FITLIFE BRANDS, INC.

Previous wording

FitLife Brands, Inc. (the “Company”) is a provider of innovative and proprietary nutritional supplements and wellness products for health-conscious consumers marketed under the following brand names: (i) NDS Nutrition, PMD Sports, SirenLabs, Core Active, Nutrology, and Metis Nutrition (together, “NDS Products”); (ii) iSatori, BioGenetic Laboratories, and Energize (together, the "iSatori Products"); (iii) Dr. Tobias, All Natural Advice, and Maritime Naturals (together, the “MRC Products"); and (iv) MusclePharm.

Current wording

FitLife Brands, Inc. (the “Company”) is a provider of innovative and proprietary nutritional supplements and wellness products for health-conscious consumers marketed under the following brand names: (i) NDS Nutrition, PMD Sports, SirenLabs, Core Active, Nutrology, and Metis Nutrition (together, “NDS Products”); (ii) iSatori, BioGenetic Laboratories, and Energize (together, the "iSatori Products"); (iii) Dr. Tobias, All Natural Advice, and Maritime Naturals, each acquired as a result of the acquisition of Mimi’s Rock Corp.(“MRC”) on February 28, 2023 (together, the “MRC Products"); and (iv) MusclePharm, which was acquired on October 10, 2023 as a result of the acquisition of substantially all of the assets of MusclePharm Corporation (“MusclePharm”).

Previous wording

The Company distributes the NDS Products principally through franchised General Nutrition Centers, Inc. (“GNC”) stores located both domestically and internationally and, with the launch of Metis Nutrition, through corporate GNC stores in the U.S. The iSatori Products are sold through retail locations, which include specialty, mass, and online. The Company distributes the MRC Products primarily online. MusclePharm’s products are sold to wholesale customers as well as online directly to the end consumer.

Current wording

The Company distributes the NDS Products principally through franchised General Nutrition Centers, Inc. (“GNC”) stores located both domestically and internationally and, with the launch of Metis Nutrition, through corporate GNC stores in the U.S. The iSatori Products are sold through retail locations, which include specialty and mass, as well as online directly to the end consumer. The Company distributes the MRC Products primarily online through e-commerce platforms, such as Amazon, directly to the end consumer. MusclePharm’s products are sold to both wholesale customers as well as online through various e-commerce platforms directly to the end consumer.

Previous wording

Revenue. Revenue for the three months ended September 30, 2024 increased 15% to $15,977 as compared to $13,902 for the three months ended September 30, 2023. The increase in revenue for the three months ended September 30, 2024 compared to the prior period is primarily due to the acquisition of the MusclePharm assets, which were acquired on October 10, 2023, partially offset by a decline in Legacy FitLife revenue.

Current wording

Revenue. Revenue for the three months ended March 31, 2025 decreased 4% to $15,936 as compared to $16,549 for the three months ended March 31, 2024. The decrease in revenue for the three months ended March 31, 2025 compared to the prior period is primarily due to lower MRC sales, partially offset by an increase in Legacy FitLife revenue.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Cost of Goods Sold. Cost of goods sold for the nine months ended September 30, 2024 increased to $27,588 as compared to $23,332 for the nine months ended September 30, 2023. This 18% increase is due to an increase in revenue attributable to the acquisitions of MRC and the MusclePharm assets.

Current wording

Cost of Goods Sold. Cost of goods sold for the three months ended March 31, 2025 decreased to $9,062 as compared to $9,262 for the three months ended March 31, 2024. This 2% decrease is primarily due to a decrease in revenue attributable to MRC.

Previous wording

Gross Profit. Gross profit for the three months ended September 30, 2024 increased to $7,001 as compared to $5,696 for the three months ended September 30, 2023. The increase in gross profit is attributable to higher gross profit from both MRC and Legacy FitLife as well as incremental gross profit from MusclePharm.

