Annual Report for Fiscal Year Ending 12-31, 2024 (Form 10-K)

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business, includes forward looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the ''Risk Factors''section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by these forward-looking statements.

Overview

We are an integrated formulator, marketer, distributor and retailer of branded nutritional supplements and other natural products sold to and through domestic health and natural food stores, mass market retailers, specialty retailers, on-line retailers and websites. Internationally, we market and distribute branded nutritional supplements and other natural products to and through health and natural product distributors and retailers.

Our products include vitamins, minerals, specialty supplements and sports nutrition products primarily under the Twinlab®, Reserveage and ResVitale ® brands. We also formulate, market and sell diet and energy products under the Metabolife® brand and a full line of herbal teas under the Alvita® brand. To accommodate consumer preferences, our products come in various formulations and delivery forms, including capsules, tablets, softgels, chewables, liquids, sprays, powders and whole herbs. These products are sold primarily through health and natural food stores and on-line retailers, supermarkets, and mass-market retailers.

We distribute branded product lines with approximately 77 stock keeping units, or SKUs. We believe that as a result of our history of top quality products and past recognition of our brands in health and natural food stores as quality products, there remains an operational path forward, though potentially as a smaller, leaner company. In most periods since our formation, we have generated losses from operations.

We also performed services between private label distributors and contract manufacturers under the NutraScience Labs ("NSL") brand name. NSL facilitated the production of new supplements to market and reformulates existing products to include scientifically-backed ingredients. We provided our customers with numerous production services, including manufacturing, testing, label and packaging design, order fulfillment, and regulatory compliance.

NSL facilitated the contract manufacture of a variety of high-quality vitamin and supplement products, including but not limited to, immune support supplements, cognitive support products, prebiotics and probiotics, supplements for weight management, and sports nutrition supplements. Our role in the production of these products was to help our customers manufacture or reformulate dietary supplements for sale and distribution. We did this by working with contract manufacturers to build scientifically backed formulas for resale to our end customers. We also simplified the production process by providing quality control checks, storing inventory on site, labeling and designing finished products, and drop shipping finished products ready for sale to our end customers. We did not market these private label products, but rather sold the products to the customer, who was then responsible for the marketing, distribution, and sale to retailers or to their end customers.

In the third quarter of 2023, due to history of operating losses associated with private label distributions business under NSL brand name, the Company decided to cease operations associated with NSL. As such, NutraScience's fixed assets were determined to have minimal economic value to the Company and were disposed of through abandonment concurrently with the ceased operation.

Going Concern Uncertainty

The accompanying consolidated financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. In most periods since our formation, we have generated losses from operations. At December 31, 2024, we had an accumulated deficit of $379.6million. Historical losses are primarily attributable to lower than planned sales resulting from low fill rates on demand due to limitations of our working capital, delayed product introductions and postponed marketing activities, merger-related and other restructuring costs, interest and refinancing charges associated with our debt refinancing, and impairment of goodwill and intangible assets. Losses have been funded primarily through issuance of common stock and third-party or related party debt.

The Company is currently a defendant in litigation described in Note 13. The plaintiff seeks damages of approximately $963,363, which significantly exceeds the Company's available liquidity. The potential exposure from the litigation, if resolved unfavorably, could materially exceed the Company's available financial resources. These conditions raise substantial doubt about the Company's ability to continue as a going concern within one year after the date these financial statements are issued. Management is evaluating various strategic alternatives, including settlement negotiations, additional capital raising, refinancing arrangements, and other restructuring options. There can be no assurance that these efforts will be successful. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Because of our history of operating losses and significant interest expense on our debt, we have a working capital deficiency of $149.9million at December 31, 2024. We also have $93.9million of debt, presented in current liabilities. These continuing conditions, among others, raise substantial doubt about our ability to continue as a going concern.

Management is addressing operating issues through the following actions: focusing on maintaining the most profitable core business and brands through emphasis on major customers and key products whereby the company can sell the most product with the least internal costs; winding down or selling less profitable brand; reducing operating costs; restructuring debt, potentially through bankruptcy filings; and continuing to negotiate lower prices from major suppliers in an effort to maintain the core business in the face of increasing financial pressures. We believe that we will need additional capital to execute our business plan. There can be no assurance that sources of funding will be available when needed on acceptable terms or at all.

The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Critical Accounting Policies and Estimates

Our management's discussion and analysis of our consolidated financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates, if any, will be reflected in the financial statements prospectively from the date of change in estimates.

