to 40.7% from 41.8% for the year ended December 31, 2022.

The decrease in gross margin is primarily attributable to the amortization of the fair value step-up to MRC inventory acquired as well as higher product costs due to inflationary pressure.

Gross margin for the year ended December 31, 2024 increased to 43.6% from 40.7% for the year ended December 31, 2023.

The increase in gross margin is primarily attributable to higher margins from MRC and Legacy FitLife as well as the amortization of the fair value step-up to MRC inventory acquired in the first quarter of 2023.

Excluding the $323 impact of the step-up amortization, gross margin would have been 41.3% during the year ended December 31, 2023.

Selling, General and Administrative Expense.

Selling, general and administrative (“ SG&A ”) expense for the year ended December 31, 2023 increased by $6,151 to $12,161 as compared to $6,010 for the year ended December 31, 2022.

The increase was primarily due to the inclusion of SG&A expense in the Company’s consolidated financial statements attributable to MRC.

Advertising and Marketing.

Advertising and marketing expense for the year ended December 31, 2024 increased to $4,626 as compared to $4,276 for the same period of the prior year.

The 8% increase is primarily due to the full-period impact of MRC advertising and marketing as well as incremental advertising and marketing expense following the acquisition of the MusclePharm assets.

SG&A expense for the year ended December 31, 2024 increased by $2,087 to $9,972 as compared to $7,885 for the year ended December 31, 2023.

The increase was primarily due to the full-period impact of MRC SG&A as well as higher personnel costs (including salaries and benefits) and higher professional fees.

In addition, the Company incurred non-recurring severance costs of $184 during the year ended December 31, 2024.

Merger and Acquisition Related Expense.

Merger and acquisition related expense increased to $1,627 for the year ended December 31, 2023 compared to $257 for the same period of 2022, driven primarily by acquisition costs related to MRC.

Merger and acquisition related expense decreased to $255 for the year ended December 31, 2024 compared to $1,627 for the same period of 2023, driven primarily by transaction costs related to the acquisition of MRC and the MusclePharm assets in 2023.

We generated a net income of $8,984 for the year ended December 31, 2024, an increase of 70% compared to net income of $5,296 for the year ended December 31, 2023.

The increase in net income for the year ended December 31, 2023 compared to the same period in 2022 was primarily attributable to the acquisition of MRC, partially offset by approximately $2.1 million of non-recurring items associated with the transaction.

The increase in net income for the year ended December 31, 2024 compared to the same period in 2023 was primarily attributable to higher revenue and gross profit from MRC, incremental revenue and gross profit from MusclePharm, as well as a reduction in acquisition-related expense due to the acquisitions of MRC and the MusclePharm assets that closed during 2023, partially offset by incremental SG&A expense and higher interest expense due to the debt borrowed in conjunction with the acquisition of the MusclePharm assets.

Supplemental Discussion of Performance of Acquired Brands

Management frequently receives questions from investors regarding the performance of brands subsequent to their acquisition by the Company.

In an effort to be responsive to these questions, the Company is providing additional disclosure herein.

Management intends to provide this level of disclosure for no more than two years following a transaction, after which the performance of acquired brands will be reported as part of Legacy FitLife results.

One of the primary metrics used by management to evaluate the performance of the Company’s brands is contribution, a non-GAAP financial measure which management defines as gross profit less advertising and marketing expenditures.

Other companies may also report contribution as a performance metric, but their definition or calculation of contribution may differ from the Company’s.

Management believes that contribution, as defined by the Company, is a particularly relevant performance metric since it incorporates the gross profit associated with a specific brand or collection of brands as well as the advertising and marketing expenditures associated with the same brand or brands.

With limited exceptions, other operating expenses incurred by the Company are generally not allocable to a specific brand or collection of brands.

Other than for MusclePharm, the numbers in the contribution tables presented below represent the performance of a collection of brands.

Legacy FitLife consists of nine brands and MRC consists of three brands.

These collections of brands do not meet the definition of operating segments and are not managed as such.

Legacy FitLife

Wholesale revenue

Online revenue

Total revenue

Advertising and marketing

Contribution as a % of revenue

For the fourth quarter of 2024, Legacy FitLife revenue declined 13% compared to the same period last year, primarily driven by a 20% decline in wholesale revenue.

During the fourth quarter, a commercial dispute with GNC, the Company’s largest customer, resulted in the Company rejecting all purchase orders from GNC beginning on December 1, 2024.

However, any product that was ordered by GNC prior to December 1, 2024 continued to be shipped and was all received by GNC prior to the end of December 2024.

Subsequent to the end of the fourth quarter, in early January 2025, the Company began selling and shipping product directly to its GNC franchisee customers.

On January 23, 2025, the Company and GNC settled their commercial dispute and the Company immediately began accepting purchase orders from GNC, with shipments to the GNC distribution centers beginning approximately two weeks later.