Current wording

Gross Profit. Gross profit for the three months ended March 31, 2025 decreased to $6,874 as compared to $7,287 for the three months ended March 31, 2024. This 6% decrease in gross profit is principally attributable to lower gross profit from MRC and MusclePharm, partially offset by an increase from Legacy FitLife.

Previous wording

Gross Margin. Gross margin for the three months ended September 30, 2024 increased to 43.8% from 41.0% for the comparable prior period. The increase in gross margin is primarily attributable to higher margins from both MRC and Legacy FitLife.

Current wording

Gross Margin. Gross margin for the three months ended March 31, 2025 decreased to 43.1% from 44.0% for the comparable prior period. The decrease in gross margin is primarily attributable to lower margins from both MRC and MusclePharm, partially offset by higher margins from Legacy FitLife.

Previous wording

*Advertising andMarketing.*Advertising and marketing expense for the three months ended September 30, 2024 decreased to $1,093 as compared to $1,275 for the same period of the prior year. The 14% decrease is the result of targeted efforts to rationalize the Company’s advertising spend on less effective advertising campaigns.

Current wording

*Advertising and Marketing.*Advertising and marketing expense for the three months ended March 31, 2025 decreased to $1,053 as compared to $1,228 for the same period of the prior year. The 14% decrease is the result of targeted efforts to optimize the efficiency of the Company’s advertising spend.

Previous wording

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

Current wording

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

Previous wording

Net Income. We generated net income of $2,126 for the three months ended September 30, 2024 as compared to net income of $1,696 for the three months ended September 30, 2023. The increase in net income for the three months ended September 30, 2024 compared to the same period in 2023 was primarily attributable to incremental revenue and gross profit from MusclePharm, higher gross profit from MRC and Legacy FitLife, as well as reduced advertising and marketing expense.

Current wording

Net Income. We generated net income of $2,018 for the three months ended March 31, 2025 as compared to net income of $2,160 for the three months ended March 31, 2024. The decrease in net income for the three months ended March 31, 2025 compared to the same period in 2024 was primarily attributable to lower revenue and gross profit from MRC and MusclePharm, partially offset by higher revenue and gross profit from Legacy FitLife, as well as a decrease in operating expense driven by lower advertising spend and lower interest expense due to the lower debt balances carried by the Company.

Previous wording

One of the primary metrics used by management to evaluate the performance of the Company’s brands is contribution, a non-GAAP financial measure which management defines as gross profit less advertising and marketing expenditures. Other companies may also report contribution as a performance metric, but their definition or calculation of contribution may differ from the Company’s. Management believes that contribution, as defined by the Company, is a particularly relevant performance metric since it incorporates the gross profit associated with a specific brand or collection of brands as well as the advertising and marketing expenditures associated with the same brand or brands. With limited exceptions, other operating expenses incurred by the Company are generally not allocable to a specific brand or collection of brands.

Current wording

One of the primary metrics used by management to evaluate the performance of the Company’s brands is contribution, a non-GAAP financial measure which management defines as gross profit less advertising and marketing expenditures. Other companies may also report contribution as a performance metric, but their definition or calculation of contribution may differ from the Company’s. Management believes that contribution, as defined by the Company, is a particularly relevant performance metric since it incorporates the gross profit associated with a specific brand or collection of brands as well as the advertising and marketing expenditures associated with the same brand or brands. With limited exceptions, other operating expenses incurred by the Company are generally not allocable to a specific brand or collection of brands. Management intends to provide this level of disclosure for no more than two years following a transaction, after which the performance of acquired brands will be reported as part of Legacy FitLife results.

Previous wording

Despite the revenue decline, gross profit and contribution for Legacy FitLife increased. Gross margin increased from 37.2% during the third quarter of 2023 to 42.6% during the third quarter of 2024. Contribution as a percentage of revenue increased from 36.0% to 41.5% over the same time period.

Current wording

For the first quarter of 2025, gross margin increased to 44.6% from 42.1% during the same period last year. Contribution as a percentage of revenue increased to 43.4% from 40.9% over the same time period.