While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies used in the preparation of our consolidated financial statements require the most significant judgments and estimates.

Revenue Recognition

Revenue from product and service sales and the related cost of sales are recognized when the performance obligations are satisfied. The performance obligations are typically satisfied upon shipment of physical goods or as the services are performed over time. In addition to the satisfaction of the performance obligations, the following conditions are required for revenue recognition: an arrangement exists, there is a fixed price, and collectability is reasonably assured. Discounts, returns and allowances related to sales, including an estimated reserve for the returns and allowances, are recorded as reduction of revenue.

Accounts Receivable and Allowances

We grant credit to customers and generally do not require collateral or other security. We perform credit evaluations of our customers and provide for expected claims, related to promotional items; customer discounts; shipping shortages and damages; and credit losses based upon historical bad debt and claims experience.

Inventories

Inventories are stated at the lower of cost or net realizable value and are reduced by an estimated reserve for obsolete inventory.

Value of Warrants Issued with Debt

We estimate the grant date value of certain warrants issued with debt using a valuation method, such as the Black-Scholes option pricing model, or, if the terms are more complex, using an outside professional valuation firm, which uses the Monte Carlo option lattice model. We record the amounts as interest expense or debt discount, depending on the terms of the agreement. These estimates involve multiple inputs and assumptions, including the market price of the Company's common stock, stock price volatility and other assumptions to project earnings before interest, taxes, depreciation and amortization ("EBITDA") and other reset events. These inputs and assumptions are subject to management's judgment and can vary materially from period to period.

Share-Based Compensation

We record share-based compensation, including grants of restricted stock units, based on their grant date fair values and record compensation expense over the vesting period of the restricted stock awards.

Income Taxes

We account for income taxes using an asset and liability approach. Deferred income taxes are determined by applying currently enacted tax laws and rates to the cumulative temporary differences between the carrying values of assets and liabilities for financial statement and income tax purposes. Valuation allowances against deferred income tax assets are recorded when we are unable to conclude that it is more likely than not that such deferred income tax assets will be realized.

Results of Operations

The following table summarizes our results of operations for the years ended December 31, 2024and December 31, 2023:

Net Sales

The decreasein our net sales by 14% for the year ended December 31, 2024compared to 2023, is primarily due to production backlogs at manufacturers, resulting in extended lead-time for production and fulfillment of sales, as well as a reduction in demand from some of our major customers and retailers for some of our branded products.

Gross Profit

Our overall gross profit decreaseof 22% for the year ended December 31, 2024compared to 2023, is primarily due to increased product input costs at the supplier and manufacturing levels.

Selling Expenses

Our selling expenses decreasedby 60% for the year ended December 31, 2024compared to 2023, primarily due to the reduction of certain advertising costs, such as print marketing, public relations, and brand ambassadors, as we did not have a major product launch in 2024.

Our general and administrative expenses increasedby 0% for the year ended December 31, 2024compared to 2023, primarily due to proactively assessing all costs and ensuring that expenses are right-sized for a leaner company and not taking on new expenses.

Impairment of Goodwill and Intangible Assets

Due to the immaterial net book value of our remaining intangible assets, annual impairment testing was not performed nor was an impairment loss recognized in 2024 or 2023.

Interest Expense, Net

Our interest expense decreasedby $0.3million or 3% for the year ended December 31, 2024compared to 2023. The increase is primarilydue to rising interest rates on existing debt.

Other Income

The decrease in other income of 80% is related the sale of unused web domains in 2023 which did not also occur in 2024. Other income for the year ended December 31, 2024 related insurance premium refunds resulting from an annual fees audit.

Liquidity and Capital Resources

At December 31, 2024, we had an accumulated deficit of $379.6million primarily because of our history of operating losses. We had a working capital deficiency of $149.9million at December 31, 2024. Losses have been funded primarily through the issuance of common stock and warrants, borrowings from our stockholders and third-party debt. As of December 31, 2024, we had cash of $69 thousand. On an ongoing basis, we also seek to improve operating cash through trade receivables and payables management as well as inventory stocking levels. Net cash used in operating activities for the year ended December 31, 2024 was $0.3million. During the year ended December 31, 2024, we incurred net repayment on borrowings from our revolving credit facility of $0.7million.

Our total liabilities increasedby $6.5million to $154.5million at December 31, 2024from $148.0million at December 31, 2023. This increase in our total liabilities wasprimarily due to the increase of $6.6 million in accrued interest and $0.6 million in accounts payable, partially offset by an decrease of $4 million in accrued expenses, lease liabilities, and current liabilities related to discontinued operations.

