Most of us have heard the dictum "the trend is your friend." And this is undeniably the key to success when it comes to short-term investing or trading. But it isn't easy to ensure the sustainability of a trend and profit from it.Often, the direction of a stock's price movement reverses quickly after taking a position in it, making investors incur a short-term capital loss. So, it's important to ensure that there are enough factors -- such as sound fundamentals, positive earnings estimate revisions, etc. -- ...

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 declined by 5% year over year to $16.1 million, with online sales accounting for 65% of total revenue at $10.4 million [3] - Gross profit margin decreased from 44.08% in Q2 2024 to 42.8% in Q2 2025 [3] - Net income fell to $1.7 million in Q2 2025 from $6 million in Q2 2024, primarily due to elevated merger and acquisition-related expenses [3] - Basic earnings per share decreased from $0.29 to $0.19, and diluted earnings per share dropped from $0.27 to $0.07 [4] - Adjusted EBITDA for Q2 2025 was $3.3 million, a 13% decrease compared to the previous year [4] Business Line Data and Key Metrics Changes - Legacy FitLife revenue for Q2 2025 was $7.3 million, with 59% from wholesale and 41% from online sales, representing a 1% increase in wholesale revenue and a 7% increase in online revenue year over year [5] - MRC revenue declined by 16% to $6.3 million, with gross margin decreasing from 48.2% to 45% due to tariffs impacting skin care brands [6] - MusclePharm revenue declined by 4%, with wholesale and online revenue decreasing by 63% respectively, and gross margin fell from 36.6% to 30.8% [7] Market Data and Key Metrics Changes - The performance of the Doctor Tobias brand within MRC is a primary concern, experiencing reduced session counts on Amazon, although conversion rates remain stable [11] - The decline in session counts began in 2024 and has remained stable throughout 2025, indicating potential for improvement later in the year [12] Company Strategy and Development Direction - The company is focused on stabilizing the Erwin Naturals acquisition and addressing challenges with the Doctor Tobias brand [12][20] - There is an emphasis on increasing online sales for Erwin, which currently does not sell on Amazon, and leveraging existing distribution relationships to enhance MusclePharm's market presence [31][75] - The company aims to achieve organic growth in the legacy business while acknowledging challenges with specific brands [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving organic growth despite challenges with the Doctor Tobias brand, which is dragging down overall performance [25] - The company expects to generate improved gross margins over time as it increases online sales and enhances supply chain efficiency for Erwin [19] - Management acknowledged the uncertainties associated with new acquisitions but remains committed to updating investors on progress [20] Other Important Information - The company ended Q2 2025 with $10.9 million outstanding on term loans and $6.6 million in cash, resulting in net debt of $4.3 million, approximately 0.3 times adjusted EBITDA [4] - The acquisition of Erwin Naturals is expected to generate over $120 million in revenue and adjusted EBITDA of $20 million to $25 million in the first full year of operations [20] Q&A Session Summary Question: Commentary on growth rate for the organic business in the second half of the year - Management is optimistic about achieving organic growth despite a mid-single-digit decline in the first half, attributing challenges primarily to the Doctor Tobias brand [22][24] Question: Blended gross margins for the combined businesses - Management indicated that blended gross margins for the combined businesses would be in the high 30s, with expectations for improvement as online sales increase [26] Question: Potential revenue synergies between the two companies - Management highlighted opportunities to grow online revenue for Erwin and leverage existing distribution relationships to enhance MusclePharm's market presence [29][33] Question: Seasonality of the business - Management noted that while the general trend is comparable, the magnitude of seasonality is less pronounced for Erwin compared to FitLife's sports nutrition business [38] Question: Expectations for SG&A expenses - Management expects SG&A expenses to be approximately $1.5 million lower post-acquisition, with plans to introduce additional advertising and marketing expenses to drive growth [40] Question: Future M&A activity - Management indicated that while they will focus on integrating the Erwin acquisition, they will continue to look for potential transactions in the future [88][90]

[Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) [Overview of Q2 2025 Results](index=1&type=section&id=Overview%20of%20Q2%202025%20Results) FitLife Brands reported Q2 2025 financial results with total revenue decreasing 5% year-over-year to $16.1 million, online revenue down 7%, and wholesale revenue flat, while gross margin declined from 44.8% to 42.8% Q2 2025 Key Financial Data | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | Change (%) | | :---------------- | :-------------------- | :-------------------- | :------- | | Total Revenue | 16.1 | 16.9 | -5% | | Online Revenue | 10.4 | 11.2 | -7% | | Wholesale Revenue | 5.7 | 5.7 | 0% | | Gross Margin | 42.8% | 44.8% | -2.0 pp | [Key Financial Metrics](index=1&type=section&id=Key%20Financial%20Metrics) The company's Q2 2025 net income and Adjusted EBITDA both decreased, primarily due to increased M&A-related expenses from the Irwin Naturals acquisition, leading to reduced basic and diluted EPS Q2 2025 Key Financial Metrics | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | Change (%) | | :---------------- | :-------------------- | :-------------------- | :------- | | Net Income | 1.7 | 2.6 | -34.6% | | Basic EPS | 0.19 | 0.29 | -34.5% | | Diluted EPS | 0.18 | 0.27 | -33.3% | | Adjusted EBITDA | 3.3 | 3.8 | -13% | - The primary reason for the decline in net income and EPS was increased M&A-related expenses associated with the Irwin Naturals acquisition[6](index=6&type=chunk)[7](index=7&type=chunk) [Balance Sheet and Debt Position](index=1&type=section&id=Balance%20Sheet%20and%20Debt%20Position) As of Q2 2025, the company held $6.6 million in cash (including a $5 million Irwin acquisition deposit), with a term loan balance of $10.9 million, total net debt of $4.3 million, and a net debt to Adjusted EBITDA ratio of 0.3x Q2 2025 End-of-Period Debt Position | Metric | Amount ($ millions) | | :---------------- | :-------------- | | Term Loan Balance | 10.9 | | Cash | 6.6 | | Total Net Debt | 4.3 | | Net Debt/Adjusted EBITDA | 0.3x | - The cash balance includes a **$5 million** deposit related to the Irwin Naturals acquisition[6](index=6&type=chunk)[9](index=9&type=chunk) [Performance of Acquired Brands](index=2&type=section&id=Performance%20of%20Acquired%20Brands) [Introduction to Contribution Metric](index=2&type=section&id=Introduction%20to%20Contribution%20Metric) Management uses 'Contribution,' a non-GAAP metric defined as gross profit less advertising and marketing expenses, to assess brand performance by effectively combining gross profit and related marketing spend - Contribution is defined as gross profit less advertising and marketing expenses, serving as management's primary metric for evaluating brand performance[10](index=10&type=chunk) - The company plans to provide contribution disclosures for acquired brands for approximately two years post-transaction, after which they will be integrated into Legacy FitLife performance reports[11](index=11&type=chunk) [Legacy FitLife Performance](index=3&type=section&id=Legacy%20FitLife%20Performance) Legacy FitLife's Q2 2025 revenue grew 7% year-over-year, driven by strong 17% online revenue growth, with gross profit and contribution also increasing by 7% and 5% respectively, despite slight declines in gross margin and contribution as a percentage of revenue Legacy FitLife Q2 2025 Performance | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change (%) | | :-------------------- | :------------------ | :------------------ | :------- | | Total Revenue | 7,303 | 6,802 | +7% | | Online Revenue | 3,021 | 2,578 | +17% | | Wholesale Revenue | 4,282 | 4,224 | +1% | | Gross Profit | 3,200 | 3,006 | +7% | | Gross Margin | 43.8% | 44.2% | -0.4 pp | | Contribution | 3,070 | 2,912 | +5% | | Contribution as % of Revenue | 42.0% | 42.8% | -0.8 pp | [Mimi's Rock (MRC) Performance](index=3&type=section&id=Mimi%27s%20Rock%20%28MRC%29%20Performance) MRC's Q2 2025 revenue decreased 16% year-over-year, impacted by a 16% decline in Dr. Tobias and 20% in skincare brands, with gross profit and contribution down 19% and 17% respectively, and gross margin falling to 46.5% due to reduced Dr. Tobias listing page traffic and tariff effects on skincare Mimi's Rock (MRC) Q2 2025 Performance | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change (%) | | :-------------------- | :------------------ | :------------------ | :------- | | Total Revenue | 6,269 | 7,461 | -16% | | Dr. Tobias Revenue | - | - | -16% | | Skincare Brand Revenue | - | - | -20% | | Gross Profit | 2,916 | 3,597 | -19% | | Gross Margin | 46.5% | 48.2% | -1.7 pp | | Contribution | 2,093 | 2,526 | -17% | | Contribution as % of Revenue | 33.4% | 33.9% | -0.5 pp | - The decline in Dr. Tobias brand revenue was primarily due to reduced product listing page traffic, not decreased conversion rates[18](index=18&type=chunk) - The decrease in skincare brand gross margin is partly due to a **25% tariff** impacting most of its revenue[18](index=18&type=chunk) [MusclePharm Performance](index=4&type=section&id=MusclePharm%20Performance) MusclePharm's Q2 2025 revenue decreased 4% year-over-year, with wholesale revenue down 6% and online revenue down 3%, as the company invests in targeted advertising and promotions and launched a new Pro Series line at Vitamin Shoppe in