What changed in this filing

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Item 1. Financial Statements

2025-05-15 compared with 2024-11-14 · 240 added, 335 removed, 399 unchanged (59% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

September 30, 2024

March 31, 2025

December 31, 2024

2 unchanged sentences

Restricted cash

Accounts receivable, net of allowance of doubtful accounts of $ 19 and $ 17 , respectively

Accounts receivable, net of allowance for credit losses of $ 38 and $ 41 , respectively

Inventories, net of allowance for obsolescence of $ 76 and $ 100 , respectively

Sales tax receivable

Prepaid expense and other current assets

7 unchanged sentences

Accounts payable

Accrued expense and other liabilities

Accrued liabilities

Income taxes payable

8 unchanged sentences

STOCKHOLDERS’ EQUITY:

Preferred stock, $ 0.01 par value, 10,000 shares authorized, none outstanding as of September 30, 2024 and December 31, 2023

Preferred stock, $ 0.01 par value, 10,000 shares authorized, none outstanding as of March 31, 2025 and December 31, 2024

Common stock, $ 0.01 par value, 120,000 shares authorized;

4,598 issued and outstanding as of September 30, 2024 and December 31, 2023

9,383 and 9,210 issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital

Retained earnings (accumulated deficit)

Retained earnings

Foreign currency translation adjustment

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(In thousands, except per share data)

Three months ended September 30

Nine months ended September 30

Three months ended March 31,

Cost of goods sold

9 unchanged sentences

Interest expense

Foreign exchange (gain) loss

Foreign exchange loss

Total other expense, net

9 unchanged sentences

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

THREE MONTHS ENDED SEPTEMBER 30, 2024

Stock-based compensation

Comprehensive income

SEPTEMBER 30, 2024

NINE MONTHS ENDED SEPTEMBER 30, 2024

THREE MONTHS ENDED MARCH 31, 2025

JANUARY 1, 2025

Stock-based compensation

Comprehensive income

SEPTEMBER 30, 2024

THREE MONTHS ENDED SEPTEMBER 30, 2023

Exercise of stock options

Stock-based compensation

Comprehensive income

SEPTEMBER 30, 2023

NINE MONTHS ENDED SEPTEMBER 30, 2023

MARCH 31, 2025

THREE MONTHS ENDED MARCH 31, 2024

JANUARY 1, 2024

Shares surrendered by former employee

Stock-based compensation

Comprehensive income

SEPTEMBER 30, 2023

MARCH 31, 2024

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(In thousands)

Nine months ended September 30,

Three months ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

Depreciation and amortization

Allowance for doubtful accounts

Allowance for credit losses

Allowance for inventory obsolescence

3 unchanged sentences

Accounts receivable

Deferred tax asset

Prepaid expense, other current assets and sales tax receivable

Right-of-use assets

Deferred taxes

Prepaid expense and other current assets

Right of use asset

Accounts payable

Income taxes payable

Lease liability

Accrued expense, other liabilities and income taxes payable

Accrued liabilities

Product returns

2 unchanged sentences

Purchase of property and equipment

Cash paid for acquisition of Mimi’s Rock Corp.

Cash deposit paid for the acquisition of MusclePharm assets

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings on term loans

Payments on term loans

Net cash provided by (used in) financing activities

Proceeds from exercise of stock options

Net cash used in financing activities

Foreign currency impact on cash

4 unchanged sentences

Cash paid for income taxes

Cash paid for interest, net of amounts capitalized

Non-cash investing and financing activities

Addition to right-of-use assets from new operating lease liabilities

Cash paid for interest

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

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

FOR THE THREE MONTHS ENDED MARCH 31, 2025 and 2024

(In thousands, except per share data)

5 unchanged sentences

Tobias, All Natural Advice, and Maritime Naturals, (together, the “ MRC Products ”);

and (iv) MusclePharm.

and (iv) MusclePharm (“ MusclePharm ”).

The Company distributes the NDS Products principally through franchised General Nutrition Centers, Inc.

10 unchanged sentences

In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation are included.

Operating results for the three- and nine-month periods ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Operating results for the three-month period ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

Although management of the Company believes the disclosures presented herein are adequate and not misleading, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the footnotes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission (the “ SEC ”) on March 27, 2025.

32 unchanged sentences

For these transactions, the Company evaluated principal versus agent considerations to determine appropriateness of recording distribution and platform fees paid to third-party e-commerce companies as an expense or as a reduction of revenue.

The Company records distribution and platform fees to cost of goods sold in the condensed consolidated statements of income and comprehensive income.

Distribution and platform fees are not recorded as a reduction of revenue because the Company (1) owns the goods before they are transferred to the customer, (2) can direct Amazon, similar to other third-party logistics providers (“ Logistic Providers ”), to return the Company’s inventory to any location specified by the Company, (3) has the responsibility to make customers whole following any returns made by customers directly to Logistic Providers and the Company retains the back-end inventory risk, (4) is subject to credit risk (i.e., credit card chargebacks), (5) establishes prices of its products, (6) can determine who fulfills the goods to the customer (Amazon or the Company) and (7) can limit quantities or stop selling the goods at any time.

The Company records distribution and platform fees to cost of goods sold in the consolidated statements of income and comprehensive income.

Distribution and platform fees are not recorded as a reduction of revenue because the Company (1) owns the goods before they are transferred to the customer, (2) can direct Amazon, similar to other third-party logistics providers, to return the Company’s inventory to any location specified by the Company, (3) has the responsibility to make customers whole following any returns made by customers directly to Logistic Providers and the Company retains the back-end inventory risk, (4) is subject to credit risk (i.e., credit card chargebacks), (5) establishes prices of its products, (6) can determine who fulfills the goods to the customer (Amazon or the Company) and (7) can limit quantities or stop selling the goods at any time.

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

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

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.

Online revenue during the three months ended September 30, 2024 and 2023 was approximately 68 % of net revenue for both periods, compared to 32 % for the wholesale channel for the same periods.

Online revenue during the nine months ended September 30, 2024 and 2023 was approximately 66 % and 62 % of net revenue, compared to 34 % and 38 % for the wholesale channel for the same period.

Sales to customers in the U.S.

were approximately 95 % and 93 % during the three months ended September 30, 2024 and 2023, respectively, with the balance of sales for the same respective periods being to customers primarily in Canada.

Online revenue, which consists of revenue generated from sales on the Company’s own websites as well as third-party e-commerce platforms such as Amazon, for the quarter ended March 31, 2025 was approximately 67 % of net revenue, compared to 65 % of net revenue during the same period in the prior year.

