FitLife Brands to Acquire Substantially All of the Assets of MusclePharm Corporation

Omaha, NE, Sept. 27, 2023 (GLOBE NEWSWIRE) -- FitLife Brands, Inc. (“FitLife” or the “Company”) (Nasdaq: FTLF), a provider of innovative and proprietary nutritional supplements and wellness products, today announced that the US Bankruptcy Court for the District of Nevada has approved FitLife’s acquisition of substantially all of the assets of MusclePharm Corporation under Section 363 of the US Bankruptcy Code.

Highlights of the transaction are as follows:

• The all-cash transaction, with no shares being issued by FitLife, is expected to be highly accretive to existing shareholders once all transaction-related costs (anticipated to be approximately $500,000) have been expensed.
• The purchase price of $18.5 million, which is subject to customary adjustments, will be funded using cash on hand and the proceeds of a new committed $10 million term loan issued by First Citizens Bank with a rate of SOFR+275.
• The transaction is expected to close as soon as practicable, but no later than October 16, 2023.
• Through the asset purchase transaction, the Company is acquiring substantially all of the assets and assuming none of the liabilities of MusclePharm (other than de minimus cure costs relating to certain assumed contracts).

MusclePharm is an iconic sports nutrition brand with strong domestic and international appeal.  The brand, which was launched approximately 15 years ago, grew quickly with the support of brand ambassadors such as Tiger Woods and Arnold Schwarzenegger.  Despite MusclePharm’s financial distress in recent years and ultimate bankruptcy filing, the brand’s consumer following remains strong, as evidenced by the continued engagement of its 564,000 Instagram followers.

According to monthly operating reports filed with the Bankruptcy Court, MusclePharm has been generating approximately $1.2-1.5 million in monthly revenue at gross margins between 25-30% during bankruptcy.  FitLife intends to return the brand to growth and enhance the brand’s profitability through a focus on online sales direct to the end consumer and expanded wholesale distribution.

Online Sales Direct to the End Consumer

Historically, MusclePharm has focused almost exclusively on wholesale distribution as opposed to selling directly to the end consumer.  Presently, FitLife estimates that third parties are selling approximately $5 million annually of MusclePharm’s products on Amazon.com despite limited availability of the products.  After current third-party resellers have exhausted their inventory, FitLife intends to fully internalize this revenue stream and drive further online revenue growth for the MusclePharm products.  As is the case with FitLife’s other brands, online sales of MusclePharm products are anticipated to generate substantially higher gross margins than those achieved through wholesale distribution.