mid-March 2025 MusclePharm Q2 2025 Performance | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change (%) | | :-------------------- | :------------------ | :------------------ | :------- | | Total Revenue | 2,555 | 2,667 | -4% | | Wholesale Revenue | 1,311 | 1,388 | -6% | | Online Revenue | 1,244 | 1,279 | -3% | | Gross Profit | 788 | 977 | -19.4% | | Gross Margin | 30.8% | 36.6% | -5.8 pp | | Contribution | 550 | 816 | -32.6% | | Contribution as % of Revenue | 21.5% | 30.6% | -9.1 pp | - The company is making targeted advertising and promotional investments in both wholesale and online channels to drive revenue growth[19](index=19&type=chunk) - In mid-March 2025, the company piloted the new MusclePharm Pro Series product line in Vitamin Shoppe stores, with online sales and sales through other international partners also commencing[21](index=21&type=chunk) [FitLife Consolidated Performance](index=5&type=section&id=FitLife%20Consolidated%20Performance) FitLife's consolidated Q2 2025 revenue decreased 5% year-over-year, with gross profit and contribution both down 9%, and gross margin declining from 44.8% to 42.8%, while contribution as a percentage of revenue fell from 36.9% to 35.4% FitLife Consolidated Q2 2025 Performance | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change (%) | | :-------------------- | :------------------ | :------------------ | :------- | | Total Revenue | 16,127 | 16,930 | -5% | | Wholesale Revenue | 5,696 | 5,702 | -0.1% | | Online Revenue | 10,431 | 11,228 | -7.1% | | Gross Profit | 6,904 | 7,580 | -9% | | Gross Margin | 42.8% | 44.8% | -2.0 pp | | Contribution | 5,713 | 6,254 | -9% | | Contribution as % of Revenue | 35.4% | 36.9% | -1.5 pp | [Acquisition of Irwin Naturals](index=5&type=section&id=Acquisition%20of%20Irwin%20Naturals) FitLife Brands completed the acquisition of Irwin Naturals and its affiliates on August 8, 2025, for a total consideration of $42.5 million, financed by $35.75 million from new term loans and revolving credit, with the remainder from existing cash - The company completed the acquisition of Irwin Naturals on **August 8, 2025**[23](index=23&type=chunk) Irwin Naturals Acquisition Details | Item | Amount ($ millions) | | :---------------- | :-------------- | | Total Consideration | 42.5 | | New Term Loan & Revolving Credit Financing | 35.75 | | Paid from Company's Existing Cash | 6.75 | [Management Commentary](index=6&type=section&id=Management%20Commentary) [CEO Remarks on Q2 Performance](index=6&type=section&id=CEO%20Remarks%20on%20Q2%20Performance) CEO Dayton Judd noted strong Legacy FitLife performance but challenges in MRC, with Dr. Tobias brand being a key concern due to reduced Amazon session volume, which the company addresses through increased ad spend, SEO optimization, and external traffic generation - Legacy FitLife business showed strong performance, benefiting from modest wholesale revenue growth and robust online revenue growth[25](index=25&type=chunk) - The Dr. Tobias brand's performance is a primary concern due to reduced Amazon session volume, though conversion rates remain stable or higher[26](index=26&type=chunk) - The company is implementing measures to increase Dr. Tobias brand session volume, including increased advertising spend, SEO optimization, and driving external traffic[26](index=26&type=chunk) [MusclePharm and Irwin Naturals Outlook](index=6&type=section&id=MusclePharm%20and%20Irwin%20Naturals%20Outlook) MusclePharm's sales team achieved success with July wholesale revenue reaching a post-acquisition high, and management is confident in Irwin Naturals' brand and distribution, expecting improved gross margins through increased online sales and supply chain optimization, alongside annual SG&A savings from employee restructuring - MusclePharm's sales team continues to achieve results, with July wholesale revenue reaching its highest level since the brand's acquisition[27](index=27&type=chunk) Irwin Naturals Expected Financial Data (Trailing Twelve Months Ended June 30, 2025) | Metric | Amount ($ millions) | | :---------------- | :-------------- | | Adjusted Revenue | ~60 | | Gross Margin | ~35% | | SG&A | ~14.5 | | Expected Annual SG&A Savings | ~1.5 | - The company expects to improve Irwin Naturals' gross margin by increasing the proportion of online sales and enhancing supply chain efficiency[28](index=28&type=chunk) - Annual SG&A for Irwin Naturals is expected to decrease by approximately **$1.5 million** through employee restructuring, with potential for further cost-saving opportunities[29](index=29&type=chunk) [Company Information](index=7&type=section&id=Company%20Information) [About FitLife Brands](index=7&type=section&id=About%20FitLife%20Brands) FitLife Brands develops and markets over 250 innovative and proprietary nutritional supplements and health products for health-conscious consumers, primarily sold through online channels, GNC franchises, and various retail stores - FitLife Brands develops and markets over **250** innovative and proprietary nutritional supplements and health products[32](index=32&type=chunk) - Products are primarily sold through online channels, GNC franchise stores, and various retail outlets[32](index=32&type=chunk) [Forward-Looking Statements](index=7&type=section&id=Forward-Looking%20Statements) Forward-looking statements in this press release involve known and unknown risks and uncertainties that could cause actual future results to differ materially from expectations, including the company's ability to grow revenue, achieve positive cash flow, and service debt, with investors advised to consult SEC filings for risk factors - Forward-looking statements involve known and unknown risks and uncertainties that could cause actual future results to differ materially from expectations[33](index=33&type=chunk) - Risk factors include the company's ability to grow revenue, achieve positive cash flow, and service debt[33](index=33&type=chunk) - Investors should refer to the risk factor discussions in the company's 10-K and 10-Q reports filed with the SEC[33](index=33&type=chunk) [Condensed Consolidated Financial Statements](index=8&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $62.847 million, an increase from December 31, 2024, with cash and cash equivalents decreasing but a $5 million increase in Irwin acquisition deposit, while total liabilities slightly decreased and stockholders' equity increased Condensed Consolidated Balance Sheets (As of June 30, 2025 and December 31, 2024) | Item | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :------------------------------------ | :----------------------- | :----------------------- | | **ASSETS:** | | | | Cash and Cash Equivalents | 1,530 | 4,468 | | Irwin Acquisition Deposit | 5,000 | - | | Total Current Assets | 22,177 | 18,143 | | Total Assets | 62,847 | 58,531 | | **LIABILITIES:** | | | | Total Current Liabilities | 12,968 | 11,311 | | Total Liabilities | 21,928 | 22,405 | | **STOCKHOLDERS' EQUITY:** | | | | Retained Earnings | 9,332 | 5,567 | | Total Stockholders' Equity | 40,919 | 36,126 | [Condensed Consolidated Statements of Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) In Q2 2025, total revenue decreased 5% year-over-year to $16.127 million, gross profit declined 9%, and operating income fell 31.4%, resulting in net income of $1.747 million, down 33.6%, primarily due to a significant increase in M&A-related expenses Condensed Consolidated Statements of Income (For the Three Months Ended June 30, 2025) | Item | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change (%) | | :-------------------- | :------------------ | :------------------ | :------- | | Revenue | 16,127 | 16,930 | -5% | | Cost of Sales | 9,223 | 9,350 | -1.4% | | Gross Profit | 6,904 | 7,580 | -9% | | Advertising and Marketing | 1,191 | 1,326 | -10.2% | | Selling, General and Administrative | 2,485 | 2,528 | -1.7% | | M&A-Related Expenses | 696 | 24 | +2800% | | Operating Income | 2,518 | 3,675 | -31.4% | | Net Income | 1,747 | 2,628 | -33.6% | | Basic EPS | 0.19 | 0.29 | -34.5% | | Diluted EPS | 0.18 | 0.27 | -33.3% | - M&A-related expenses significantly increased from **$24 thousand** in Q2 2024 to **$696 thousand** in Q2 2025, being the primary reason for the decline in net income[37](index=37&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash from operating activities was $3.523 million, a significant decrease from the prior year, with net cash used in investing activities of $5.029 million primarily due to the Irwin acquisition deposit, and net cash used in financing activities of $1.568 million, resulting in total cash and restricted cash of $1.585 million at period-end Condensed Consolidated Statements of Cash Flows (For the Six Months Ended June 30, 2025) | Item | 2025 ($ thousands) | 2024 ($ thousands) | | :-------------------------- | :-------------- | :-------------- | | Net Cash from Operating Activities | 3,523 | 6,606 | | Net Cash Used in Investing Activities | (5,029) | (10) | | Net Cash Used in Financing Activities | (1,568) | (4,750) | | Cash and Restricted Cash, End of Period | 1,585 | 3,735 | - Net cash used in investing activities significantly increased, primarily due to the **$5 million** payment for the Irwin acquisition deposit[39](index=39&type=chunk) [Non-GAAP Financial Measures](index=11&type=section&id=Non-GAAP%20Financial%20Measures) [EBITDA and Adjusted EBITDA Reconciliation](index=11&type=section&id=EBITDA%20and%20Adjusted%20EBITDA%20Reconciliation) The company provided a reconciliation of EBITDA and Adjusted EBITDA, where Adjusted EBITDA excludes interest, foreign exchange gains/losses, income taxes, depreciation and amortization, stock-based compensation, and M&A-related expenses, with Q2 2025 Adjusted EBITDA at $3.327 million, down 13% year-over-year - EBITDA excludes interest, foreign exchange gains/losses, income taxes, depreciation, and amortization[41](index=41&type=chunk) - Adjusted EBITDA further excludes stock-based compensation and M&A-related expenses from EBITDA[41](index=41&type=chunk) EBITDA and Adjusted EBITDA Reconciliation (For the Three Months Ended June 30, 2025) | Item | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | | :-------------------------- | :------------------ | :------------------ | | Net Income | 1,747 | 2,628 | | Interest Expense | 225 | 345 | | Interest Income | (50) | (17) | | Foreign Exchange (Gain) Loss | (35) | (10) | | Income Tax Provision | 631 | 729 | | Depreciation and Amortization | 14 | 27 | | **EBITDA** | **2,532** | **3,702** | | Stock-Based Compensation Expense | 99 | 101 | | M&A-Related Expenses | 696 | 24 | | **Adjusted EBITDA** | **3,327** | **3,827** |