Wholesale revenue for the quarter ended March 31, 2025 was approximately 33 % of net revenue compared to 35 % during the same period in the prior year.

Sales to customers in the U.S.

were approximately 96 % and 94 % during the nine months ended September 30, 2024 and 2023, respectively, with the balance of sales for the same respective periods being to customers primarily in Canada.

were approximately 96 % during the three months ended March 31, 2025 and 2024, with the balance of sales for the same respective periods being to customers primarily in Canada.

The Company provides limited financial performance metrics for three collections of brands—Legacy FitLife (consists of nine brands), MRC (consists of three brands), and MusclePharm (one brand).

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

Three months ended

September 30,

Nine months ended

September 30,

Three months ended March 31,

Legacy FitLife

Total Revenue

Control of products we sell transfers to customers upon shipment from our facilities or delivery to our customers, and the Company’s performance obligations are satisfied at that time.

9 unchanged sentences

Customer and Vendor Concentration

Net sales to GNC during the three-month periods ended September 30, 2024 and 2023 represent 23 % and 30 % of total net revenue, respectively.

Net sales to GNC during the nine-month periods ended September 30, 2024 and 2023 represent 24 % and 34 % of total net revenue, respectively.

Gross accounts receivable attributable to GNC represented 28 % and 30 % of the Company’s total accounts receivable balance as of September 30, 2024 and December 31, 2023, respectively.

As of September 30, 2024 and December 31, 2023, there was one vendor that accounted for more than 10 % of the Company's consolidated accounts payable.

During the nine months ended September 30, 2024 and 2023, there were two vendors that each accounted for over 10 % of the Company’s inventory-related purchases.

Cash and Cash Equivalents

Total net sales to GNC during the three months ended March 31, 2025 and 2024 were 16 % and 25 % of total revenue for the three months ended March 31, 2025 and 2024, respectively.

Accounts receivable attributable to GNC as of March 31, 2025 and December 31, 2024 represented 43 % and 35 % of the Company’s total accounts receivable balance, respectively.

As of March 31, 2025 and December 31, 2024, there was one vendor who accounted for 65 % and 59 % of the Company's consolidated accounts payable, respectively.

For the three months ended March 31, 2025 , there were two vendors who accounted for 54 % and 12 % of the Company's inventory-related purchases.

For the three months ended March 31, 2024 , there were two vendors who accounted for 42 % and 27 % of the Company's inventory-related purchases.

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments with an original maturity from the date of purchase of three months or less to be cash equivalents.

The Company has approximately $ 56 in short-term interest-earning accounts pledged as collateral for financing arrangements at September 30, 2024, currently limited to business credit cards.

The Company has approximately $ 53 in short-term interest-earning accounts pledged as collateral for financing arrangements at March 31, 2025, currently limited to business credit cards.

We lease certain corporate office space and office equipment under lease agreements with monthly payments over a period of 36 to 84 months.

10 unchanged sentences

If the Company’s stock price experiences significant price fluctuations, this will impact the fair value of the reporting unit, which can lead to potential impairment in future periods.

Management determined there were no indicators of impairment at September 30, 2024 or December 31, 2023.

The Company will perform its next impairment analysis in December 2024.

Intangible Assets

The Company has certain intangible assets that were recorded at their fair value at the time of acquisition.

The finite-lived intangible assets consist of client relationships, formulations, and website.

Intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful life.

Intangible assets with indefinite lives, which consist of brands and trademarks, are not amortized but are tested for impairment annually or when indicators of impairment exist.

Factors that management considers in this assessment include macroeconomic conditions, industry and market considerations, overall financial performance (both current and projected), changes in management and strategy, and changes in the composition and carrying amounts of net assets.

If this qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than it’s carrying value, a quantitative assessment is then performed.

The Company noted no indicators of impairment for intangible assets as of September 30, 2024, and December 31, 2023.

Based on management’s assessment, there were no indicators of impairment at March 31, 2025 or December 31, 2024.

Intangible and Long-lived Assets

Intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives.

The Company regularly reviews the carrying value and estimated lives of its long-lived assets and intangible assets to determine whether indicators of impairment may exist which warrant adjustments to carrying values or estimated useful lives.

The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as the strategic significance of the assets to the Company’s business objectives.

Should an impairment exist, the impairment loss would be measured based on the excess of the carrying amount of the long-lived asset group over the asset’s fair value.

Based on management’s assessment, there were no indicators of impairment for intangible assets as of March 31, 2025, and December 31, 2024.

Acquisitions and Business Combinations

16 unchanged sentences

There is potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates.

The effective income tax rate was 25 % and 28 % for the nine months ended September 30, 2024 and 2023, respectively.

The effective income tax rate was 25.8 % and 27.2 % for the three months ended March 31, 2025 and 2024, respectively.

Net Income Per Share

Our computation of earnings per share (“ EPS ”) includes basic and diluted EPS.

Basic EPS is measured as the income available to common stockholders divided by the weighted average common shares outstanding for the period.

Diluted EPS reflects the potential dilution, using the treasury stock method, that could occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock or resulted in the issuance of Common Stock that then shared in the income of the Company as if they had been converted at the beginning of the periods presented, or issuance date, if later.

In computing diluted EPS, the treasury stock method assumes that outstanding options and warrants are exercised, and the proceeds are used to purchase Common Stock at the average market price during the period.

Options and warrants may have a dilutive effect under the treasury stock method only when the average market price of the Common Stock during the period exceeds the exercise price of the options and warrants.

Potential common shares that have an antidilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

Three months ended September 30,

Nine months ended September 30,

Net income available to common shareholders

Weighted average common shares - basic

Dilutive effect of outstanding warrants and stock options

Weighted average common shares - diluted

Net income per common share:

Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding for the period.

Diluted earnings per share is computed by dividing the net income available to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method.

Potential common shares are excluded from the computation when their effect is antidilutive.

The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period.

Basic and diluted weighted-average shares outstanding and antidilutive options that were excluded from diluted weighted average shares outstanding are as follows:

Three months ended March 31,

Basic weighted average shares outstanding

Dilutive effect of potential common shares

Diluted weighted average shares outstanding

Fair Value Measurements

11 unchanged sentences

The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, restricted cash, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments.

The carrying value of our notes payable approximate their fair value based on the market interest rates of these notes.

The Company operates in one segment, providing nutritional supplements and wellness products to health-conscious consumers.

The Company’s chief operating decision maker is the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company.

Reclassifications

Certain reclassifications have been made in the Company’s financial statements.