Previous wording

For the third quarter of 2024, MRC revenue was consistent with the same period in 2023. Over the same time period, gross profit increased 7% and contribution increased 25%.

Current wording

For the first quarter of 2025, MRC revenue decreased 11% compared to the same period in 2024. Over the same time period, gross profit decreased 14% and contribution decreased 9%.

Previous wording

Revenue for the largest MRC brand, Dr. Tobias, increased 6% in the third quarter of 2024 while revenue for the skin care brands, Maritime Naturals and All Natural Advice, declined 33% in the same period compared to the third quarter of 2023.

Current wording

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

Previous wording

The substantial year-over-year increase in gross profit for the MRC brands is primarily the result of this optimization of the skin care brands as well as beneficial product mix within the Dr. Tobias brand. The substantial year-over-year increase in contribution for the MRC brands is a function of the optimization of the skin care brands, beneficial product mix within the Dr. Tobias brand, as well as the optimization of advertising spend across all MRC brands.

Current wording

The decrease in gross profit for the MRC brands is primarily the result of lower sales. The decrease in gross margin is primarily driven by the change in product mix within the Dr. Tobias brand. The year-over-year increase in contribution as a percentage of revenue for the MRC brands is a function of the optimization of the advertising spend across all MRC brands.

Previous wording

In an effort to drive revenue growth, the Company is making targeted investments in advertising and promotion in both the wholesale and online channels. As a result of these investments, gross margin and contribution margin as a percent of revenue may fluctuate from quarter to quarter.

Current wording

The Company anticipates that the increased promotional efforts will continue for the foreseeable future. As a result of these investments, gross margin and contribution margin as a percent of revenue may fluctuate materially from quarter to quarter.

Previous wording

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

Current wording

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

Previous wording

The financial presentation below contains certain financial measures not in accordance with GAAP, defined by the SEC as “non-GAAP financial measures”, including non-GAAP earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and adjusted non-GAAP EBITDA. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in this Quarterly Report in accordance with GAAP.

Current wording

The financial presentation below contains certain financial measures not in accordance with GAAP, defined by the SEC as “non-GAAP financial measures”, including EBITDA and adjusted EBITDA. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in this Quarterly Report in accordance with GAAP.

Previous wording

As presented below, non-GAAP EBITDA excludes interest, foreign exchange gains and losses, income taxes, and depreciation and amortization. Adjusted non-GAAP EBITDA excludes, in addition to interest, taxes, depreciation and amortization, stock-based compensation, merger and acquisition related expense and non-recurring expense. The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expense and other items that may not be indicative of its core operating results and business outlook. The Company believes that the inclusion of non-GAAP measures in the financial presentation below allows investors to compare the Company’s financial results with the Company’s historical financial results and is an important measure of the Company’s comparative financial performance.

Current wording

As presented below, EBITDA excludes interest, foreign exchange gains and losses, income taxes, and depreciation and amortization. Adjusted EBITDA excludes—in addition to interest, foreign exchange losses, taxes, depreciation and amortization—stock-based compensation and merger and acquisition related expense. The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expense and other items that may not be indicative of its core operating results and business outlook. The Company believes that the inclusion of non-GAAP measures in the financial presentation below allows investors to compare the Company’s financial results with the Company’s historical financial results and is an important measure of the Company’s comparative financial performance.

Previous wording

As of September 30, 2024, the Company had positive working capital of $6,044, compared to $4,356 at December 31, 2023. Our principal sources of liquidity at September 30, 2024 consisted of $4,720 of cash and $2,008 of accounts receivable. The increase in working capital is principally attributable to positive operating cash flows during the nine months ended September 30, 2024, partially offset by a voluntary paydown of $2,500 on the Term Loans as well as the three scheduled amortization payments totaling $3,375.

Current wording

As of March 31, 2025, the Company had positive working capital of $8,463 compared to $6,832 at December 31, 2024. Our principal sources of liquidity at March 31, 2025 consisted of $5,994 of cash and $2,693 of accounts receivable. The increase in working capital is principally attributable to positive operating cash flows during the three months ended March 31, 2025.