[FORM 10-Q](index=1&type=section&id=FORM%2010-Q) This Quarterly Report on Form 10-Q for FitLife Brands, Inc. covers the period ended June 30, 2025, detailing its common stock trading on Nasdaq and shares outstanding - FitLife Brands, Inc. (FTLF) filed its Quarterly Report on Form 10-Q for the period ended June 30, 2025[1](index=1&type=chunk)[2](index=2&type=chunk) | Indicator | Value | | :--- | :--- | | Trading Symbol | FTLF | | Exchange | The Nasdaq Capital Market | | Shares Outstanding (as of Aug 11, 2025) | 9,391,072 | | Filer Status | Non-Accelerated filer, Smaller reporting company | [TABLE OF CONTENTS](index=3&type=section&id=TABLE%20OF%20CONTENTS) This section indexes the Form 10-Q filing for FitLife Brands, Inc., outlining Part I (Financial Information) and Part II (Other Information) [Special Note Regarding Forward-Looking Statements](index=4&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) This section warns that the report contains forward-looking statements subject to risks and uncertainties, and the company is not obligated to update them - The report contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[10](index=10&type=chunk)[11](index=11&type=chunk) - Investors are cautioned to read statements containing terms such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", "proposed", "intended", or "continue" carefully[11](index=11&type=chunk) - The company is under no duty to update any forward-looking statements after the date of this Quarterly Report[11](index=11&type=chunk) [PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This part presents FitLife Brands, Inc.'s unaudited condensed consolidated financial statements, management's discussion, market risk disclosures, and controls for Q2 2025 [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section provides unaudited condensed consolidated financial statements, including balance sheets, income statements, equity, cash flows, and explanatory notes [Condensed Consolidated Balance Sheets (unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) The balance sheet shows increased total assets and stockholders' equity as of June 30, 2025, driven by current assets and the Irwin acquisition deposit | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------- | :------------ | :---------------- | :--------- | :--------- | | Total Assets | $62,847 | $58,531 | $4,316 | 7.4% | | Total Liabilities | $21,928 | $22,405 | $(477) | (2.1)% | | Total Stockholders' Equity | $40,919 | $36,126 | $4,793 | 13.3% | | Cash and cash equivalents | $1,530 | $4,468 | $(2,938) | (65.8)% | | Deposit for Irwin acquisition | $5,000 | $- | $5,000 | N/A | [Condensed Consolidated Statements of Income and Comprehensive Income (unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income%20(unaudited)) Revenue, gross profit, and net income decreased for Q2 and 6M 2025 due to lower sales from MRC and MusclePharm and increased M&A expenses | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Revenue | $16,127 | $16,930 | $(803) | (4.7)% | | Gross profit | $6,904 | $7,580 | $(676) | (8.9)% | | Operating income | $2,518 | $3,675 | $(1,157) | (31.5)% | | Net income | $1,747 | $2,628 | $(881) | (33.5)% | | Basic EPS | $0.19 | $0.29 | $(0.10) | (34.5)% | | Diluted EPS | $0.18 | $0.27 | $(0.09) | (33.3)% | | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Revenue | $32,063 | $33,479 | $(1,416) | (4.2)% | | Gross profit | $13,778 | $14,867 | $(1,089) | (7.3)% | | Operating income | $5,476 | $7,056 | $(1,580) | (22.4)% | | Net income | $3,765 | $4,788 | $(1,023) | (21.4)% | | Basic EPS | $0.40 | $0.52 | $(0.12) | (23.1)% | | Diluted EPS | $0.38 | $0.49 | $(0.11) | (22.4)% | [Condensed Consolidated Statements of Stockholders' Equity (unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(unaudited)) Stockholders' equity increased for 6M 2025 due to net income and stock option exercises, with a 2-for-1 stock split effected in February 2025 | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------- | :------------ | :---------------- | :--------- | :--------- | | Total Stockholders' Equity | $40,919 | $36,126 | $4,793 | 13.3% | | Retained Earnings | $9,332 | $5,567 | $3,765 | 67.6% | | Additional Paid-in Capital | $32,015 | $31,129 | $886 | 2.8% | - A **2-for-1 stock split** was effected on February 7, 2025, retroactively adjusting all share and per share information[78](index=78&type=chunk) [Condensed Consolidated Statements of Cash Flows (unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Cash and restricted cash decreased significantly for 6M 2025 due to substantial investing activities, primarily the Irwin acquisition deposit | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Net cash provided by operating activities | $3,523 | $6,606 | $(3,083) | (46.7)% | | Net cash used in investing activities | $(5,029) | $(10) | $(5,019) | 50190.0% | | Net cash used in financing activities | $(1,568) | $(4,750) | $3,182 | (67.0)% | | Change in cash and restricted cash | $(2,935) | $1,837 | $(4,772) | (259.8)% | | Cash and restricted cash, end of period | $1,585 | $3,735 | $(2,150) | (57.6)% | - The significant increase in cash used in investing activities was primarily due to a **$5,000 thousand deposit** paid for the Irwin acquisition[20](index=20&type=chunk)[147](index=147&type=chunk) [Notes to Condensed Consolidated Financial Statements (unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) These notes detail the company's business, accounting policies, and specific financial accounts, providing essential context for the financial statements [NOTE 1 - DESCRIPTION OF BUSINESS](index=9&type=section&id=NOTE%201%20-%20DESCRIPTION%20OF%20BUSINESS) FitLife Brands, Inc. provides nutritional supplements under various brands, distributed through GNC, retail, and e-commerce platforms like Amazon - FitLife Brands, Inc. offers innovative and proprietary nutritional supplements and wellness products[21](index=21&type=chunk) - Key brand names include NDS Nutrition, PMD Sports, SirenLabs, Core Active, Nutrology, Metis Nutrition (NDS Products); iSatori, BioGenetic Laboratories, Energize (iSatori Products); Dr. Tobias, All Natural Advice, Maritime Naturals (MRC Products); and MusclePharm[21](index=21&type=chunk) - Distribution channels include franchised and corporate GNC stores, specialty and mass retail, and online e-commerce platforms (e.g., Amazon)[22](index=22&type=chunk) [NOTE 2 - BASIS OF PRESENTATION](index=9&type=section&id=NOTE%202%20-%20BASIS%20OF%20PRESENTATION) Unaudited interim financial statements are prepared under GAAP and Form 10-Q, and should be read with the Annual Report on Form 10-K - Interim financial statements are unaudited and prepared in accordance with GAAP, Form 10-Q, and Article 8 of Regulation S-X[24](index=24&type=chunk) - Operating results for the three- and six-month periods ended June 30, 2025, are not necessarily indicative of the results that may be expected for the year ending December 31, 2025[24](index=24&type=chunk) [NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=NOTE%203%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines key accounting policies, including consolidation, foreign currency, estimates, revenue recognition, goodwill, and recent pronouncements [Principles of Consolidation](index=9&type=section&id=Principles%20of%20Consolidation) The consolidated financial statements include the Company and its wholly-owned subsidiaries, with all intercompany transactions eliminated - Consolidated financial statements include the Company and its wholly-owned subsidiaries, with intercompany accounts and transactions eliminated[25](index=25&type=chunk) [Foreign Currency Translation](index=9&type=section&id=Foreign%20Currency%20Translation) The Company uses USD as its functional currency, while Canadian subsidiaries use CAD, with translation adjustments recorded in stockholders' equity - The functional currency of the Company is the U.S. dollar, and for its Canadian subsidiaries, it is the Canadian dollar[26](index=26&type=chunk) - Assets and liabilities of foreign subsidiaries are translated using end-of-period exchange rates, with changes included in foreign currency translation adjustment within stockholders' equity[26](index=26&type=chunk) - Revenue and expense transactions use an average rate prevailing during the period, and transaction gains and losses are included in the results of operations[27](index=27&type=chunk) [Use of Estimates and Assumptions](index=11&type=section&id=Use%20of%20Estimates%20and%20Assumptions) Financial statement preparation relies on management's estimates and assumptions for various accounts, which may differ from actual results - Management makes estimates and assumptions for reserves of uncollectible accounts, allowance for inventory obsolescence, product returns, depreciable lives of property and equipment, allocation of purchase price from business combinations, analysis of impairment of goodwill, realization of deferred tax assets, accruals for potential liabilities, and assumptions made in valuing stock instruments issued for services[28](index=28&type=chunk)[29](index=29&type=chunk) - Actual results could differ from these estimates[29](index=29&type=chunk) [Revenue Recognition](index=11&type=section&id=Revenue%20Recognition) Revenue is recognized upon shipment or delivery, with the company acting as principal in e-commerce sales, and 65% of Q2 2025 