Advertising and marketing expense for the three and nine months ended September 30, 2023 were previously reported as part of selling, general and administrative expense.

Advertising and marketing expense is now segregated and reported separately in the accompanying statement of income and comprehensive income to conform to current period presentation.

These reclassifications had no impact on earnings or stockholders’ equity.

The carrying value of the term loans approximate their fair value based on the market interest rates of these loans.

Segment Information

The Company’s Chief Executive Officer is the chief operating decision maker (“ CODM ”) and evaluates performance and makes operating decisions about allocating resources based on financial data presented on a consolidated basis.

Because the CODM evaluates financial performance on a consolidated basis, the Company has determined that it operates as a single reportable segment composed of the financial results of FitLife Brands, Inc.

Recently Adopted Accounting Pronouncements

3 unchanged sentences

This standard became effective for the Company on January 1, 2024.

The adoption of this standard did not have a material impact on its results of operations, financial position or cash flows.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements but has resulted in additional disclosures within the footnotes of the consolidated financial statements.

Recently Issued Accounting Pronouncements

In November 2024, FASB issued ASU 2024-03 Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses (“ ASU 2024-03 ”).

The guidance in ASU 2024-03 requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory;

employee compensation;

and depreciation and amortization expense for each caption on the income statement where such expenses are included.

The update is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements.

We are currently evaluating the provisions of this guidance and assessing the potential impact on our financial statement disclosures.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

6 unchanged sentences

The value of any finished goods inventory projected to expire prior to sale is included in the allowance.

The total allowance for expiring, excess and slow-moving inventory items as of September 30, 2024 and December 31, 2023 amounted to $ 86 and $ 162 , respectively.

The Company’s inventories as of September 30, 2024 and December 31, 2023 were as follows:

September 30, 2024

The total allowance for expiring, excess and slow-moving inventory items as of March 31, 2025 and December 31, 2024 amounted to $ 76 and $ 100 , respectively.

The Company’s inventories as of March 31, 2025 and December 31, 2024 were as follows:

March 31, 2025

December 31, 2024

2 unchanged sentences

NOTE 5 - PROPERTY AND EQUIPMENT

The Company had property and equipment as of September 30, 2024 and December 31, 2023 as follows:

September 30, 2024

The Company had property and equipment as of March 31, 2025 and December 31, 2024 as follows:

March 31, 2025

December 31, 2024

Accumulated depreciation

Depreciation expense for the three months ended September 30, 2024 and 2023 was $ 15 and $ 11 , respectively.

Depreciation expense for the nine months ended September 30, 2024 and 2023 was $ 57 and $ 33 , respectively.

NOTE 6 – NOTES PAYABLE

Notes payable consisted of the following:

September 30, 2024

Depreciation expense for the three months ended March 31, 2025 and 2024 was $ 10 and $ 26 , respectively.

NOTE 6 – CREDIT AGREEMENT

Debt obligations consisted of the following:

March 31,2025

December 31, 2024

2 unchanged sentences

Credit Agreements – First Citizens Bank

On February 23, 2023, the Company entered into an Amended and Restated Credit Agreement (the “ Credit Agreement ”) with First Citizens Bank (the “ Bank ”), amending and restating that certain Credit Agreement, dated September 24, 2019, between the Company and the Bank.

Pursuant to the Previous Credit Agreement, the Bank provided the Company with a term loan for the principal amount of $ 12,500 (“ Term Loan A ”), and a revolving line of credit of $ 3,500 (the “ Line of Credit ”, and collectively with the Term Loans, the “ Loan ”).

The Company used the proceeds from the Loan to fund the acquisition of MRC (discussed in further detail in Note 8) and for general working capital purposes.

On February 23, 2023, the Company entered into an Amended and Restated Credit Agreement (the “ Prior Credit Agreement ”) with First Citizens Bank (the “ Bank ”), amending and restating that certain Credit Agreement, dated September 24, 2019, between the Company and the Bank.

Pursuant to the Prior Credit Agreement, the Bank provided the Company with a term loan for the principal amount of $ 12,500 (“ Term Loan A ”), and a revolving line of credit of $ 3,500 (the “ Line of Credit ”, and collectively with the Term Loans, the “ Loan ”).

The Company used the proceeds from the Loan to fund the acquisition of MRC and for general working capital purposes.

Second Amended and Restated Credit Agreement

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

Pursuant to the Amended Credit Agreement, the Bank 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 15, 2024.

The Company used the proceeds from Term Loan B to fund the acquisition of the MusclePharm assets (discussed in further detail in Note 9) and for general working capital purposes.

Term Loans - Pursuant to the Amended Credit Agreement, the Term Loans accrue interest at a per annum rate equal to 2.75 % above the one-month secured overnight financing rate ("SOFR") published for such day by the Federal Reserve Bank of New York.

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

Pursuant to the Credit Agreement, the Bank 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 and for general working capital purposes.

First Amendment to Second Amended and Restated Credit Agreement

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

Term Loans A and B – Pursuant to the Amended Credit Agreement, the Term Loans accrue interest at a per annum rate equal to the greater of 3.50 % or 2.75 % above the one-month secured overnight financing rate (" SOFR ") published for such day by the Federal Reserve Bank of New York.

The Company shall make quarterly payments of principal plus accrued interest on the Term Loans until the principal balances are fully amortized.

Quarterly principal payments for Term Loan A and Term Loan B are $ 625 and $ 500 , respectively.

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 Bank at least one business day prior to the proposed prepayment.

During the first quarter of 2024, the Company made a voluntary prepayment on Term Loan A of $ 2,500 , and as such, Term Loan A will fully amortize in February 2027.

Term Loan B will fully amortize in October 2028.

Line of Credit - Also pursuant to the Amended Credit Agreement, outstanding advances under the Line of Credit (“ Advances ”) will accrue interest at a per annum rate equal to 2.75 % above the one-month SOFR, and the Company will pay the interest on the Advances monthly, with all principal and any accrued interest on outstanding Advances being due and payable in full on the Line of Credit maturity date.

The Company may prepay amounts borrowed under the Loan, in whole or in part with accrued interest to the date of such prepayment on the amount prepaid, by written notice to Bank 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, among other things, interest will accrue at the A pplicable R ate plus 2 % per annum, and the Bank may declare all obligations, with interest thereon, immediately due and payable.

Line of Credit – Also pursuant to the Amended Credit Agreement, outstanding advances under the Line of Credit (“ Advances ”) will accrue interest at a per annum rate equal to the greater of 3.50 % or 2.75 % above the one-month SOFR, and the Company will pay the interest on the Advances monthly, with all principal and any accrued interest on outstanding Advances being due and payable in full on the Line of Credit maturity date.