Previous wording

On February 23, 2023, the Company and the Lender amended the Line of Credit Agreement (the “Credit Agreement”) providing the Company with a term loan for the principal amount of $12.5 million (“Term Loan A”). All other terms of the Credit Agreement remain unchanged. All of the proceeds from Term Loan A were used for the acquisition of MRC.

Current wording

On February 23, 2023, the Company and the Lender amended the Line of Credit Agreement (the “Prior Credit Agreement”) providing the Company with a term loan for the principal amount of $12.5 million (“Term Loan A”). All other terms of the Credit Agreement remain unchanged. All of the proceeds from Term Loan A were used for the acquisition of MRC.

Previous wording

On October 10, 2023, the Company entered into a Second Amended and Restated Credit Agreement (the “Amended Credit Agreement”) with the Lender, amending and restating the Credit Agreement between the Company and the Lender. Pursuant to the Amended Credit Agreement, the Lender provided the Company with an additional term loan (“Term Loan B”, and together with Term Loan A, the “Term Loans”) for the principal amount of $10,000 and extended the Line of Credit of $3.5 million to December 15, 2024. The Company used the proceeds from Term Loan B to fund the acquisition of the MusclePharm assets.

Current wording

On October 10, 2023, the Company entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”) with the Lender, amending and restating the Credit Agreement between the Company and the Lender. Pursuant to the Credit Agreement, the Lender provided the Company with an additional term loan (“Term Loan B”, and together with Term Loan A, the “Term Loans”) for the principal amount of $10,000 and extended the Line of Credit of $3.5 million to December 23, 2024. The Company used the proceeds from Term Loan B to fund the acquisition of the MusclePharm assets.

Previous wording

Advances drawn under the Line of Credit bear interest at an annual rate of the one-month SOFR rate plus 2.75%, and each advance will be payable on the maturity date with the interest on outstanding advances payable monthly. The Company may, at its option, prepay any borrowings under the Line of Credit, in whole or in part at any time prior to the maturity date, without premium or penalty. On September 20, 2022, the Company and the Lender amended the Line of Credit Agreement to extend the maturity date to December 23, 2022. On December 19, 2022, the Company and the Lender amended the Line of Credit agreement to increase the Line of Credit to $3.5 million and extend the maturity date to December 23, 2023.

Current wording

On December 19, 2024, the Company entered into the First Amendment to the Amended Credit Agreement (the “Amended Credit Agreement”) to extend the $3.5 million Line of Credit to April 30, 2026. Pursuant to the Amended Credit Agreement, the Line of Credit accrues interest at an annual rate equal to the greater of 3.50% or the one-month secured overnight financing rate (“SOFR”) rate plus 2.75%, and each advance will be payable on the maturity date with the interest on outstanding advances payable monthly. The Company may, at its option, prepay any borrowings under the Line of Credit, in whole or in part at any time prior to the maturity date, without premium or penalty.

Previous wording

The Term Loans accrue interest at an annual rate of the one-month SOFR rate plus 2.75%, and principal plus accrued interest will be payable quarterly beginning June 10, 2023 in amounts sufficient to fully amortize the Term Loans through February 28, 2028 in the case of Term Loan A and through October 10, 2028 in the case of Term Loan B. The Company may prepay amounts borrowed under the Term Loans, in whole or in part with accrued interest to the date of such prepayment on the amount prepaid, by written notice to the Lender at least one business day prior to the proposed prepayment.

Current wording

Also pursuant to the Amended Credit Agreement, the Term Loans accrue interest at an annual rate equal to the greater of 3.50% or the one-month SOFR rate plus 2.75%, and principal plus accrued interest will be payable quarterly in June, September, December, and March, in amounts sufficient to fully amortize the Term Loans through February 28, 2028 in the case of Term Loan A and through October 10, 2028 in the case of Term Loan B. The Company may prepay amounts borrowed under the Term Loans, in whole or in part with accrued interest to the date of such prepayment on the amount prepaid, by written notice to the Lender at least one business day prior to the proposed prepayment.