net revenue from online channels - Revenue is recognized when performance obligations are satisfied, which occurs upon shipment or delivery of products to customers[31](index=31&type=chunk)[38](index=38&type=chunk) - The Company is the principal in e-commerce arrangements (e.g., Amazon), recording distribution and platform fees to cost of goods sold, not as a reduction of revenue[33](index=33&type=chunk) | Revenue Channel | Q2 2025 (% of net revenue) | Q2 2024 (% of net revenue) | 6M 2025 (% of net revenue) | 6M 2024 (% of net revenue) | | :---------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Online Revenue | 65% | 66% | 66% | 66% | | Wholesale Revenue | 35% | 34% | 34% | 34% | - Sales to customers in the U.S. were approximately **96%** during the three and six months ended June 30, 2025 and 2024[37](index=37&type=chunk) | Brand Collection (in thousands) | Q2 2025 Revenue | Q2 2024 Revenue | 6M 2025 Revenue | 6M 2024 Revenue | | :------------------------------ | :-------------- | :-------------- | :-------------- | :-------------- | | Legacy FitLife | $7,303 | $6,802 | $14,602 | $13,763 | | MRC | $6,269 | $7,461 | $12,943 | $14,954 | | MusclePharm | $2,555 | $2,667 | $4,518 | $4,762 | | **Total Revenue** | **$16,127** | **$16,930** | **$32,063** | **$33,479** | [Customer and Vendor Concentration](index=12&type=section&id=Customer%20and%20Vendor%20Concentration) GNC is a significant customer, accounting for 22% of Q2 2025 net revenue, and the company also has vendor concentration for purchases | Customer/Vendor | Q2 2025 (% of net revenue) | Q2 2024 (% of net revenue) | 6M 2025 (% of net revenue) | 6M 2024 (% of net revenue) | | :---------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | GNC Net Sales | 22% | 23% | 19% | 24% | | Customer/Vendor | June 30, 2025 (% of total AR) | December 31, 2024 (% of total AR) | | :---------------- | :---------------------------- | :-------------------------------- | | GNC AR | 28% | 35% | - As of June 30, 2025, one vendor accounted for more than **10%** of the Company's consolidated accounts payable[42](index=42&type=chunk) - During the six months ended June 30, 2025 and 2024, there were two vendors who each accounted for over **10%** of the Company's inventory-related purchases[42](index=42&type=chunk) [Cash and Cash Equivalents](index=12&type=section&id=Cash%20and%20Cash%20Equivalents) Cash equivalents include highly liquid investments with short maturities, with $55 thousand in restricted cash as of June 30, 2025 - 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[43](index=43&type=chunk) | Metric (in thousands) | June 30, 2025 | | :-------------------- | :------------ | | Restricted cash | $55 | [Leases](index=12&type=section&id=Leases) The company leases office space and equipment, recognizing right-of-use assets and lease liabilities on the balance sheet for monthly payment arrangements - Leased assets are presented as operating lease right-of-use assets and related liabilities are presented as lease liabilities[44](index=44&type=chunk) - The company leases certain corporate office space and office equipment under lease agreements with monthly payments over a period of **36 to 84 months**[44](index=44&type=chunk) [Goodwill](index=12&type=section&id=Goodwill) Goodwill impairment is tested annually using the market approach, with no impairment indicators noted as of June 30, 2025 - The Company has a single reporting unit for purposes of performing its goodwill impairment test, reviewed annually or whenever events or changes in circumstances indicate the carrying value may not be recoverable[45](index=45&type=chunk) - The fair value of the reporting unit is determined using the market approach, and significant stock price fluctuations will impact the fair value calculation[45](index=45&type=chunk)[47](index=47&type=chunk) - Management determined there were **no indicators of impairment** at June 30, 2025 or December 31, 2024[48](index=48&type=chunk) - The next impairment analysis will be performed in December 2025[48](index=48&type=chunk) [Intangible Assets](index=14&type=section&id=Intangible%20Assets) Finite-lived intangible assets are amortized, while indefinite-lived assets are tested for impairment, with no indicators noted as of June 30, 2025 - Finite-lived intangible assets (client relationships, formulations, and website) are amortized using the straight-line method over their estimated useful life[49](index=49&type=chunk) - Intangible assets with indefinite lives (brands and trademarks) are not amortized but are tested for impairment annually or when indicators of impairment exist[49](index=49&type=chunk) - The Company noted **no indicators of impairment** for intangible assets as of June 30, 2025, and December 31, 2024[49](index=49&type=chunk) [Acquisitions and Business Combinations](index=14&type=section&id=Acquisitions%20and%20Business%20Combinations) Purchase consideration is allocated to acquired assets and liabilities based on fair values, with any excess recorded as goodwill, subject to measurement period adjustments - The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and separately identified intangible assets acquired based on their estimated fair values[50](index=50&type=chunk) - The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill[50](index=50&type=chunk) - Valuations require management to make significant estimates and assumptions, and adjustments may be recorded during the measurement period (not to exceed one year from the acquisition date)[50](index=50&type=chunk) [Income Taxes](index=14&type=section&id=Income%20Taxes) Income taxes are accounted for using the asset and liability method, with deferred tax assets reduced by a valuation allowance if recovery is uncertain - The Company accounts for income taxes using the asset and liability method, recognizing deferred tax assets for deductible temporary differences and deferred tax liabilities for taxable temporary differences[51](index=51&type=chunk) - Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all will not be realized[51](index=51&type=chunk) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | | Effective Income Tax Rate | 26.1% | 24.3% | [Net Income Per Share](index=15&type=section&id=Net%20Income%20Per%20Share) Basic EPS is calculated using weighted average common shares, while diluted EPS includes potential common shares, with no antidilutive options for Q2 and 6M 2025 - Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding[53](index=53&type=chunk) - Diluted earnings per share includes the dilutive effect of potential common shares using the treasury stock method[53](index=53&type=chunk) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic weighted average shares outstanding | 9,389 | 9,196 | 9,301 | 9,196 | | Diluted weighted average shares outstanding | 9,961 | 9,900 | 9,944 | 9,862 | - For the three and six months ended June 30, 2025 and 2024, there were **no antidilutive options**[53](index=53&type=chunk) [Fair Value Measurements](index=15&type=section&id=Fair%20Value%20Measurements) The company uses a three-level hierarchy for fair value measurements, with short-term financial assets and liabilities approximating fair value - FASB ASC Topic 820 establishes a three-level valuation hierarchy for fair value measurements based on the transparency of inputs: **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than quoted prices), and **Level 3** (significant unobservable inputs)[55](index=55&type=chunk)[58](index=58&type=chunk) - 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 due to their short maturity[56](index=56&type=chunk) - The carrying value of notes payable approximates their fair value based on market interest rates[56](index=56&type=chunk) [Segment](index=16&type=section&id=Segment) The company operates as a single reportable segment, with the CEO evaluating performance and allocating resources based on consolidated net income - The Company operates as a **single reportable segment**, with the Chief Executive Officer (CODM) evaluating performance and making operating decisions based on consolidated financial data[59](index=59&type=chunk) - The CODM uses **net income** as the sole measure of segment profit[59](index=59&type=chunk) [Recently Adopted Accounting Pronouncements](index=16&type=section&id=Recently%20Adopted%20Accounting%20Pronouncements) The company adopted ASU 2023-07, Segment Reporting, effective January 1, 2024, which resulted in additional disclosures but no material financial statement impact - The Company adopted **ASU 2023-07, Segment Reporting (Topic 280)**, effective January 1, 2024[60](index=60&type=chunk) - The adoption did not have a material impact on the Company's consolidated financial statements but resulted in additional disclosures[60](index=60&type=chunk) [Recently Issued Accounting Pronouncements](index=16&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) FASB issued ASU 2024-03 in November 2024, requiring disclosure of specific income statement expenses, with the company currently evaluating its impact - In November 2024, FASB issued **ASU 2024-03**, requiring public business entities to disclose specific information about certain costs and expenses, including purchases of inventory, employee compensation, and depreciation and amortization expense[61](index=61&type=chunk) - The update is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027[61](index=61&type=chunk) - The Company is currently evaluating the provisions of this guidance and assessing the potential impact on its financial statement disclosures[61](index=61&type=chunk) [NOTE 4 – INVENTORIES](index=16&type=section&id=NOTE%204%20%E2%80%93%20INVENTORIES) Inventories are valued at the lower of cost or net realizable value using FIFO, with an allowance for obsolescence that decreased to $78 thousand at June 30, 2025 - The Company's inventory is carried at the lower of cost or net realizable value using the **first-in, first-out ("FIFO") method**[63](index=63&type=chunk) - The Company recognizes an allowance for