The Company may prepay amounts borrowed under the Line of Credit, in whole or in part with accrued interest to the date of such prepayment on the amount prepaid, by written notice to Bank 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, 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 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 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 September 30, 2024 and December 31, 2023.

The borrowings outstanding on the Term Loans were $ 14,250 and $ 20,125 on September 30, 2024 and December 31, 2023, respectively.

There was no outstanding balance on the Line of Credit as of September 30, 2024 and December 31, 2023.

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, 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, 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 March 31, 2025 and December 31, 2024.

The borrowings outstanding on the Term Loans were $ 12,000 and $ 13,125 as of March 31, 2025 and December 31, 2024, respectively.

There was no outstanding balance on the Line of Credit as of March 31, 2025 and December 31, 2024.

Maturities of the Company's Term Loans are as follows:

2025 (nine months)

Total balance outstanding as of March 31, 2025

NOTE 7 - EQUITY

The Company is authorized to issue 60,000 shares of Common Stock, $ 0.01 par value per share, of which 4,598 shares of Common Stock were issued and outstanding as of September 30, 2024 and December 31, 2023.

Common Stock Issued for Services

In February 2021 , the Company granted an officer an aggregate of 160 restricted share units (“ RSUs ”) with a fair value of $ 468 , which was amortized to stock-based compensation over its vesting term.

The Company did not grant or record any stock-based compensation related to RSUs during the three or nine months ended September 30, 2024.

The Company recorded $ 0 and $ 31 of stock-based compensation related to RSUs during the three and nine months ended September 30, 2023, respectively.

The Company is authorized to issue 120,000 shares of Common Stock, $ 0.01 par value per share, of which 9,383 and 9,210 shares of Common Stock were issued and outstanding as of March 31, 2025 and December 31, 2024, respectively.

On February 7, 2025, the Company effected a 2 -for-1 stock split of its Common Stock and proportionately increased the number of authorized shares of Common Stock to 120,000 .

All share and per share information throughout this Quarterly Report on Form 10-Q has been retroactively adjusted to reflect the stock split as of the earliest period presented.

The shares of Common Stock retain a par value of $ 0.01 per share.

Accordingly, an amount equal to the par value of the additional shares issued in the stock split was reclassified from additional paid-in capital in excess of par value to Common Stock.

Share Repurchase Program

1 unchanged sentence

Under the extended and amended Share Repurchase Program, the Board authorized management to repurchase up to $ 5,000 of the Company's Common Stock over a period of 24 months, at a purchase price equal to the fair market value of the Company's Common Stock on the date of purchase, with the exact date and amount of such purchases to be determined by management (the “ 2023 Share Repurchase Program ”).

During the nine months ended September 30, 2024 and 2023, the Company did not repurchase any Common Stock under the 2023 Share Repurchase Program.

As of September 30, 2024 , the Company may purchase $ 5,000 of Common Stock under the 2023 Share Repurchase Program.

Information regarding options outstanding as of September 30, 2024 is as follows:

average exercise

remaining life

During the three months ended March 31, 2025 and 2024, the Company did not repurchase any Common Stock under the 2023 Share Repurchase Program.

As of March 31, 2025 , the Company may purchase $ 5,000 of Common Stock under the 2023 Share Repurchase Program.

Information regarding options outstanding as of March 31, 2025 is as follows:

Outstanding, December 31, 2023

Outstanding, September 30, 2024

Exercise price

Outstanding, December 31, 2024

Outstanding, March 31, 2025

remaining life

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exercise price

The closing stock price for the Company’s stock on September 30, 2024 was $ 32.74 , resulting in an intrinsic value of outstanding options of $ 12,554 .

In August 2024, the Company granted stock options to purchase 10 shares of common stock to employees.

The stock options are exercisable at $ 33.20 per share.

The stock options expire in five years and vest (i) one fourth immediately on the date of grant, and (ii) in three equal annual installments thereafter.

The total fair value of these options at grant date was approximately $ 146 , which was determined using a Black-Scholes option pricing model with the following assumptions:

stock price of $ 33.20 per share, expected term of 5 years, volatility of 45 %, dividend rate of 0 %, and risk-free interest rate of 3.38 %.

The risk-free interest rate is based on the U.S.

Treasury yield curve in effect at the time of measurement corresponding with the expected term of the share option award.

The expected term represents the weighted-average period of time that share option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior.

The expected volatility is based upon historical volatility of the Company’s Common Stock.

The expected dividend yield is based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future.

During the three-month periods ended September 30, 2024 and 2023, the Company recognized stock-based compensation of $ 141 and $ 21 , respectively, related to stock options.

During the nine-month periods ended September 30, 2024 and 2023, the Company recognized stock-based compensation of $ 344 and $ 63 , respectively, related to stock options.

As of September 30, 2024 there is $ 542 of unamortized stock-based compensation related to stock options.

NOTE 8 – ACQUISITION OF MIMI ’ S ROCK CORP

On February 28, 2023, the Company acquired all the equity interests of Mimi’s Rock Corp.

( "MRC" ) for the purchase price of $ 17,099 .

MRC is headquartered in Oakville, Ontario, Canada.

The Company accounted for the acquisition as a business combination under ASC 805, Business Combinations ( “ ASC 805 ” ) .

As a result of the MRC acquisition, the Company recorded intangible assets – brands of $ 7,630 and goodwill of $ 12,764 .

The goodwill recognized is primarily attributable to anticipated synergies from future growth.

The intangible assets, which consist of brands, is not amortized but will be tested for impairment on an annual basis.

Goodwill is also not amortized but will be tested for impairment on an annual basis.

The purchase was intended to augment and diversify the Company’s product offerings and lineup.

Key factors that contributed to the recorded intangible assets and goodwill were the opportunity to complement existing operations of the Company and the opportunity to generate future synergies within the nutritional supplement and wellness business.

Pro Forma Condensed Combined Financial Information (Unaudited, in thousands)

The following presents the Company’s unaudited pro forma financial information for the nine months ended September 30, 2023, giving effect to the acquisition of MRC as if it had occurred at January 1, 2023.

Included in the pro forma information are adjustments to (1) remove non-recurring transaction-related costs related to the acquisition of MRC, (2) remove the interest costs from MRC’s debt prior to the closing of the acquisition, and (3) recognize interest expense based on the projected balance of the Term Loan A for the respective periods presented for this pro forma.

Nine months ended

September 30, 2023

Diluted net income per share

The pro forma adjustments do not reflect adjustments for anticipated operating efficiencies that the Company expects to achieve as a result of this acquisition.

