
FORM 10-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, 202512 | 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 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 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 materially1011 - Investors are cautioned to read statements containing terms such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", "proposed", "intended", or "continue" carefully11 - The company is under no duty to update any forward-looking statements after the date of this Quarterly Report11 PART I - FINANCIAL INFORMATION 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 This section provides unaudited condensed consolidated financial statements, including balance sheets, income statements, equity, cash flows, and explanatory notes Condensed Consolidated Balance Sheets (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 | $- | $5,000 | N/A | Condensed Consolidated Statements of Income and Comprehensive Income (unaudited) Revenue, gross profit, and net income decreased for Q2 and 6M 2025 due to lower sales from MRC and MusclePharm and increased M&A expenses | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | 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 | $(0.11) | (22.4)% | Condensed Consolidated Statements of Stockholders' Equity (unaudited) Stockholders' equity increased for 6M 2025 due to net income and stock option exercises, with a 2-for-1 stock split effected in February 2025 | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change ($) | 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 | $886 | 2.8% | - A 2-for-1 stock split was effected on February 7, 2025, retroactively adjusting all share and per share information78 Condensed Consolidated Statements of Cash Flows (unaudited) Cash and restricted cash decreased significantly for 6M 2025 due to substantial investing activities, primarily the Irwin acquisition deposit | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | 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 acquisition20147 Notes to Condensed Consolidated Financial Statements (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 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 products21 - 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 MusclePharm21 - Distribution channels include franchised and corporate GNC stores, specialty and mass retail, and online e-commerce platforms (e.g., Amazon)22 NOTE 2 - BASIS OF PRESENTATION 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-X24 - 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, 202524 NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines key accounting policies, including consolidation, foreign currency, estimates, revenue recognition, goodwill, and recent pronouncements Principles of Consolidation 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 eliminated25 Foreign Currency Translation 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 dollar26 - Assets and liabilities of foreign subsidiaries are translated using end-of-period exchange rates, with changes included in foreign currency translation adjustment within stockholders' equity26 - Revenue and expense transactions use an average rate prevailing during the period, and transaction gains and losses are included in the results of operations27 Use of Estimates and Assumptions 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 services2829 - Actual results could differ from these estimates29 Revenue Recognition 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 customers3138 - 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 revenue33 | 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 202437 | 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 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 payable42 - 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 purchases42 Cash and Cash Equivalents 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 equivalents43 | Metric (in thousands) | June 30, 2025 | | :-------------------- | :------------ | | Restricted cash | $55 | 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 liabilities44 - The company leases certain corporate office space and office equipment under lease agreements with monthly payments over a period of 36 to 84 months44 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 recoverable45 - The fair value of the reporting unit is determined using the market approach, and significant stock price fluctuations will impact the fair value calculation4547 - Management determined there were no indicators of impairment at June 30, 2025 or December 31, 202448 - The next impairment analysis will be performed in December 202548 Intangible Assets 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 life49 - Intangible assets with indefinite lives (brands and trademarks) are not amortized but are tested for impairment annually or when indicators of impairment exist49 - The Company noted no indicators of impairment for intangible assets as of June 30, 2025, and December 31, 202449 Acquisitions and Business Combinations 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 values50 - The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill50 - 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 Income Taxes 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 differences51 - Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all will not be realized51 | 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 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 outstanding53 - Diluted earnings per share includes the dilutive effect of potential common shares using the treasury stock method53 | 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 options53 Fair Value Measurements 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)5558 - 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 maturity56 - The carrying value of notes payable approximates their fair value based on market interest rates56 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 data59 - The CODM uses net income as the sole measure of segment profit59 Recently Adopted Accounting Pronouncements 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, 202460 - The adoption did not have a material impact on the Company's consolidated financial statements but resulted in additional disclosures60 Recently Issued Accounting Pronouncements 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 expense61 - The update is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 202761 - The Company is currently evaluating the provisions of this guidance and assessing the potential impact on its financial statement disclosures61 NOTE 4 – INVENTORIES Inventories are valued at the lower of cost or net realizable value using FIFO, with an allowance for obsolescence that decreased to $78 thousand at June 30, 2025 - The Company's inventory is carried at the lower of cost or net realizable value using the first-in, first-out ("FIFO") method63 - The Company recognizes an allowance for obsolescence for expiring, excess, and slow-moving inventory64 | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change ($) | 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 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 