obsolescence for expiring, excess, and slow-moving inventory[64](index=64&type=chunk) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------- | :------------ | :---------------- | :--------- | :--------- | | Finished goods | $10,276 | $10,348 | $(72) | (0.7)% | | Components | $1,524 | $826 | $698 | 84.5% | | Allowance for obsolescence | $(78) | $(100) | $22 | (22.0)% | | Total Inventories | $11,722 | $11,074 | $648 | 5.8% | [NOTE 5 - PROPERTY AND EQUIPMENT](index=16&type=section&id=NOTE%205%20-%20PROPERTY%20AND%20EQUIPMENT) Property and equipment, net, increased slightly to $81 thousand at June 30, 2025, while depreciation expense decreased for Q2 and 6M 2025 | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------- | :------------ | :---------------- | :--------- | :--------- | | Equipment | $993 | $964 | $29 | 3.0% | | Accumulated depreciation | $(912) | $(889) | $(23) | 2.6% | | Total Property and Equipment, net | $81 | $75 | $6 | 8.0% | | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Depreciation expense | $13 | $16 | $23 | $42 | [NOTE 6 – NOTES PAYABLE](index=18&type=section&id=NOTE%206%20%E2%80%93%20NOTES%20PAYABLE) Total notes payable decreased to $10,821 thousand at June 30, 2025, with Term Loans A and B accruing interest based on SOFR, and the company in compliance with covenants | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------- | :------------ | :---------------- | :--------- | :--------- | | Term Loan A | $4,375 | $5,625 | $(1,250) | (22.2)% | | Term Loan B | $6,500 | $7,500 | $(1,000) | (13.3)% | | Total Notes Payable | $10,821 | $13,050 | $(2,229) | (17.1)% | - Term Loans A and B 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")**[72](index=72&type=chunk) - The Line of Credit was extended to **April 30, 2026**[71](index=71&type=chunk)[140](index=140&type=chunk) - The Company was in compliance with all loan covenants as of June 30, 2025 and December 31, 2024[75](index=75&type=chunk) [NOTE 7 - EQUITY](index=20&type=section&id=NOTE%207%20-%20EQUITY) Common Stock outstanding was 9,391 thousand shares as of June 30, 2025, following a 2-for-1 stock split, and the share repurchase program was extended | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Common Stock Issued & Outstanding | 9,391 | 9,210 | - On February 7, 2025, the Company effected a **2-for-1 stock split** of its Common Stock[78](index=78&type=chunk) - The Board approved the extension of the Share Repurchase Program, authorizing management to repurchase up to **$5,000 thousand** of Common Stock over 24 months[79](index=79&type=chunk) - No repurchases occurred during the six months ended June 30, 2025 and 2024[80](index=80&type=chunk) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Stock-based compensation | $99 | $101 | $206 | $203 | [NOTE 8 - COMMITMENTS AND CONTINGENCIES](index=21&type=section&id=NOTE%208%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) The company is not involved in any litigation or investigations believed to have a material adverse effect on its financial condition or operations - The Company is not involved in any litigation that is believed to have a material adverse effect on its financial condition or results of operations[84](index=84&type=chunk) [NOTE 9 - SEGMENT INFORMATION](index=21&type=section&id=NOTE%209%20%E2%80%93%20SEGMENT%20INFORMATION) The company operates as a single reportable segment, with the CEO assessing performance at the consolidated level using net income as the sole measure of profit - The Company operates and manages its business as **one reportable operating segment**[85](index=85&type=chunk) - The CODM allocates resources and assesses financial performance based upon financial data presented at the consolidated level, using **net income** as the sole measure of segment profit[86](index=86&type=chunk) | Significant Segment Expenses (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Cost of goods sold | $9,223 | $9,350 | $18,285 | $18,612 | | Employee compensation and benefits | $1,494 | $1,546 | $3,031 | $3,039 | | Advertising and marketing | $1,191 | $1,326 | $2,244 | $2,554 | | Merger and acquisition related | $696 | $24 | $1,028 | $158 | | Sales by Geographic Region (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | United States | $15,484 | $16,262 | $30,816 | $32,066 | | Rest of world | $643 | $668 | $1,247 | $1,413 | | **Total Revenue** | **$16,127** | **$16,930** | **$32,063** | **$33,479** | [NOTE 10 - SUBSEQUENT EVENTS](index=22&type=section&id=NOTE%2010%20%E2%80%93%20SUBSEQUENT%20EVENTS) On August 8, 2025, the company acquired Irwin Naturals for $42,500 thousand, funded by a new term loan and revolving line of credit from First Citizens Bank - On August 8, 2025, the Company acquired substantially all of the assets of Irwin Naturals and its related affiliates for approximately **$42,500 thousand**[88](index=88&type=chunk)[97](index=97&type=chunk) - The acquisition was funded using proceeds from a new **$40,625 thousand term loan** and a new **$10,000 thousand revolving line of credit** from First Citizens Bank[88](index=88&type=chunk)[90](index=90&type=chunk) - The new term loan also paid off, retired, and replaced all existing debt of the Company as of the Closing Date, totaling **$10,875 thousand**[90](index=90&type=chunk) - The new Term Loan accrues interest at a per annum rate equal to **2.50% to 3.00% above a forward-looking term rate based on the secured overnight financing rate (Term SOFR Rate)**[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20%26%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of FitLife Brands' financial performance for Q2 and 6M 2025, covering business overview, results, liquidity, and accounting policies [Overview](index=23&type=section&id=Overview) FitLife Brands, Inc. offers nutritional supplements under various brands, distributed through GNC, retail, and e-commerce, headquartered in Omaha, Nebraska - FitLife Brands, Inc. is a provider of innovative and proprietary nutritional supplements and wellness products marketed under brands such as NDS Nutrition, iSatori, MRC Products, and MusclePharm[94](index=94&type=chunk) - Products are distributed through franchised and corporate GNC stores, retail locations (specialty and mass), and online e-commerce platforms (e.g., Amazon)[95](index=95&type=chunk) [Recent Acquisitions](index=23&type=section&id=Recent%20Acquisitions) Subsequent to the quarter end, on August 8, 2025, FitLife Brands acquired substantially all assets of Irwin Naturals for approximately $42,500 thousand in cash. This acquisition was financed through a new term loan and revolving line of credit from First Citizens Bank - Subsequent to the end of the quarter, on August 8, 2025, the Company acquired substantially all of the assets of Irwin Naturals and its related affiliates for approximately **$42,500 thousand in cash**[97](index=97&type=chunk) - The acquisition was funded using proceeds from a new term loan (**$29,750 thousand**) and a new revolving line-of-credit (**$6,000 thousand** from a $10,000 thousand facility) from First Citizens Bank, with the remainder from the Company's available cash balances[97](index=97&type=chunk) [Recent Developments](index=24&type=section&id=Recent%20Developments) On February 7, 2025, the company effected a 2-for-1 stock split of its Common Stock, retroactively adjusting all share and per share information in the report. The number of authorized shares was proportionately increased - 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[99](index=99&type=chunk) - All share and per share information throughout this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect the stock split[99](index=99&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) The company experienced declines in revenue, gross profit, and net income for Q2 and 6M 2025, primarily due to decreased MRC and MusclePharm sales and increased M&A expenses [Comparison of Q2 2025 vs. Q2 2024](index=24&type=section&id=Comparison%20of%20the%20three%20months%20ended%20June%2030,%202025%20to%20the%20three%20months%20ended%20June%2030,%202024) Q2 2025 revenue decreased 5% to $16,127 thousand, and net income decreased 34% due to lower MRC revenue and higher M&A expenses, despite Legacy FitLife growth | Metric (in thousands) | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :-------------------- | :------ | :------ | :--------- | :--------- | | Revenue | $16,127 | $16,930 | $(803) | (5)% | | Cost of goods sold | $9,223 | $9,350 | $(127) | (1)% | | Gross profit | $6,904 | $7,580 | $(676) | (9)% | | Gross margin | 42.8% | 44.8% | n/m | (2.0)% | | Operating income | $2,518 | $3,675 | $(1,157) | (31)% | | Net income | $1,747 | $2,628 | $(881) | (34)% | - Legacy FitLife revenue increased **7%** due to a **17% increase in online revenue** and a **1% increase in wholesale revenue**[101](index=101&type=chunk) - MRC revenue decreased **16%** due to a drop in traffic to its product listing pages on Amazon[101](index=101&type=chunk) - MusclePharm revenue decreased **4%**[102](index=102&type=chunk) - Merger and acquisition related expense increased to **$696 thousand** from $24 thousand, driven by transaction costs related to the Irwin acquisition[107](index=107&type=chunk) [Comparison of 6M 2025 vs. 6M 2024](index=26&type=section&id=Comparison%20of%20the%20six%20months%20ended%20June%2030,%202025%20to%20the%20six%20months%20ended%20June%2030,%202024) 6M 2025 revenue decreased 4% to $32,063 thousand, and net income decreased 21%, driven by lower MRC sales and increased acquisition-related expenses | Metric (in thousands) | 6M 2025 | 6M 2024 | Change ($) | Change (%) | | :-------------------- | :------ | :------ | :--------- | :--------- | | Revenue | $32,063 | $33,479 | $(1,416) | (4)% | | Cost of goods sold | $18,285 | $18,612 | $(327) | (2)% | | Gross profit | $13,778 | $14,867 | $(1,089) | (7)% | | Gross margin | 43.0% | 44.4% | n/m | (1.4)% | | Operating income | $5,476 | $7,056 | $(1,580) | (22)% | | Net income | $3,765 | $4,788 | $(1,023) | (21)% | - Legacy FitLife