The pro forma financial information is for informational purposes only and does not purport to present what the Company’s results would actually have been had the transaction actually occurred on the dates presented or to project the combined company’s results of operations or financial position for any future period.

MRC revenue for the three months ended September 30, 2024 and 2023 was $ 7,210 and $ 7,202 , respectively.

MRC revenue for the nine months ended September 30, 2024 was $ 22,164 and was $ 17,468 for the period from February 28, 2023 (the acquisition date) to September 30, 2023.

ACQUISITION OF MUSCLEPHARM ASSETS

On October 10, 2023, the Company acquired substantially all of the assets and assumed none of the liabilities other than de minimus cure costs relating to certain assumed contracts of MusclePharm through an asset purchase transaction under Section 363 of the U.S.

Bankruptcy Code.

Total consideration for the acquisition, including legal expense, amounted to $ 18,788 .

The Company accounted for the transaction as an asset acquisition under Accounting Standards Codification (“ASC”) 805.

The assets acquired consisted of indefinite life intellectual property – brands of $ 18,593 and inventory of $ 195 .

The intangible asset is not amortized and will be tested for impairment on an annual basis.

The Company accounted for the transaction as an asset acquisition under ASC 805.

The assets acquired consist of indefinite life intellectual property – brands with an estimated value of $ 18,593 – and inventory of $ 195 .

The intangible assets, which consist of brands, are not amortized but will be tested for impairment on an annual basis.

The closing stock price for the Company’s stock on March 31, 2025 was $ 12.10 , resulting in an intrinsic value of outstanding options of $ 6,812 .

During the three months ended March 31, 2025, 173 stock options were exercised pursuant to the terms of the option agreements.

As a result, the Company received cash proceeds of $ 638 , of which $ 259 was received in March 2025 and the remaining $ 379 was received in April 2025 and reported as part of Prepaid and Other Current Assets in the accompanying Balance Sheet.

During the three-month periods ended March 31, 2025 and 2024, the Company recognized stock-based compensation expense of $ 107 and $ 102 , respectively, related to stock options.

As of March 31, 2025, there is $ 334 of unamortized compensation expense related to stock options.

NOTE 8 – COMMITMENTS AND CONTINGENCIES

We currently are not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations.

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations.

There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of the Company or any of its subsidiaries, threatened against or affecting the Company, our Common Stock, any of our subsidiaries or of the Company’s or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

NOTE 9 – SEGMENT INFORMATION

The Company operates and manages its business as one reportable operating segment dedicated to providing innovative and proprietary nutritional supplements and wellness products for health-conscious consumers.

The measure of segment assets is reported on the consolidated balance sheet as total assets.

In addition, the Company manages its business activities on a consolidated basis.

The Company’s CODM allocates resources and assesses financial performance based upon financial data presented at the consolidated level.

The CODM uses net income as the sole measure of segment profit.

Significant segment expenses include cost of goods sold, advertising and marketing, merger and acquisition related and other expense, which are all presented on the consolidated statements of income and comprehensive income.

Employee compensation and benefits is also a significant segment expense.

Operating expense includes all remaining costs necessary to operate our business, including external professional services, insurance and other administrative expenses.

The following table presents the significant segment expenses and other segment items regularly reviewed by our CODM:

Three months ended March 31,

Cost of goods sold

Employee compensation and benefits

Advertising and marketing

Operating expense

Merger and acquisition related

Total operating expense

Interest and other expense

The following table summarizes sales to customers by geographic regions:

Three months ended March 31,

United States

Rest of world

Total revenue

NOTE 10 – SUBSEQUENT EVENTS

The Company evaluated subsequent events for their potential impact on the condensed consolidated financial statements and disclosures through the date the condensed consolidated financial statements were issued and determined that no subsequent events occurred that were reasonably expected to impact the condensed consolidated financial statements presented herein.

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 ").

The Share Repurchase Program was amended September 23, 2019 to increase the repurchase amount to $ 1,000,000 ;

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

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

and extended on March 17, 2023 to repurchase up to $ 5,000,000 of the Company's Common Stock over the subsequent 24 months.

On May 13, 2025, the Board approved a further extension of the Share Repurchase Program.

Under the extended and amended Share Repurchase Program, the Board authorized management to repurchase up to $ 5,000,000 of the Company's Common Stock over the subsequent 24 months, at a purchase price equal to the fair market value of the Company's Common Stock on the date of purchase, with the exact date and amount of such purchases to be determined by management.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Tobias, All Natural Advice, and Maritime Naturals (together, the “ MRC Products ");

and (iv) MusclePharm.

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 ”).

The Company distributes the NDS Products principally through franchised General Nutrition Centers, Inc.

(“ GNC ”) stores located both domestically and internationally and, with the launch of Metis Nutrition, through corporate GNC stores in the U.S.

The iSatori Products are sold through retail locations, which include specialty, mass, and online.

The Company distributes the MRC Products primarily online.

MusclePharm’s products are sold to wholesale customers as well as online directly to the end consumer.

The iSatori Products are sold through retail locations, which include specialty and mass, as well as online directly to the end consumer.

The Company distributes the MRC Products primarily online through e-commerce platforms, such as Amazon, directly to the end consumer.

MusclePharm’s products are sold to both wholesale customers as well as online through various e-commerce platforms directly to the end consumer.

FitLife Brands is headquartered in Omaha, Nebraska.

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The Company’s common stock, par value $0.01 per share (“ Common Stock ”), trades under the symbol “FTLF” on the Nasdaq Capital Market.

Recent Acquisitions

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.

Total consideration for the acquisition of MRC was $17,099, of which $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.

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

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 for additional disclosure regarding the acquisition of the MusclePharm assets.

Recent Developments

On February 7, 2025, the Company effected a 2-for-1 stock split of its Common Stock and proportionately increased the number of authorized shares of Common Stock.

All share and per share information throughout this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect the stock split.

The shares of Common Stock retain a par value of $0.01 per share.

Accordingly, an amount equal to the par value of the additional shares issued in the stock split was reclassified from additional paid-in capital in excess of par value to Common Stock.

Results of Operations

Comparison of the three months ended September 30, 2024 to the three months ended September 30, 2023

Comparison of the three months ended March 31, 2025 to the three months ended March 31, 2024

Three months ended

September 30, 2024

September 30, 2023

Cost of goods sold

Advertising and marketing

general and administrative (“S G&A ”)

Merger and acquisition related

Depreciation and amortization

Total operating expense

Operating income

Other expense (income), net

Provision for income tax

Revenue for the three months ended September 30, 2024 increased 15% to $15,977 as compared to $13,902 for the three months ended September 30, 2023.