The Company continued shipping directly to GNC franchisees until the GNC distribution centers were restocked.

Subsequent to the distribution centers being restocked during February 2024, in the event GNC distribution centers do not have adequate inventory to fulfill franchisee orders of the Company’s products, the Company may make shipments directly to GNC franchisees in order to ensure continued availability of the Company’s products on store shelves.

Gross margin decreased from 40.4% during the fourth quarter of 2023 to 39.7% during the fourth quarter of 2024.

Contribution as a percentage of revenue decreased from 39.2% to 38.6% over the same time period.

The Company’s wholesale revenue continues to be challenged by declining customer counts in the brick-and-mortar stores of our wholesale partners.

However, at least some of the customers choosing to no longer shop in brick-and-mortar locations continue to purchase Legacy FitLife products online, and when a customer buys online the Company earns substantially higher gross profit and contribution.

Mimi's Rock (MRC)

Wholesale revenue

Online revenue

Total revenue

Advertising and marketing

Contribution as a % of revenue

For the fourth quarter of 2024, MRC revenue was down slightly compared to the same period in 2023.

Over the same time period, gross profit increased 20% and contribution increased 31%.

For the fourth quarter of 2024, gross margin increased to 48.7% from 40.4% during the same period last year.

Revenue for the largest MRC brand, Dr.

Tobias, increased 6% in the fourth quarter of 2024 while revenue for the skin care brands, Maritime Naturals and All Natural Advice, declined 38% in the same period compared to the fourth quarter of 2023.

At the time of the MRC acquisition in 2023, the skin care brands were sold in a number of countries.

Analysis subsequent to the acquisition determined that, in almost all countries other than Canada and the U.S., the products were being sold at levels resulting in negative contribution.

Even worse, in many of those countries, the products were being sold at negative gross margins.

To optimize performance of the skin care brands, management exited a number of countries and raised prices in other countries.

As a result of these changes, a substantial amount of unprofitable revenue was eliminated.

The substantial year-over-year increase in gross profit for the MRC brands is primarily the result of this optimization of the skin care brands as well as beneficial product mix within the Dr.

Tobias brand.

The substantial year-over-year increase in contribution for the MRC brands is a function of the optimization of the skin care brands, beneficial product mix within the Dr.

Tobias brand, as well as the optimization of advertising spend across all MRC brands.

Wholesale revenue

Online revenue

Total revenue

Advertising and marketing

Contribution as a % of revenue

MusclePharm revenue increased 14% sequentially from the third quarter of 2024 to the fourth quarter of 2024, with wholesale revenue increasing 37% and online revenue decreasing 8%.

This slower movement in the online channel is due primarily to normal seasonality of retail sales.

As previously disclosed, in an effort to drive revenue growth, the Company is making targeted investments in advertising and promotion in both the wholesale and online channels.

During the fourth quarter of 2024, the Company offered additional promotional incentives to certain wholesale partners in an effort to drive incremental growth for the MusclePharm brand.

In most cases, these investments are accounted for as a reduction in net revenue rather than as advertising and marketing spend.

Despite the increased promotions and the accompanying deductions from gross revenue, the Company generated record net revenue from wholesale customers during the quarter.

The Company anticipates that the increased promotional efforts will continue for the foreseeable future.

As a result of these investments, gross margin and contribution margin as a percent of revenue may fluctuate materially from quarter to quarter.

As previously announced, subsequent to the end of the quarter, the Company launched the new MusclePharm Pro Series, a collection of premium sports nutrition products, in a two-month pilot in high-volume Vitamin Shoppe stores (consisting of approximately 60% of Vitamin Shoppe’s nationwide store base) in mid-March 2025.

If the pilot effort is successful, the Pro Series is anticipated to be added to the assortment in all Vitamin Shoppe stores and will be exclusive to Vitamin Shoppe for a period of 12 months.

In addition, the Company is exploring additional new product launches and continues to have productive discussions with a number of potential new wholesale partners.

FitLife Consolidated

Wholesale revenue

Online revenue

Total revenue

Advertising and marketing

Contribution as a % of revenue

For the fourth quarter of 2024 for the Company overall, revenue increased 13%, gross profit increased 16%, and contribution increased 18% compared to the fourth quarter of 2023.

Gross margin increased to 41.4% during the fourth quarter of 2024 compared to 40.3% during the fourth quarter of last year.

Contribution as a percentage of revenue increased to 34.9% compared to 33.4% during the fourth quarter of last year.

Non-GAAP Measures

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As presented below, EBITDA excludes interest, foreign exchange gains and losses, income taxes, and depreciation and amortization.

Adjusted EBITDA excludes—in addition to interest, taxes, depreciation and amortization—stock-based compensation, merger and acquisition related expense and other non-recurring costs.