revenue increased **6%** (**14% online**, **2% wholesale**)[110](index=110&type=chunk) - MRC revenue decreased **13%** (**13% online**)[110](index=110&type=chunk) - MusclePharm revenue decreased **5%** (**21% wholesale decrease**, **13% online increase**)[111](index=111&type=chunk) - Merger and acquisition related expense increased to **$1,028 thousand** from $158 thousand, primarily due to transaction costs related to the Irwin acquisition[117](index=117&type=chunk) [Supplemental Discussion of Performance of Acquired Brands](index=27&type=section&id=Supplemental%20Discussion%20of%20Performance%20of%20Acquired%20Brands) This section analyzes the performance of Legacy FitLife, MRC, and MusclePharm brands, focusing on revenue, gross margin, and 'contribution' as a non-GAAP metric [Legacy FitLife Performance](index=28&type=section&id=Legacy%20FitLife) Legacy FitLife revenue increased 7% in Q2 2025 compared to Q2 2024, driven by a 17% increase in online revenue and a 1% increase in wholesale revenue. Gross margin slightly decreased to 43.8%, and contribution as a percentage of revenue decreased to 42.0%. The company resolved a commercial dispute with GNC in January 2025 | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----- | :------ | :------ | :--------- | | Total revenue | $7,303 | $6,802 | 7% | | Wholesale revenue | $4,282 | $4,224 | 1% | | Online revenue | $3,021 | $2,578 | 17% | | Gross profit | $3,200 | $3,006 | 6.4% | | Gross margin | 43.8% | 44.2% | (0.4)% | | Advertising and marketing | $130 | $94 | 38.3% | | Contribution | $3,070 | $2,912 | 5.4% | | Contribution as a % of revenue | 42.0% | 42.8% | (0.8)% | - A commercial dispute with GNC was settled in January 2025, leading to the resumption of purchase orders and direct shipments to GNC franchisees[121](index=121&type=chunk)[122](index=122&type=chunk) [Mimi's Rock (MRC) Performance](index=28&type=section&id=Mimi's%20Rock%20(MRC)) MRC revenue decreased 16% in Q2 2025 compared to Q2 2024, primarily due to a drop in traffic to Amazon product listing pages. Gross profit decreased 19%, and contribution decreased 17%. Gross margin declined to 46.5% due to product mix changes and tariffs on skin care products. Dr. Tobias revenue decreased 16%, and skin care brands declined 20% | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----- | :------ | :------ | :--------- | | Total revenue | $6,269 | $7,461 | (16)% | | Online revenue | $6,166 | $7,371 | (16.4)% | | Gross profit | $2,916 | $3,597 | (19)% | | Gross margin | 46.5% | 48.2% | (1.7)% | | Advertising and marketing | $823 | $1,071 | (23.1)% | | Contribution | $2,093 | $2,526 | (17)% | | Contribution as a % of revenue | 33.4% | 33.9% | (0.5)% | - The decrease in MRC revenue is primarily due to a **drop in traffic to its product listing pages on Amazon**[101](index=101&type=chunk)[124](index=124&type=chunk) - The decrease in gross margin is primarily driven by changes in product mix within the Dr. Tobias brand and the impact of tariffs on certain skin care products[105](index=105&type=chunk)[125](index=125&type=chunk)[127](index=127&type=chunk) - Revenue for Dr. Tobias decreased **16%**, while revenue for the skin care brands (Maritime Naturals and All Natural Advice) declined **20%**[126](index=126&type=chunk) [MusclePharm Performance](index=29&type=section&id=MusclePharm) MusclePharm revenue decreased 4% in Q2 2025 compared to Q2 2024, with wholesale revenue down 6% and online revenue down 3%. Gross margin decreased to 30.8% due to promotional investments. The company launched the new MusclePharm Pro Series in a pilot at Vitamin Shoppe stores in mid-March 2025 | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----- | :------ | :------ | :--------- | | Total revenue | $2,555 | $2,667 | (4)% | | Wholesale revenue | $1,311 | $1,388 | (6)% | | Online revenue | $1,244 | $1,279 | (3)% | | Gross profit | $788 | $977 | (19.4)% | | Gross margin | 30.8% | 36.6% | (5.8)% | | Advertising and marketing | $238 | $161 | 47.8% | | Contribution | $550 | $816 | (32.7)% | | Contribution as a % of revenue | 21.5% | 30.6% | (9.1)% | - Gross margin and contribution margin were impacted by targeted investments in advertising and promotion, including additional promotional incentives to certain wholesale partners[128](index=128&type=chunk)[129](index=129&type=chunk) - In mid-March 2025, the Company launched the new **MusclePharm Pro Series** in a pilot in high-volume Vitamin Shoppe stores, with plans for online and international wholesale sales[130](index=130&type=chunk) [FitLife Consolidated Performance](index=30&type=section&id=FitLife%20Consolidated) For Q2 2025, consolidated revenue decreased 5% to $16,127 thousand, gross profit decreased 9% to $6,904 thousand, and contribution decreased 9% to $5,713 thousand compared to Q2 2024. Gross margin declined to 42.8% from 44.8%, and contribution as a percentage of revenue decreased to 35.4% from 36.9% | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----- | :------ | :------ | :--------- | | Total revenue | $16,127 | $16,930 | (5)% | | Wholesale revenue | $5,696 | $5,702 | (0.1)% | | Online revenue | $10,431 | $11,228 | (7.1)% | | Gross profit | $6,904 | $7,580 | (9)% | | Gross margin | 42.8% | 44.8% | (2.0)% | | Advertising and marketing | $1,191 | $1,326 | (10.2)% | | Contribution | $5,713 | $6,254 | (9)% | | Contribution as a % of revenue | 35.4% | 36.9% | (1.5)% | [Non-GAAP Measures (EBITDA and Adjusted EBITDA)](index=30&type=section&id=Non-GAAP%20Measures) EBITDA and Adjusted EBITDA, which excludes stock-based compensation and M&A expenses, both decreased for Q2 and 6M 2025 compared to the prior year - EBITDA excludes interest, foreign exchange gains and losses, income taxes, and depreciation and amortization[133](index=133&type=chunk) - Adjusted EBITDA further excludes stock-based compensation and merger and acquisition related expense[133](index=133&type=chunk) | Metric (in thousands) | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :-------------------- | :------ | :------ | :--------- | :--------- | | EBITDA | $2,532 | $3,702 | $(1,170) | (31.6)% | | Adjusted EBITDA | $3,327 | $3,827 | $(500) | (13.1)% | | Metric (in thousands) | 6M 2025 | 6M 2024 | Change ($) | Change (%) | | :-------------------- | :------ | :------ | :--------- | :--------- | | EBITDA | $5,509 | $7,119 | $(1,610) | (22.6)% | | Adjusted EBITDA | $6,743 | $7,480 | $(737) | (9.9)% | [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital increased to $9,209 thousand at June 30, 2025, supported by operating cash flows and a new credit agreement for the Irwin acquisition and debt refinancing | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------- | :------------ | :---------------- | :--------- | :--------- | | Working Capital | $9,209 | $6,832 | $2,377 | 34.8% | | Cash and Accounts Receivable | $4,018 | $6,094 | $(2,076) | (34.1)% | - On August 8, 2025, the Company entered into a new credit agreement with First Citizens Bank, providing a **five-year term loan in the amount of $40,625 thousand** and a **three-year revolving line of credit of up to $10,000 thousand**[141](index=141&type=chunk) - The proceeds from the new loan were used to fund the Irwin acquisition (**$29,750 thousand**) and pay off, retire, and replace all existing debt of the Company (**$10,875 thousand**)[141](index=141&type=chunk) - Management anticipates that cash derived from operations and existing cash reserves, along with available borrowings under the Line of Credit, will be sufficient to provide for the Company's liquidity for the next twelve months[144](index=144&type=chunk)[145](index=145&type=chunk) | Cash Flow Activity (in thousands) | 6M 2025 | 6M 2024 | Change ($) | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | :--------- | | Operating Activities | $3,523 | $6,606 | $(3,083) | (46.7)% | | Investing Activities | $(5,029) | $(10) | $(5,019) | 50190.0% | | Financing Activities | $(1,568) | $(4,750) | $3,182 | (67.0)% | [Critical Accounting Policies and Estimates](index=33&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights critical accounting policies and estimates, including the use of estimates, goodwill impairment, and revenue recognition, which require significant management judgment [Use of Estimates and Assumptions](index=34&type=section&id=Use%20of%20Estimates%20and%20Assumptions_MDA) Management's estimates and assumptions are vital for financial statements, covering areas like uncollectible accounts, inventory, and goodwill, with actual results potentially differing - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts of assets, liabilities, net sales, and expense[153](index=153&type=chunk) - These estimates include reserves for uncollectible accounts receivable, allowance for inventory obsolescence, product returns, depreciable lives of property and equipment, allocation of purchase price from business combinations, analysis of impairment of goodwill, realization of deferred tax assets, accruals for potential liabilities, and assumptions made in valuing stock instruments issued for services[154](index=154&type=chunk) - Management evaluates these estimates and assumptions on a regular basis, but actual results could differ[154](index=154&type=chunk) [Goodwill](index=34&type=section&id=Goodwill_MDA) Goodwill and indefinite-lived intangible assets are reviewed for impairment annually (December 31) or when triggering events occur. Impairment is determined by comparing the fair value of reporting units to their carrying value. No triggering event for impairment was identified during the six months ended June 30, 2025 - Goodwill and indefinite-lived intangible assets are reviewed for impairment at least annually (December 31) or whenever events or circumstances indicate a potential impairment[155](index=155&type=chunk) - Impairment is determined by comparing the fair value of reporting units to the carrying value of the underlying net assets[155](index=155&type=chunk) - Management concluded that a **triggering event did not occur** during the six months ended