The increase in revenue for the three months ended September 30, 2024 compared to the prior period is primarily due to the acquisition of the MusclePharm assets, which were acquired on October 10, 2023, partially offset by a decline in Legacy FitLife revenue.

Legacy FitLife revenue for the three months ended September 30, 2024 was $6,302, a 6% decrease compared to the previous year, driven by a 12% decline in wholesale revenue partially offset by a 4% increase in online revenue.

MRC revenue for the three months ended September 30, 2024 was $7,210, which was approximately flat compared to the previous year.

During the three months ended September 30, 2024, MusclePharm generated revenue of $2,465, of which approximately half was generated from wholesale customers and half from online sales.

Online revenue and wholesale revenue for the quarter ended September 30, 2024 were approximately 68% and 32% of total net revenue, respectively, consistent with the online and wholesale revenue percentages for the same period of 2023.

Sales to customers in the U.S.

were approximately 95% and 93% during the quarters ended September 30, 2024 and 2023, respectively, with the balance of sales to customers primarily in Canada.

Cost of Goods Sold.

Cost of goods sold for the three months ended September 30, 2024 increased to $8,976 as compared to $8,206 for the three months ended September 30, 2023.

This 9% increase is primarily due to an increase in revenue attributable to the acquisition of the MusclePharm assets, partially offset by lower Legacy FitLife sales.

Gross Profit.

Gross profit for the three months ended September 30, 2024 increased to $7,001 as compared to $5,696 for the three months ended September 30, 2023.

The increase in gross profit is attributable to higher gross profit from both MRC and Legacy FitLife as well as incremental gross profit from MusclePharm.

Gross Margin .

Gross margin for the three months ended September 30, 2024 increased to 43.8% from 41.0% for the comparable prior period.

The increase in gross margin is primarily attributable to higher margins from both MRC and Legacy FitLife.

Advertising and M arketing.

Advertising and marketing expense for the three months ended September 30, 2024 decreased to $1,093 as compared to $1,275 for the same period of the prior year.

The 14% decrease is the result of targeted efforts to rationalize the Company’s advertising spend on less effective advertising campaigns.

SG&A expense for the three months ended September 30, 2024 increased to $2,645 as compared to $1,897 for the three months ended September 30, 2023.

The increase was primarily due to higher personnel costs (including salaries, benefits, and stock compensation) and higher professional fees.

In addition, the Company incurred non-recurring severance costs of $184.

Merger and A cquisition R elated.

Merger and acquisition related expense increased to $59 during the quarter ended September 30, 2024 compared to $32 for the same period of 2023.

We generated net income of $2,126 for the three months ended September 30, 2024 as compared to net income of $1,696 for the three months ended September 30, 2023.

The increase in net income for the three months ended September 30, 2024 compared to the same period in 2023 was primarily attributable to incremental revenue and gross profit from MusclePharm, higher gross profit from MRC and Legacy FitLife, as well as reduced advertising and marketing expense.

Comparison of the nine months ended September 30, 2024 to the nine months ended September 30, 2023

Nine months ended

September 30, 2024

September 30, 2023

March 31, 2025

March 31, 2024

Cost of goods sold

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Provision for income tax

Revenue for the nine months ended September 30, 2024 increased 26% to $49,456 as compared to $39,401 for the nine months ended September 30, 2023.

The increase in revenue for the nine months ended September 30, 2024 compared to the prior period is 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 seven months of MRC revenue were included in the Company’s financial statements for the nine months ended September 30, 2023.

MusclePharm was acquired on October 10, 2023.

Legacy FitLife revenue for the nine months ended September 30, 2024 was $20,065, a 9% decrease compared to the previous year, driven by a 15% decline in wholesale revenue partially offset by a 5% increase in online revenue.

MRC revenue for the nine months ended September 30, 2024 was $22,164.

MRC revenue for the period from February 28, 2023 to September 30, 2023 was $17,468.

During the nine months ended September 30, 2024, MusclePharm generated revenue of $7,227, of which approximately half was generated from wholesale customers and half from online sales.

Online revenue and wholesale revenue for the nine months ended September 30, 2024 were approximately 66% and 34% of total net revenue, respectively.

Online revenue and wholesale revenue for the nine months ended September 30, 2023 were approximately 62% and 38% of net revenue, respectively.

Revenue for the three months ended March 31, 2025 decreased 4% to $15,936 as compared to $16,549 for the three months ended March 31, 2024.

The decrease in revenue for the three months ended March 31, 2025 compared to the prior period is primarily due to lower MRC sales, partially offset by an increase in Legacy FitLife revenue.

Legacy FitLife revenue for the three months ended March 31, 2025 was $7,299, a 5% increase compared to $6,961 for the three months ended March 31, 2024, driven by an 11% increase in online revenue and a 2% increase in wholesale revenue..

MRC revenue for the three months ended March 31, 2025 was $6,674, an 11% decrease compared to $7,493 for the three months ended March 31, 2024.

MusclePharm revenue for the three months ended March 31, 2025 was $1,963, a 6% decrease compared to $2,095 for the three months ended March 31, 2024.

Online revenue for the quarter ended March 31, 2025 was approximately 67% of total net revenue, compared to 65% of total net revenue for the quarter ended March 31, 2024.

Sales to customers in the U.S.

were approximately 96% and 94% during the nine months ended September 30, 2024 and 2023, respectively, with the balance of sales to customers primarily in Canada.

were approximately 96% during the quarters ended March 31, 2025 and 2024, respectively, with the balance of sales to customers primarily in Canada.

Cost of Goods Sold.

Cost of goods sold for the nine months ended September 30, 2024 increased to $27,588 as compared to $23,332 for the nine months ended September 30, 2023.

This 18% increase is due to an increase in revenue attributable to the acquisitions of MRC and the MusclePharm assets.

Cost of goods sold for the three months ended March 31, 2025 decreased to $9,062 as compared to $9,262 for the three months ended March 31, 2024.

This 2% decrease is primarily due to a decrease in revenue attributable to MRC.

Gross Profit.

Gross profit for the nine months ended September 30, 2024 increased to $21,868 as compared to $16,069 for the nine months ended September 30, 2023.

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

Gross profit for the three months ended March 31, 2025 decreased to $6,874 as compared to $7,287 for the three months ended March 31, 2024.

This 6% decrease in gross profit is principally attributable to lower gross profit from MRC and MusclePharm, partially offset by an increase from Legacy FitLife.

