Company: LIFD
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001096906-25-001332
Chunk: 130

Company: LFTD PARTNERS INC.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 2
Chunk 130
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 advertising and marketing expenses.

Bad Debt Expense

Bad debt expense for the three and six months ended June 30, 2025, totaled $649,637 and $245,768, respectively; bad debt expense for the six months ended June 30, 2025 is less than bad debt expense for the three months ended June 30, 2025 because the Company reported a benefit from bad debt expense of $403,869 during the quarter ended March 31, 2025. Bad debt expense for the three and six months ended June 30, 2024, totaled $1,165,275 and $1,440,553, respectively.

 9Table of Contents

Bad debt expense stems from the change in the Company’s allowance for doubtful accounts, which stems from the Company’s CECL Model analysis. The delay in Lifted’s receipt of payments from certain customers—primarily distributors—have increasingly become an issue for Lifted. Certain customers have become slower to pay Lifted for purchased product (“Slow Paying Customers”), and the Slow Paying Customers disregard payment terms. Management speculates that some Slow Paying Customers may be slow-paying Lifted because of their own sales collection issues, which may in part be caused by the regulatory uncertainty over our industry. The Company has an accounting protocol which effectively causes the Company to recognize an allowance for doubtful accounts for all invoices older than 90 days. Consequently, the delay in Lifted’s receipt of payments from certain customers has a direct impact on the Company’s net receivables, net income, and earnings per share.

Collaboration Commission and Royalty Expense

During the three and six months ended June 30, 2025, the Company reported collaboration commission and royalty expense of $5,742 and $72,840, respectively. In comparison, during the three and six months ended June 30, 2024, the Company reported collaboration commission and royalty expense of $238,385 and $409,300, respectively. The change in collaboration commission and royalty expense primarily stems from decreased sales of the products covered by respective collaborations. Lifted has been de-emphasizing its collaboration efforts with outside brands due to the collaborations’ lack of traction in sales. Also, on or about April 28, 2025, Lifted and Cali terminated the Cali Agreement. Under the Termination Agreement, Lifted and Cali mutually agreed to terminate the Cali Agreement and all agreements, obligations and responsibilities of the parties thereunder, as of January 1