June 30, 2025[156](index=156&type=chunk) [Revenue Recognition](index=34&type=section&id=Revenue%20Recognition_MDA) Revenue is recognized upon shipment or delivery, with the company acting as principal in e-commerce sales, and online channels contributing 65% of Q2 2025 net revenue - Revenue is comprised of sales of nutritional supplements and wellness products to consumers, accounted for in accordance with **FASB ASC 606**[157](index=157&type=chunk)[158](index=158&type=chunk) - Revenue is recognized when performance obligations are satisfied, which occurs upon shipment or delivery of products to customers[158](index=158&type=chunk)[164](index=164&type=chunk) - The Company is the principal in e-commerce arrangements (e.g., Amazon), recording platform fees paid for distribution to cost of goods sold[160](index=160&type=chunk) | Revenue Channel | Q2 2025 (% of net revenue) | Q2 2024 (% of net revenue) | 6M 2025 (% of net revenue) | 6M 2024 (% of net revenue) | | :---------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Online Revenue | 65% | 66% | 66% | 66% | | Wholesale Revenue | 35% | 34% | 34% | 34% | - Sales to customers in the U.S. were approximately **96%** during the three and six months ended June 30, 2025 and 2024[163](index=163&type=chunk) [Recent Accounting Pronouncements](index=35&type=section&id=Recent%20Accounting%20Pronouncements_MDA) This section refers to Note 3 for details on recent accounting pronouncements that may materially impact the company's financial statements - Refer to Note 3 of the Condensed Consolidated Financial Statements for a description of recent accounting pronouncements believed to have a material impact on the Company's present or future financial statements[167](index=167&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily foreign currency fluctuations from the MRC acquisition and interest rate changes on borrowings [Foreign Currency](index=35&type=section&id=Foreign%20Currency) Due to the MRC acquisition in 2023, the company has increased exposure to fluctuations in foreign currencies. However, it has not entered into any foreign currency hedging transactions during the six months ended June 30, 2025 - Due to the MRC acquisition in 2023, the Company has more exposure to fluctuations in foreign currencies[168](index=168&type=chunk) - The Company has not entered into any foreign currency hedging transactions during the six months ended June 30, 2025[169](index=169&type=chunk) [Interest Rates](index=36&type=section&id=Interest%20Rates) Interest rate risk relates to borrowings under the Amended Credit Agreement, with $10,875 thousand outstanding on Term Loans as of June 30, 2025 - The Company's exposure to risk for changes in interest rates relates primarily to borrowings under the Amended Credit Agreement (Term Loans and Line of Credit) and investments in short-term financial instruments[170](index=170&type=chunk) | Metric (in thousands) | June 30, 2025 | | :-------------------- | :------------ | | Outstanding Term Loans | $10,875 | | Outstanding Line of Credit | $0 | - The Company does not expect any material change with respect to its net income as a result of an interest rate change, as substantially all cash equivalents consist of bank deposits and short-term money market instruments[171](index=171&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting [Evaluation of disclosure controls and procedures](index=36&type=section&id=Evaluation%20of%20disclosure%20controls%20and%20procedures.) The CEO and CFO evaluated and concluded that the company's disclosure controls and procedures were effective as of June 30, 2025 - The Chief Executive Officer and Chief Financial Officer believe that the Company's disclosure controls and procedures are **effective** as of June 30, 2025[172](index=172&type=chunk) [Changes in Internal Control Over Financial Reporting](index=36&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025 - There were **no additional changes** in internal control over financial reporting during the three months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[173](index=173&type=chunk) [Inherent Limitations on the Effectiveness of Controls](index=36&type=section&id=Inherent%20Limitations%20on%20the%20Effectiveness%20of%20Controls) Management acknowledges that control systems provide only reasonable assurance due to inherent limitations like faulty judgments, errors, or circumvention - Management does not expect that disclosure controls and procedures or internal control over financial reporting will prevent or detect all errors and all fraud[174](index=174&type=chunk) - A control system can provide only reasonable, not absolute, assurance that objectives are met, due to inherent limitations such as faulty judgments, simple errors, circumvention by individuals or collusion, or management override[174](index=174&type=chunk)[175](index=175&type=chunk) [PART II - OTHER INFORMATION](index=37&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This part includes additional information such as legal proceedings, risk factors, unregistered sales of equity securities, defaults, and a list of exhibits [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in any litigation or investigations believed to have a material adverse effect on its financial condition or operations - The Company is not currently involved in any litigation that is believed to have a material adverse effect on its financial condition or results of operations[177](index=177&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the Annual Report on Form 10-K for detailed risk factors, with no material changes noted since the last annual report - The Company's results of operations and financial condition are subject to numerous risks and uncertainties described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024[178](index=178&type=chunk) - Management is not aware of any material changes to the risk factors discussed in the Annual Report on Form 10-K for the year ended December 31, 2024[178](index=178&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds during the reporting period - None[179](index=179&type=chunk) [Item 3. Defaults Upon Senior Securities](index=37&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the three-month period ended June 30, 2025 - There were **no defaults** upon senior securities during the three-month period ended June 30, 2025[180](index=180&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - In the three months ended June 30, 2025, **no directors or officers adopted or terminated** a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement"[181](index=181&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and various Inline XBRL documents - Exhibits include Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act[182](index=182&type=chunk) - Various Inline XBRL documents (Instance, Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, Presentation Linkbase) are also included[182](index=182&type=chunk)

Core Insights - FitLife Brands, Inc. reported a 5% decrease in total revenue for Q2 2025, amounting to $16.1 million compared to $16.9 million in Q2 2024 [3][19] - The decline in online revenue was 7%, totaling $10.4 million, which represented 65% of total revenue for the quarter [3][19] - Gross margin decreased to 42.8% from 44.8% year-over-year, primarily due to increased merger and acquisition-related expenses [4][5][19] Financial Performance - Net income for Q2 2025 was $1.7 million, down from $2.6 million in Q2 2024, with basic and diluted earnings per share at $0.19 and $0.18, respectively [5][19] - Adjusted EBITDA decreased by 13% to $3.3 million compared to the same period in 2024, with trailing twelve months adjusted EBITDA at $13.4 million [6][19] - The company ended the quarter with $10.9 million in term loans and $6.6 million in cash, resulting in total net debt of $4.3 million, approximately 0.3x adjusted EBITDA [7][19] Brand Performance - Legacy FitLife revenue increased by 7% year-over-year, driven by a 17% increase in online revenue and a 1% increase in wholesale revenue [11][12] - MRC revenue decreased by 16% compared to Q2 2024, with significant declines in the Dr. Tobias brand and skin care brands due to reduced traffic and tariffs [13][14][15] - MusclePharm revenue decreased by 4%, with wholesale revenue down 6% and online revenue down 3%, although the company is investing in advertising to drive growth [17][18][24] Acquisition Activity - The company completed the acquisition of Irwin Naturals for $42.5 million on August 8, 2025, funded primarily through a new term loan and available cash [20][26] - Irwin Naturals generated approximately $60 million in revenue with a gross margin of about 35% for the trailing twelve months as of June 30, 2025 [25][26] - Management expects to achieve cost savings and improved gross margins as they integrate Irwin Naturals into their operations [26][27]

Core Viewpoint - FitLife Brands, Inc. has successfully acquired substantially all assets of Irwin Naturals for a total consideration of $42.5 million, as approved by the US Bankruptcy Court [1][2]. Group 1: Acquisition Details - The acquisition was executed under Section 363 of the US Bankruptcy Code, allowing FitLife to acquire assets while assuming minimal liabilities [2]. - The funding for the acquisition included $35.75 million from a new term loan and revolving line of credit from First Citizens Bank, with the remainder sourced from FitLife's cash balances [2]. Group 2: Company Insights - FitLife Brands is a developer and marketer of nutritional supplements and wellness products, offering over 250 products primarily online and through various retail locations [3]. - The company is headquartered in Omaha, Nebraska, and targets health-conscious consumers [3]. Group 3: Management Commentary - Dayton Judd, Chairman and CEO of FitLife, expressed excitement about the acquisition, highlighting Irwin's strong brands and distribution capabilities, and anticipates it will drive revenue and earnings growth for the company [3].