Previous wording

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

Current wording

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

Previous wording

Cash Provided by Operating Activities. Cash provided by operating activities for the nine months ended September 30, 2024 was $8,653, as compared to cash provided by operations of $2,772 for the nine months ended September 30, 2023. The increase in cash provided by operating activities was primarily due to the higher net income achieved in the first nine months of 2024 which was driven by the acquisitions of MRC and the MusclePharm assets, as well as the payment of the transaction-related costs and other payables and expenses that were accrued at MRC at the time the Company acquired MRC in 2023.

Current wording

Cash Provided by Operating Activities. Cash provided by operating activities for the three months ended March 31, 2025 was $2,328 compared to cash provided by operating activities of $5,036 for the three months ended March 31, 2024. The decrease in cash provided by operating activities was primarily due to increases in working capital.

Previous wording

Cash Used in Investing Activities. Cash used in investing activities for the nine months ended September 30, 2024 and 2023 was $10 and $18,984, respectively. The Company used $10 and $60 for purchases of property and equipment in the nine months ended September 30, 2024 and 2023, respectively. During the nine-month period ended September 30, 2023, the Company paid $17,099 to acquire MRC and had paid a deposit towards the acquisition of the MusclePharm assets.

Current wording

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

Previous wording

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

Current wording

Cash Used in Financing Activities. Cash used in financing activities for the three months ended March 31, 2025 was $866 compared to cash used in financing activities of $3,625 during the three months ended March 31, 2024. The decrease in cash used in financing activities is primarily due to the voluntary debt repayment made by the Company during the first quarter of 2024.

Previous wording

The Company’s products are also sold on e-commerce platforms including Amazon. For these transactions, the Company evaluated principal versus agent considerations to determine appropriateness of recording distribution and platform fees paid to third-party e-commerce companies as an expense or as a reduction of revenue. The Company records distribution and platform fees to cost of goods sold in the condensed consolidated statements of income and comprehensive income. Distribution and platform fees are not recorded as a reduction of revenue because the Company (1) owns the goods before they are transferred to the customer, (2) can direct Amazon, similar to other third-party logistics providers (“Logistic Providers”), to return the Company’s inventory to any location specified by the Company, (3) has the responsibility to make customers whole following any returns made by customers directly to Logistic Providers and the Company retains the back-end inventory risk, (4) is subject to credit risk (i.e., credit card chargebacks), (5) establishes prices of its products, (6) can determine who fulfills the goods to the customer (Amazon or the Company) and (7) can limit quantities or stop selling the goods at any time. Based on these considerations, the Company is the principal in this arrangement. Advertising fees for Amazon are recorded in advertising and marketing expense in the condensed consolidated statements of income and comprehensive income.

Current wording

The Company’s products are also sold on e-commerce platforms including Amazon. For these transactions, the Company evaluated principal versus agent considerations to determine appropriateness of recording distribution and platform fees paid to third-party e-commerce companies as an expense or as a reduction of revenue. The Company records distribution and platform fees to cost of goods sold in the condensed consolidated statements of income and comprehensive income. Distribution and platform fees are not recorded as a reduction of revenue because the Company (1) owns the goods before they are transferred to the customer, (2) can direct Amazon, similar to other third-party logistics providers, to return the Company’s inventory to any location specified by the Company, (3) has the responsibility to make customers whole following any returns made by customers directly to Logistic Providers and the Company retains the back-end inventory risk, (4) is subject to credit risk (i.e., credit card chargebacks), (5) establishes prices of its products, (6) can determine who fulfills the goods to the customer (Amazon or the Company) and (7) can limit quantities or stop selling the goods at any time. Based on these considerations, the Company is the principal in this arrangement. Advertising fees for Amazon are recorded in advertising and marketing expense in the condensed consolidated statements of income and comprehensive income.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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