Gross Margin .

Gross margin for the nine months ended September 30, 2024 increased to 44.2% from 40.8% for the comparable prior period.

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 41.6% during the nine months ended September 30, 2023.

Advertising and M arketing.

Advertising and marketing expense for the nine months ended September 30, 2024 increased to $3,647 as compared to $3,359 for the same period of the prior year.

The 9% 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 nine months ended September 30, 2024 increased to $7,681 as compared to $5,399 for the nine months ended September 30, 2023.

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

In addition, the Company incurred non-recurring severance costs of $184.

Merger and A cquisition R elated.

Merger and acquisition related expense decreased to $217 during the nine months ended September 30, 2024 compared to $1,519 for the same period of 2023, driven primarily by transaction costs related to the MRC acquisition in 2023.

We generated net income of $6,914 for the nine months ended September 30, 2024 as compared to net income of $3,816 for the nine months ended September 30, 2023.

The increase in net income for the nine months ended September 30, 2024 compared to the same period in 2023 was primarily attributable to higher revenue and gross profit for MRC, incremental revenue and gross profit from MusclePharm, as well as a reduction in acquisition-related expense due to the MRC acquisition that closed during 2023, partially offset by incremental SG&A expense.

Gross margin for the three months ended March 31, 2025 decreased to 43.1% from 44.0% for the comparable prior period.

The decrease in gross margin is primarily attributable to lower margins from both MRC and MusclePharm, partially offset by higher margins from Legacy FitLife.

Advertising and Marketing.

Advertising and marketing expense for the three months ended March 31, 2025 decreased to $1,053 as compared to $1,228 for the same period of the prior year.

The 14% decrease is the result of targeted efforts to optimize the efficiency of the Company’s advertising spend.

SG&A expense for the three months ended March 31, 2025 was essentially flat relative to the same period of 2024.

Merger and Acquisition Related.

Merger and acquisition related expense increased to $332 during the quarter ended March 31, 2025 compared to $134 for the same period of 2024.

We generated net income of $2,018 for the three months ended March 31, 2025 as compared to net income of $2,160 for the three months ended March 31, 2024.

The decrease in net income for the three months ended March 31, 2025 compared to the same period in 2024 was primarily attributable to lower revenue and gross profit from MRC and MusclePharm, partially offset by higher revenue and gross profit from Legacy FitLife, as well as a decrease in operating expense driven by lower advertising spend and lower interest expense due to the lower debt balances carried by the Company.

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.

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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.

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Contribution as a % of revenue

For the third quarter of 2024, Legacy FitLife revenue declined 6% compared to the same period last year, driven by a 12% decline in wholesale revenue partially offset by a 4% increase in online revenue.

Despite the revenue decline, gross profit and contribution for Legacy FitLife increased.

Gross margin increased from 37.2% during the third quarter of 2023 to 42.6% during the third quarter of 2024.

Contribution as a percentage of revenue increased from 36.0% to 41.5% 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.

For the first quarter of 2025, Legacy FitLife revenue increased 5% compared to the same period last year, driven by an 11% increase in online revenue and a 2% increase in wholesale revenue compared to the first quarter of 2024.

As previously disclosed, during the fourth quarter of 2024, 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.

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 2025, 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.

For the first quarter of 2025, gross margin increased to 44.6% from 42.1% during the same period last year.

Contribution as a percentage of revenue increased to 43.4% from 40.9% over the same time period.

Mimi's Rock (MRC)

4 unchanged sentences

Contribution as a % of revenue

For the third quarter of 2024, MRC revenue was consistent with the same period in 2023.

Over the same time period, gross profit increased 7% and contribution increased 25%.

For the third quarter of 2024, gross margin increased to 47.7% from 44.5% last year.

For the first quarter of 2025, MRC revenue decreased 11% compared to the same period in 2024.

Over the same time period, gross profit decreased 14% and contribution decreased 9%.

For the first quarter of 2025, MRC gross margin decreased to 45.4% from 47.0% during the same period last year.

Revenue for the largest MRC brand, Dr.

Tobias, increased 6% in the third quarter of 2024 while revenue for the skin care brands, Maritime Naturals and All Natural Advice, declined 33% in the same period compared to the third 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, decreased 11% in the first quarter of 2025 while revenue for the skin care brands, Maritime Naturals and All Natural Advice, declined 14%, or 9% on a constant currency basis, in the same period compared to the first quarter of 2024.

The decrease in gross profit for the MRC brands is primarily the result of lower sales.

The decrease in gross margin is primarily driven by the change in 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.

The year-over-year increase in contribution as a percentage of revenue for the MRC brands is a function of the optimization of the advertising spend across all MRC brands.

Wholesale revenue

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Contribution as a % of revenue

MusclePharm revenue decreased 8% sequentially from the second quarter of 2024 to the third quarter of 2024, with wholesale revenue decreasing 11% and online revenue decreasing 4%.

This slower movement is due in part to normal seasonality of sales as well as timing of customer orders in the wholesale channel.

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

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

For the first quarter of 2025, MusclePharm revenue decreased 6% compared to the same period in 2024, with wholesale revenue decreasing 41% and online revenue increasing 33%.

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.

The decrease in wholesale revenue during the first quarter was primarily due to one of our wholesale customers that took advantage of the Company’s promotional investment during the fourth quarter of 2024 without increasing their sell-through of the product, which has affected their reorder volumes.

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.

In mid-March 2025, the Company launched the new MusclePharm Pro Series, a collection of premium sports nutrition products, in a pilot in high-volume Vitamin Shoppe stores (consisting of approximately 60% of Vitamin Shoppe’s nationwide store base).

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.

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Contribution as a % of revenue

For the Company overall, revenue increased 15%, gross profit increased 23%, and contribution increased 34% compared to the third quarter of 2023.

Gross margin increased to 43.8% compared to 41.0% during the third quarter of last year.

Contribution as a percentage of revenue increased to 37.0% compared to 31.8% during the third quarter of last year.

For the first quarter of 2025 for the Company overall, revenue decreased 4%, gross profit decreased 6%, and contribution decreased 4% compared to the first quarter of 2024.

Gross margin decreased to 43.1% during the first quarter of 2025 compared to 44.0% during the first quarter of last year.

Contribution as a percentage of revenue decreased slightly to 36.5% compared to 36.6% during the first quarter of last year

Non-GAAP Measures

The financial presentation below contains certain financial measures not in accordance with GAAP, defined by the SEC as “non-GAAP financial measures”, including non-GAAP earnings before interest, taxes, depreciation, and amortization (“ EBITDA ”) and adjusted non-GAAP EBITDA.