Core Viewpoint - FitLife Brands, Inc. has announced the acquisition of substantially all assets of Irwin Naturals, a nutritional supplement company, under Section 363 of the US Bankruptcy Code, with the transaction expected to close around August 8, 2025 [1][2]. Transaction Highlights - The purchase price for the acquisition is $42.5 million, which includes approximately $16 million of net working capital and equates to a pre-synergy acquisition multiple of less than 6x EBITDA [8][9]. - The combined revenue for the first full year of operation is anticipated to exceed $120 million, with adjusted EBITDA expected to be between $20-25 million [8][9]. About Irwin Naturals - Irwin Naturals, founded in 1994, generates approximately 4% of its revenue from online sales, 61% from wholesale sales to mass market customers, and 35% from wholesale sales to health food stores [3]. - Major mass market customers for Irwin include CVS, Walmart, Walgreens, and Costco Canada [3]. Rationale for the Transaction - The product lines of FitLife and Irwin are largely complementary, with Irwin strong in weight loss, sexual wellness, and body cleanse segments, while FitLife focuses on sports nutrition [5]. - The acquisition is expected to enhance revenue growth through complementary channel strengths, particularly in the food, drug, and mass market channels where FitLife currently has minimal revenue [6]. - FitLife anticipates operational synergies that will allow for more profitable operations of Irwin, including an expected reduction of approximately $1.5 million in SG&A costs [7]. Financing Arrangements - The transaction will be funded through a combination of cash on hand and a new committed term loan of $40.625 million, along with an upsized $10 million revolving credit facility from First Citizens Bank [8][9]. - Pre-synergy total leverage at closing is expected to be less than 2.25x EBITDA [8]. Company Performance Expectations - For the second quarter of 2025, FitLife expects a year-over-year revenue decline of approximately 4-5%, attributed mainly to the performance of a specific product under the Dr. Tobias brand [11][12]. - The company anticipates net income for the second quarter to be between $1.6 - 1.8 million, including transaction-related expenses [12].

Core Viewpoint - FitLife Brands, Inc. plans to report its financial performance for Q2 of fiscal 2025 on August 14, 2025 [1] Group 1: Financial Reporting - The financial performance report for Q2 fiscal 2025 will be released on August 14, 2025 [1] - An investor conference call is scheduled for August 14, 2025, at 4:30 pm ET [2] - Participants can join the call using specific dial-in numbers and a conference identification code [2] Group 2: Company Overview - FitLife Brands is a developer and marketer of nutritional supplements and wellness products [3] - The company offers over 250 different products, primarily marketed online and through GNC® franchise locations [3] - FitLife Brands is headquartered in Omaha, Nebraska [3]

Core Insights - True value in investments comes from growth rather than short-term gains, emphasizing a long-term perspective on evaluation [1] - Great businesses provide significant societal value and demonstrate durability, which is essential for sustained growth [1] - Companies that offer products and services significantly better than competitors are positioned to achieve substantial growth [1] Business Characteristics - Selection, convenience, and value are critical traits sought in businesses [1] - Durability acts as a multiplier for value, with a preference for non-cyclical businesses [1] - The ability to innovate and maintain competitive advantages is crucial for long-term success [1] Revenue and Structure - Multiple revenue streams and anti-fragile business structures are preferred for resilience [1] - A business's ability to recover from adversity is a strong indicator of its durability [1] - Uniqueness is identified as the primary driver of value [1] Cost and Investment Strategy - Low costs associated with maintaining existing operations allow for high leverage in reinvestment and growth [1] - Minimal marketing expenses are advantageous for sustainable growth [1] - Trust and network effects are valuable indicators of a business's durability [1] Management and Leadership - Effective management is critical, with a preference for executives who have aligned interests and a strong focus on the business [1] - Companies led by seasoned CEOs, founders, or family businesses are favored [1] - Good management fosters a culture that attracts talent and empowers employees [1] Market Timing and Investment Philosophy - The best investment opportunities arise when negative news is already priced in, revealing true value [1] - Companies that can maintain stability during layoffs and adverse conditions are seen as more valuable [1] - Price movements are influenced by expectations, with a focus on undervalued companies that have negative factors priced in [1]

Financial Data and Key Metrics Changes - Total revenue for the first quarter of 2025 declined 4% year over year to $15.9 million, with online sales accounting for 67% of total revenue at $10.6 million [3][4] - Gross profit decreased by 6%, and gross margin fell from 44% in the first quarter of the previous year to 43.1% [4] - Net income for the first quarter was $2 million, down from $2.2 million in the same quarter last year, with basic earnings per share declining from 23¢ to 22¢ [4][5] - Adjusted EBITDA for the quarter was $3.4 million, a 6% decrease compared to the previous year [5] - The company ended the quarter with $12 million outstanding on term loans and no balance on its revolving line of credit, resulting in net debt of $6 million, approximately 0.4 times the company's adjusted EBITDA for the past twelve months [5][13] Business Line Performance Changes - Legacy FitLife revenue for the first quarter was $7.3 million, with wholesale customers contributing 63% and online sales 37%, representing a 5% increase in total revenue [6] - MRC revenue declined 11% year over year to $6.7 million, with gross margin decreasing to 45.4% [7][9] - Muscle Farm revenue declined 6%, with wholesale revenue down 41% and online revenue up 33%, leading to a gross margin drop from 40% to 30.1% [10][11] Market Data and Key Metrics Changes - The tariff environment remains uncertain, particularly concerning ingredients from China, although a recent 90-day de-escalation is seen as encouraging [12] - The company has increased inventory levels intentionally to pre-tariff prices, resulting in an all-time high inventory at the end of the first quarter [12] Company Strategy and Industry Competition - The company aims to be active in M&A, with increased spending on potential transactions, although it cautions that such spending may not always lead to successful acquisitions [13][14] - The company believes it will likely be added to the Russell 2000 index, which could serve as a positive catalyst for the stock [15] Management's Comments on Operating Environment and Future Outlook - Management expressed hope for organic revenue growth in 2025, despite not providing formal guidance [21] - April's performance showed year-over-year increases in total revenue and adjusted EBITDA, although caution was advised regarding the representativeness of these results for the second quarter [17] Other Important Information - The company reported approximately 104,000 active subscribers, accounting for about 30% of online revenue [14] - The company is focusing on new product launches, including bars and ready-to-drink protein beverages, with expectations for increased sales in the second quarter [49][53] Q&A Session Summary Question: Changes in revenue and EBITDA expectations - Management reiterated expectations for organic revenue growth in 2025, without providing specific numbers [20][21] Question: Margins outlook for the year - Management indicated that margins would fluctuate based on product mix and ongoing investments in Muscle Farm [22][24] Question: Performance of Muscle Farm at the wholesale level - Mixed results were reported, with some customers showing increased demand while others did not respond effectively to promotional support [30][33] Question: Update on major customer GNC - Management reported a positive relationship with GNC, with no significant changes since resolving previous issues [40] Question: Status of new product launches - New products are performing well, with expectations for increased sales in the second quarter [49][53] Question: Impact of tariffs on products - Some products benefit from tariff exclusions, while others do not, leading to a variable impact on costs [55][58] Question: Long-term prospects for Muscle Farm - Management expressed disappointment in growth but remains hopeful for future improvements, emphasizing the potential for M&A in the nutritional supplement space [64][75]