As a result of ongoing liquidity constraints, recurring operating losses, and the Company's limited access to capital, management has taken actions to wind down certain operations and reduce the Company's cost structure. These actions have included the cessation of operations of NutraScience Labs, the abandonment or forfeiture of leased facilities, workforce reductions, and the elimination of operating activities that were no longer economically sustainable.

Cash Flows from Operating, Investing and Financing Activities

Net cash used in operating activities was $0.3million for the year ended December 31, 2024as a result of our net loss of $9.5million, other non-cash expenses totaling $0.0million net, and an increase in net operating assets and liabilities of $0.0 million. By comparison, for the year ended December 31, 2023, net cash used in operating activities was $2.9million as a result of our net loss of $13.7million, forgiveness of PPP loan of $0.0 million, a non-cash impairment of goodwill and intangible assets of $0.0million, other non-cash expenses totaling $0.1 million net, and an increase in net operating assets and liabilities of $2.8million.

Net cash used in financing activities was $0.3million for the year ended December 31, 2024, consisting of net payments of $0.7million under our revolving credit facility. Net cash provided by financing activities was $3.7million for the year ended December 31, 2023, consisting of net borrowings on our revolving credit facility of $1.6million.

Wind-Down and Cost Reduction Actions

As a result of ongoing liquidity constraints, recurring operating losses, and the Company's limited access to capital, management has taken actions to wind down certain operations and reduce the Company's cost structure. These actions have included the cessation of operations of NutraScience Labs, the abandonment or forfeiture of leased facilities, workforce reductions, and the elimination of operating activities that were no longer economically sustainable.

The Company has surrendered multiple office locations and no longer maintains dedicated corporate office space. These actions resulted in the impairment of certain assets and the recognition of remaining lease obligations, which are reflected in the consolidated financial statements. While these measures were undertaken to reduce ongoing cash outflows, the Company continues to have significant obligations, including lease liabilities, accrued interest, and debt obligations that are classified as current due to existing defaults.

The Company's liquidity position remains constrained, and its ability to satisfy its obligations as they become due is subject to significant uncertainty. Additional information regarding these matters is included in Note 1 and other notes to the consolidated financial statements.

Ongoing Funding Requirements

As set forth above, we obtained additional debt financing in the year ended December 31, 2024to support operations. We will need additional funding to continue supporting our operations during the next twelvemonths. However, we cannot predict whether future borrowings will be available to us and future developments associated with the current economic environment will materially affect our long-term liquidity position.

In response to COVID-19 and to protect our liquidity and cash position, we have taken a number of steps. In August of 2020, we obtained deferment letters from each of Great Harbor (defined below), Little Harbor (defined below) and Golisano Holdings (defined below) pursuant to which each lender agreed to defer all payments due under outstanding notes held by each lender through October 22, 2021 and agreed to refrain from declaring a default and/or exercising any remedies under the outstanding notes. Amendments to extend the maturity date and related payment deferrals of the aforementioned notes have not been executed and these notes are currently in default. As discussed in Note 6 - Debt, Akretive LLC is now the lender of the notes previously held by Great Harbor, Little Harbor and Golisano Holdings. We continue to anticipate extending the maturity dates and related payment deferrals with the lending parties, but we cannot guarantee that such extensions and payment deferrals will be successfully obtained on a timely basis or at all.

On May 7, 2020, TCC, the operating subsidiary of the Company, received the proceeds of a loan from Fifth Third Bank, National Association in the amount of $1.7million obtained under the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), which was enacted March 27, 2020 (the "PPP Loan"). The PPP Loan, evidenced by a promissory note dated May 5, 2020 (the "Note"), had a two-year term and bore interest at a rate of 1.0% per annum, with the monthly principal and interest payments due beginning December 1, 2020. TCC used the proceeds of the PPP Loan for payroll, office rent, and utilities which allowed the Company to seek forgiveness of this loan. The Company submitted its application for 100% forgiveness for this loan in November 2021. In January 2022, the full amount of the PPP Loan was forgiven by the Small Business Administration ("SBA"). As a result, the Company recorded a gain on the forgiveness of the loan in the amount of $1.7million.

