FitLife Brands(FTLF) - 2023 Q4 - Annual Report

Acquisitions - The Company completed the acquisition of Mimi's Rock Corp for a total consideration of $17.099 million, funded by$ 12.5 million from a new term loan and $4.599 million from available cash[22]. - On October 10, 2023, the Company acquired substantially all of the assets of MusclePharm for approximately$ 18.5 million, with $10 million funded from a new term loan and the remainder from available cash[23]. - The Company acquired MusclePharm for$ 18,788 and MRC for $17,099, funded by a combination of credit agreement proceeds and available cash[165]. - Significant non-recurring costs related to the acquisitions may not be offset by anticipated cost synergies and benefits[87]. - The acquisition of MusclePharm had minimal impact on revenue due to the timing of the transaction and the need for new commercial agreements[146]. Financial Performance - Revenue for the year ended December 31, 2023 increased 83% to$ 52,700 compared to $28,803 for the year ended December 31, 2022, primarily due to revenue generated from the acquisition of MRC[145]. - Net income for the year ended December 31, 2023 was$ 5,296, a 20% increase compared to $4,429 for the year ended December 31, 2022[155]. - Gross profit for the year ended December 31, 2023 increased 78% to$ 21,432 compared to $12,034 for the year ended December 31, 2022[151]. - Operating income improved to$ 7,550,000 in 2023, up from $5,701,000 in 2022, reflecting a growth of 32.4%[212]. - Basic net income per share increased to$ 1.18 in 2023 from $0.97 in 2022, a rise of 21.6%[212]. Sales and Marketing - The Company markets over 100 different NDS Products to more than 700 GNC franchise locations in the U.S. and distributes iSatori Products through over 17,000 retail locations[25]. - The Company’s sales and marketing efforts aim to expand NDS Products sales through additional GNC franchise locations domestically and internationally[36]. - The Company is focusing on increasing sales through wholesale partners and direct-to-consumer channels, particularly e-commerce platforms like Amazon[61]. - Online revenue constituted approximately 63% of total revenue for the year ended December 31, 2023, up from roughly 28% in the same period of 2022[137]. Competition and Market Conditions - The nutrition industry is highly competitive, with many competitors having greater financial resources; the Company focuses on product quality and innovation to differentiate itself[42]. - The company faces significant competition from established brands with greater resources, which could hinder its ability to maintain profitability[69]. - Economic conditions, including inflation, have negatively impacted consumer demand and may continue to do so, affecting sales and profit margins[67]. - The nutritional supplement industry has experienced strong growth, but any medical concerns regarding common ingredients could negatively impact demand and sales growth[77]. Regulatory and Compliance - The Company is committed to meeting FDA standards and operates within the FDA mandated current Good Manufacturing Practices[44]. - The Company has implemented vendor qualification programs for all suppliers and manufacturers to ensure quality control and compliance with Good Manufacturing Practices[32]. - Regulatory compliance requires significant financial and operational resources, and failure to comply could materially impact the company's financial position[51]. Risks and Challenges - The company relies on a limited number of independent suppliers and manufacturers, which may affect timely product delivery and revenue[64]. - The COVID-19 pandemic previously impacted global supply chains, and future outbreaks could adversely affect operations and supply[65]. - The company faces risks from adverse publicity that could negatively impact sales and revenue, particularly if products are associated with illness or adverse effects[70]. - Limited conclusive clinical studies supporting the efficacy of nutritional supplement products may lead to reduced market acceptance and lower revenue growth rates[71]. - Product liability claims could expose the company to significant insurance and loss expenses, affecting revenue and operating income[73]. Human Resources - The company has 37 full-time employees as of December 31, 2023, an increase from 27 in 2022, indicating growth in human resources[54]. Financial Position and Liquidity - As of December 31, 2023, the Company had positive working capital of$ 4,356, a decrease from $18,933 at December 31, 2022, primarily due to acquisitions totaling$ 35,887[159]. - The Company anticipates that cash from operations and existing resources will be sufficient for liquidity over the next twelve months, with no plans to raise additional capital through equity or debt[163]. - The Company was in compliance with all covenants of the Amended Credit Agreement as of December 31, 2023, including maintaining a Fixed Charge Coverage Ratio of not less than 1.25 to 1.00[160]. Audit and Financial Reporting - The consolidated financial statements for the years ended December 31, 2023, and 2022, present the financial position of the Company fairly in all material respects[200]. - The Company has undergone significant audit efforts to evaluate the assumptions related to the estimated fair value of intangible assets acquired, indicating a high degree of auditor judgment[206]. - The Company is committed to maintaining transparency and accuracy in its financial reporting, as evidenced by the certifications from the Chief Executive Officer and Chief Financial Officer[31].