Adjusted EBITDA excludes—in addition to interest, foreign exchange gains and losses, taxes, depreciation and amortization—stock-based compensation, merger and acquisition related expense and other non-recurring costs.

The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expense and other items that may not be indicative of its core operating results and business outlook.

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Non-cash and non-recurring adjustments

Stock compensation expense

Merger and acquisition related expense

Stock-based compensation

Merger and acquisition related

Restructuring costs

Amortization of inventory step-up

Non-recurring loss on foreign currency forward contract

Restatement-related costs

Adjusted EBITDA

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Our principal sources of liquidity at December 31, 2024 consisted of $4,468 of cash and $1,626 of accounts receivable.

The decrease in working capital is principally attributable to (i) the acquisition of MusclePharm for $18,788, of which $10,000 was funded from proceeds of the Amended Credit Agreement, defined below, and $8,788 from the Company’s available cash, and (ii) the acquisition of MRC for $17,099, of which $12,500 was funded from proceeds of the Credit Agreement, defined below, and $4,599 from the Company’s available cash, partially offset by cash flows from operating activities during fiscal 2023.

The Amended Credit Agreement contains customary events of default (each an “ Event of Default ”), which upon the occurrence of an Event of Default, as defined in the Amended Credit Agreement, among other things, interest will accrue at the Applicable Rate plus 2% per annum, and the Bank may declare all Obligations, with interest thereon, immediately due and payable.

The increase in working capital is principally attributable to positive operating cash flows during the year ended December 31, 2024, partially offset by a voluntary paydown of $2,500 on the Term Loans as well as the three scheduled amortization payments totaling $4,500.

On September 24, 2019, the Company entered into a line of credit agreement with Mutual of Omaha Bank (the “ Lender ”), subsequently acquired by CIT Bank N.A., then acquired by First Citizens Bank & Trust Company, providing the Company with a $2.5 million revolving line of credit (the “ Line of Credit ”).

The Line of Credit allows the Company to request advances thereunder and to use the proceeds of such advances for working capital purposes until the maturity date, or unless renewed at maturity upon approval by the Company’s Board and the Lender.

The Line of Credit is secured by all assets of the Company.

On September 20, 2022, the Company and the Lender amended the Line of Credit Agreement to extend the maturity date to December 23, 2022.

On December 19, 2022, the Company and the Lender amended the Line of Credit agreement to increase the Line of Credit to $3.5 million and extend the maturity date to December 23, 2023.

On February 23, 2023, the Company and the Lender amended the Line of Credit Agreement (the “ Prior Credit Agreement ”) providing the Company with a term loan for the principal amount of $12.5 million (“ Term Loan A ”).

All other terms of the Credit Agreement remain unchanged.

All of the proceeds from Term Loan A were used for the acquisition of MRC.

On October 10, 2023, the Company entered into a Second Amended and Restated Credit Agreement (the “ Credit Agreement ”) with the Lender, amending and restating the Credit Agreement between the Company and the Lender.

Pursuant to the Credit Agreement, the Lender provided the Company with an additional term loan (“ Term Loan B ”, and together with Term Loan A, the “ Term Loans ”) for the principal amount of $10,000 and extended the Line of Credit of $3.5 million to December 23, 2024.

The Company used the proceeds from Term Loan B to fund the acquisition of the MusclePharm assets.

On December 19, 2024, the Company entered into the First Amendment to the Amended Credit Agreement (the “ Amended Credit Agreement ”) to extend the $3.5 million Line of Credit to April 30, 2026.

Pursuant to the Amended Credit Agreement, the Line of Credit accrues interest at an annual rate equal to the greater of 3.50% or the one-month secured overnight financing rate (“ SOFR ”) rate plus 2.75%, and each advance will be payable on the maturity date with the interest on outstanding advances payable monthly.

The Company may, at its option, prepay any borrowings under the Line of Credit, in whole or in part at any time prior to the maturity date, without premium or penalty.

Also pursuant to the Amended Credit Agreement, the Term Loans accrue interest at an annual rate equal to the greater of 3.50% or the one-month SOFR rate plus 2.75%, and principal plus accrued interest will be payable quarterly in June, September, December, and March, in amounts sufficient to fully amortize the Term Loans through February 28, 2028 in the case of Term Loan A and through October 10, 2028 in the case of Term Loan B.

The Company may prepay amounts borrowed under the Term Loans, in whole or in part with accrued interest to the date of such prepayment on the amount prepaid, by written notice to the Lender at least one business day prior to the proposed prepayment.

The Amended Credit Agreement contains customary events of default (each an “ Event of Default ”), which upon the occurrence of an Event of Default, as defined in the Amended Credit Agreement, among other things, interest will accrue at the applicable rate plus 2% per annum, and the Lender may declare all obligations, with interest thereon, immediately due and payable.