On January 25, 2021, TCC applied for another PPP loan with Fifth Third Bank in the amount of $1.3million (the "Second PPP Loan"). The Second PPP Loan, evidenced by a promissory note dated February 5, 2021 (the "Second PPP Note"), had a two-year term and bore interest at a rate of 1.0% per annum, with expected monthly principal and interest payments that were due to begin September 1, 2021. TCC used the proceeds of the Second PPP Loan for payroll, which allowed the Company to seek forgiveness for this loan. The Company submitted its application for 100% forgiveness for this loan in November 2021. In December 2021, the full amount of the Second PPP Loan was forgiven by the SBA. As a result, the Company recorded a gain on the forgiveness of the loan in the amount of $1.3million.

Until such time, if ever, as we can generate substantial product revenues, we intend to finance our cash needs through a combination of equity offerings, debt financing, collaborations, strategic alliances and licensing arrangements. There can be no assurance that any of those sources of funding will be available when needed on acceptable terms or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of existing stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financing or relationships with third parties when needed or on acceptable terms, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts; or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances reporting requirements under Topic 280. The enhanced disclosure requirements include: title and position of the Chief Operating Decision Maker (CODM), significant segment expenses provided to the CODM, extending certain annual disclosures to interim periods, clarifying single reportable segment entities must apply ASC 280 in its entirety, and permitting more than one measure of segment profit or loss to be reported under certain circumstances. This change is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024. This change will apply retrospectively to all periods presented. Management is currently assessing the impact of the adoption of this ASU on the financial statements of the Company.

Although there are several new accounting pronouncements issued or proposed by the FASB, which we have adopted or will adopt, as applicable, we do not believe any of these accounting pronouncements have had or will have a material impact on our consolidated financial position or results of operations.

Material Contractual Obligations

As of December 31, 2024, we had total debt of $93.9million, of which $91.7million is considered to be related-party debt. For discussion of our debt financing, see Notes 6and 7in the Notes to Consolidated Financial Statements included in this report.

Effective April 7, 2015, we entered into an operating lease agreement for approximately 31,000 square feet of office space in St. Petersburg, Florida (the "St. Petersburg Lease"). The agreement expires in April 2027 and has a monthly base rent of $59 thousand for year 1 to $76 thousand for year 12.

On November 30, 2016, we entered into a sublease agreement tosublease half ofthe 31,000square feet of office space in St. Petersburg, Florida. The sublease term commenced on February 1, 2017 and expired on June 30, 2022.

On December 15, 2016, we entered into an operating lease agreement for approximately 13,000 square feet of office space in Boca Raton, Florida. The agreement expires in February 2026 and has a monthly base rent of $17 thousand in year 1 to $21 thousand in year 8. The commencement date was August 2017.

On June 2, 2017, we entered into an operating lease agreement for approximately 18,700 square feet of office space in Farmingdale, New York. The lease agreement was surrendered to the landlord as part of the abandonment of operations of NutraScience Labs on May 12, 2023.

On July 12, 2019, we entered into a sublease agreement to sublease the other half of the 31,000square feet of office space in St. Petersburg, Florida. The sublease term commenced on December 1, 2019 and is scheduled to expire on April 30, 2027.

On April 22, 2021, we entered into an operating lease agreement for approximately 13,500 square feet of office space in Hauppauge, New York. The agreement was surrendered to the landlord as part of the abandonment of operations of NutraScience Labs on September 30, 2023.

On August 26, 2021, we entered into an operating lease agreement for an additional 1,500 square feet approximately of office space in Boca Raton, Florida. The agreement was scheduled to expire in October 2024 and has a monthly base rent of $5thousand. The commencement date was September 2021, the date on which we moved our main executive offices from 4800T-Rex Avenue, Suite 305, Boca Raton, Florida 33431to 4800T-Rex Avenue, Suite 225, Boca Raton, Florida 33431.

On September 12, 2021, we entered into sublease agreement to sublease the approximately 13,000 square feet of office space in Boca Raton, Florida. The sublease term commenced on October 1, 2021 and was scheduled to expire on February 28, 2026.

On November 14, 2025, we surrendered the lease and sublease for 31,000 square feet of office space in St. Petersburg, Florida, to the landlord. The Company is currently in default for past due rent.

On March 26, 2025, we surrendered the leases and subleases at 4800 T-Rex Avenue in Boca Raton, Florida to the landlord.

Manufacturing and Distribution Licensing Agreement

On April 24, 2019, the Company entered into a manufacturing and distribution licensing agreement with Amherst Industries, Inc. ("Amherst") to manufacture and distribute the Alvita Tea brand of products worldwide. On October 20, 2021, the Company ended the licensing agreement with Amherst and began production and distribution of Alvita in 2022.

Off-Balance Sheet Arrangements

None.