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 - The Line of Credit was extended to April 30, 202671140 - The Company was in compliance with all loan covenants as of June 30, 2025 and December 31, 202475 NOTE 7 - EQUITY 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 Stock78 - The Board approved the extension of the Share Repurchase Program, authorizing management to repurchase up to $5,000 thousand of Common Stock over 24 months79 - No repurchases occurred during the six months ended June 30, 2025 and 202480 | 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 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 operations84 NOTE 9 - SEGMENT INFORMATION 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 segment85 - 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 profit86 | 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 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 thousand8897 - 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 Bank8890 - The new term loan also paid off, retired, and replaced all existing debt of the Company as of the Closing Date, totaling $10,875 thousand90 - 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 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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 MusclePharm94 - Products are distributed through franchised and corporate GNC stores, retail locations (specialty and mass), and online e-commerce platforms (e.g., Amazon)95 Recent Acquisitions 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 cash97 - 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 balances97 Recent Developments 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 shares99 - All share and per share information throughout this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect the stock split99 Results of Operations 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 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 revenue101 - MRC revenue decreased 16% due to a drop in traffic to its product listing pages on Amazon101 - MusclePharm revenue decreased 4%102 - Merger and acquisition related expense increased to $696 thousand from $24 thousand, driven by transaction costs related to the Irwin acquisition107 Comparison of 6M 2025 vs. 6M 2024 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 - MRC revenue decreased 13% (13% online)110 - MusclePharm revenue decreased 5% (21% wholesale decrease, 13% online increase)111 - Merger and acquisition related expense increased to $1,028 thousand from $158 thousand, primarily due to transaction costs related to the Irwin acquisition117 Supplemental Discussion of Performance of Acquired Brands 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 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 franchisees121122 Mimi's Rock (MRC) Performance 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 Amazon101124 - 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 products105125127 - Revenue for Dr. Tobias decreased 16%, while revenue for the skin care brands (Maritime Naturals and All Natural Advice) declined 20%126 MusclePharm Performance 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 partners128129 - 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 sales130 FitLife Consolidated Performance 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 | $6,254 | (9)% | | Contribution as a % of revenue | 35.4% | 36.9% | (1.5)% | Non-GAAP Measures (EBITDA and Adjusted EBITDA) EBITDA and Adjusted EBITDA, which excludes stock-based compensation and M&A expenses, both decreased for Q2 and 6M 2025 compared to the prior year - EBITDA excludes interest, foreign exchange gains and losses, income taxes, and depreciation and amortization133 - Adjusted EBITDA further excludes stock-based compensation and merger and acquisition related expense133 | Metric (in thousands) | Q2 2025 | Q2 2024 | Change ($) | 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 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 thousand141 - 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 ($10,875 thousand)141 - Management anticipates that cash derived from operations and existing cash reserves, along with available borrowings under the Line of Credit, will be sufficient to provide for the Company's liquidity for the next twelve months144145 | Cash Flow Activity (in thousands) | 6M 2025 | 6M 2024 | Change ($) | 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 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 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 expense153 - 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 services154 - Management evaluates these estimates and assumptions on a regular basis, but actual results could differ154 Goodwill 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 impairment155 - Impairment is determined by comparing the fair value of reporting units to the carrying value of the underlying net assets155 - Management concluded that a triggering event did not occur during the six months ended June 30, 2025156 Revenue Recognition 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 606157158 - Revenue is recognized when performance obligations are satisfied, which occurs upon shipment or delivery of products to customers158164 - The Company is the principal in e-commerce arrangements (e.g., Amazon), recording platform fees paid for distribution to cost of goods sold160 | 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 2024163 Recent Accounting Pronouncements 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 statements167 Item 3. Quantitative and Qualitative Disclosures About Market Risk 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 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 currencies168 - The Company has not entered into any foreign currency hedging transactions during the six months ended June 30, 2025169 Interest Rates 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 instruments170 | 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 instruments171 Item 4. Controls and Procedures 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 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, 2025172 Changes in Internal Control Over Financial Reporting 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 reporting173 Inherent Limitations on the Effectiveness of Controls 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 fraud174 - 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 override174175 PART II - OTHER INFORMATION 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 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 operations177 Item 1A. Risk Factors 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, 2024178 - 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, 2024178 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds during the reporting period - None179 Item 3. Defaults Upon Senior Securities 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, 2025180 Item 5. Other Information 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 Item 6. Exhibits 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 Act182 - Various Inline XBRL documents (Instance, Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, Presentation Linkbase) are also included182