The Amended Credit Agreement further contains customary representations and warranties of the Company;

customary indemnification provisions whereby the Company will indemnify Bank for certain losses arising out of inaccuracies in, or breaches of, the representations, warranties and covenants of the Company, and certain other matters;

and customary affirmative and negative covenants, including covenants to maintain a Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of not less than 1.25 to 1.00 as tested quarterly on a trailing twelve-month basis, starting with the fiscal quarter ending December 31, 2023, a Funded Debt to EBITDA Ratio (as defined in the Credit Agreement) of not more than 2.50 to 1.00 as tested quarterly on a trailing twelve-month basis, starting with the fiscal quarter ending March 31, 2024, and to the extent the Term Loans still have a balance as of June 30, 2025 and a Cash Flow Leverage threshold (as defined in the Credit Agreement) of at least 1.15 is not met, the Company will be required to make a prepayment on the Term Loan equal to 50% of the Excess Cash Flow (as defined in the Credit Agreement).

customary indemnification provisions whereby the Company will indemnify Lender for certain losses arising out of inaccuracies in, or breaches of, the representations, warranties and covenants of the Company, and certain other matters;

and customary affirmative and negative covenants, including covenants to maintain a Fixed Charge Coverage Ratio (as defined in the Amended Credit Agreement) of not less than 1.25 to 1.00 as tested quarterly on a trailing twelve-month basis, starting with the fiscal quarter ending December 31, 2023, a Funded Debt to EBITDA Ratio (as defined in the Amended Credit Agreement) of not more than 2.50 to 1.00 as tested quarterly on a trailing twelve-month basis, starting with the fiscal quarter ending March 31, 2024, and to the extent the Term Loans still have a balance as of June 30, 2025 and a Cash Flow Leverage threshold (as defined in the Amended Credit Agreement) of at least 1.15 is not met, the Company will be required to make a prepayment on the Term Loans equal to 50% of the Excess Cash Flow (as defined in the Amended Credit Agreement).

The Company was in compliance with all covenants as of December 31, 2024.

As of December 31, 2023 and 2022, no borrowings were outstanding on the Company’s $3,500 Line of Credit.

As of December 31, 2024, the borrowings outstanding on the Term Loans and the Line of Credit were $13,125 and $0, respectively.

The Company has historically financed its operations primarily through cash flow from operations and equity and debt financings.

The Company currently anticipates that cash derived from operations and existing cash resources, along with available borrowings under the Line of Credit, will be sufficient to provide for the Company’s liquidity for the next twelve months.

The Company currently anticipates that cash derived from operations and existing cash reserves, along with available borrowings under the Line of Credit, will be sufficient to provide for the Company’s liquidity for the next twelve months.

The Company is dependent on cash flow from operations and amounts available under the Line of Credit to satisfy its working capital requirements.

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Net cash provided by operating activities was $9,610 during the year ended December 31, 2024, compared to net cash provided by operating activities of $4,220 for the year ended December 31, 2023.

The increase in cash provided by operating activities was driven primarily by the acquisition of MRC, which was largely offset by transaction-related costs as well as payment of a number of payables and other expenses that were accrued at MRC at the time of the acquisition.

The increase in cash provided by operating activities was primarily due to the higher net income driven by the acquisitions of MRC and the MusclePharm assets, as well as the payment of the transaction-related costs and other payables and expenses that were accrued at MRC at the time the Company acquired MRC in 2023.

Cash Used in Investing Activities

Cash used in investing activities for the fiscal year ended December 31, 2023 was $35,993 and $0 during the years ended December 31, 2023 and 2022, respectively.

The Company used $17,099 for the acquisition of MRC and $18,788 for the acquisition of MusclePharm assets during the year ended December 31, 2023.

Cash used in investing activities was $10 and $35,993 during the years ended December 31, 2024 and 2023, respectively.

The Company used $10 and $106 for purchases of property and equipment in the years ended December 31, 2024 and 2023, respectively.

During the year ended December 31, 2023, the Company paid $17,099 for the acquisition of MRC and $18,788 for the acquisition of MusclePharm assets.

Cash Provided by (Used in) Financing Activities

Cash provided by financing activities for the year ended December 31, 2023 was $20,296 as compared to cash used of $750 during the year ended December 31, 2022.

The increase in cash provided by financing activities is primarily attributable to the funding of the Term Loans during the first and fourth quarters of fiscal 2023.

Cash used in financing activities for the year ended December 31, 2024 was $6,983 as compared to cash provided by financing activities of $20,296 during the year ended December 31, 2023.

Off-Balance Sheet Arrangements

1 unchanged sentence

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What changed 10-K

Item 5. Market for Registrant’s Common Equity