The financial presentation below contains certain financial measures not in accordance with GAAP, defined by the SEC as “non-GAAP financial measures”, including EBITDA and adjusted EBITDA.

These measures may be different from non-GAAP financial measures used by other companies.

The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in this Quarterly Report in accordance with GAAP.

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

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

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

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

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.

The Company believes that the inclusion of non-GAAP measures in the financial presentation below allows investors to compare the Company’s financial results with the Company’s historical financial results and is an important measure of the Company’s comparative financial performance.

For the three months ended

September 30,

For the nine months ended

September 30,

For the three months ended March 31,

Interest expense

Interest income

Foreign exchange (gain) loss

Foreign exchange loss

Provision for income taxes

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Non-cash and non-recurring adjustments

Stock-based compensation

Merger and acquisition related

Restructuring costs

Amortization of inventory step-up

Non-recurring loss on foreign currency forward contract

Stock compensation expense

Merger and acquisition related expense

Adjusted EBITDA

Liquidity and Capital Resources

As of September 30, 2024, the Company had positive working capital of $6,044, compared to $4,356 at December 31, 2023.

Our principal sources of liquidity at September 30, 2024 consisted of $4,720 of cash and $2,008 of accounts receivable.

The increase in working capital is principally attributable to positive operating cash flows during the nine months ended September 30, 2024, partially offset by a voluntary paydown of $2,500 on the Term Loans as well as the three scheduled amortization payments totaling $3,375.

As of March 31, 2025, the Company had positive working capital of $8,463 compared to $6,832 at December 31, 2024.

Our principal sources of liquidity at March 31, 2025 consisted of $5,994 of cash and $2,693 of accounts receivable.

The increase in working capital is principally attributable to positive operating cash flows during the three months ended March 31, 2025.

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 ”).

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

Advances drawn under the Line of Credit bear interest at an annual rate of the one-month 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.

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 “ Credit Agreement ”) providing the Company with a term loan for the principal amount of $12.5 million (“ Term Loan A ”).

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 “ Amended Credit Agreement ”) with the Lender, amending and restating the Credit Agreement between the Company and the Lender.

Pursuant to the Amended 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 15, 2024.

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.

The Term Loans accrue interest at an annual rate of the one-month SOFR rate plus 2.75%, and principal plus accrued interest will be payable quarterly beginning June 10, 2023 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.

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.

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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 September 30, 2024.

As of September 30, 2024, the borrowings outstanding on the Term Loans and the Line of Credit were $14,250 and $0, respectively.

The Company was in compliance with all covenants as of March 31, 2025.

As of March 31, 2025, the borrowings outstanding on the Term Loans and the Line of Credit were $12,000 and $0, respectively.

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

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Cash Provided by Operating Activities.

Cash provided by operating activities for the nine months ended September 30, 2024 was $8,653, as compared to cash provided by operations of $2,772 for the nine months ended September 30, 2023.

The increase in cash provided by operating activities was primarily due to the higher net income achieved in the first nine months of 2024 which was 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 provided by operating activities for the three months ended March 31, 2025 was $2,328 compared to cash provided by operating activities of $5,036 for the three months ended March 31, 2024.

The decrease in cash provided by operating activities was primarily due to increases in working capital.

Cash Used in Investing Activities.

Cash used in investing activities for the nine months ended September 30, 2024 and 2023 was $10 and $18,984, respectively.

The Company used $10 and $60 for purchases of property and equipment in the nine months ended September 30, 2024 and 2023, respectively.

During the nine-month period ended September 30, 2023, the Company paid $17,099 to acquire MRC and had paid a deposit towards the acquisition of the MusclePharm assets.

Cash Provided by (Used in) Financing Activities.

Cash used in financing activities for the nine months ended September 30, 2024 was $5,875 compared to cash provided by financing activities of $11,250 during the three months ended September 30, 2023.

Cash used in investing activities for the three months ended March 31, 2025 and 2024 was $24 and $10, respectively.

Cash Used in Financing Activities.

Cash used in financing activities for the three months ended March 31, 2025 was $866 compared to cash used in financing activities of $3,625 during the three months ended March 31, 2024.

The decrease in cash used in financing activities is primarily due to the voluntary debt repayment made by the Company during the first quarter of 2024.

Critical Accounting Policies and Estimates

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If the fair value of a reporting unit is determined to be less than the carrying value of its net assets, goodwill is deemed impaired and an impairment loss is recognized to the extent that the carrying value of goodwill exceeds the difference between the fair value of the reporting unit and the fair value of its other assets and liabilities.

Management concluded that a triggering event did not occur during the three months ended September 30, 2024.

Management concluded that a triggering event did not occur during the three months ended March 31, 2025.

We will continue to review for impairment indicators as necessary in future periods.

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The Company records distribution and platform fees to cost of goods sold in the condensed consolidated statements of income and comprehensive income.

Distribution and platform fees are not recorded as a reduction of revenue because the Company (1) owns the goods before they are transferred to the customer, (2) can direct Amazon, similar to other third-party logistics providers, to return the Company’s inventory to any location specified by the Company, (3) has the responsibility to make customers whole following any returns made by customers directly to Logistic Providers and the Company retains the back-end inventory risk, (4) is subject to credit risk (i.e., credit card chargebacks), (5) establishes prices of its products, (6) can determine who fulfills the goods to the customer (Amazon or the Company) and (7) can limit quantities or stop selling the goods at any time.

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

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Online revenue during the three months ended September 30, 2024 and 2023 was approximately 68% of net revenue for both periods, compared to 32% for the wholesale channel for the same periods.

Online revenue during the nine months ended September 30, 2024 and 2023 was approximately 66% and 62% of net revenue, compared to 34% and 38% for the wholesale channel for the same period.

Sales to customers in the U.S.

were approximately 95% and 93% during the three months ended September 30, 2024 and 2023, respectively, with the balance of sales for the same respective periods being to customers primarily in Canada.

Online revenue during the three months ended March 31, 2025 was approximately 67% of total revenue, compared to 65% for the three months ended March 31, 2024.

Sales to customers in the U.S.

were approximately 96% and 94% during the nine months ended September 30, 2024 and 2023, respectively, with the balance of sales for the same respective periods being to customers primarily in Canada.

were approximately 96% during the three months ended March 31, 2025 and 2024, respectively, with the balance of sales for the same respective periods being to customers primarily in Canada.

Control of products we sell transfers to customers upon shipment from our facilities or delivery to our customers, and the Company’s performance obligations are satisfied at that time.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements