Company: LIFD
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001096906-25-000819
Chunk: 259

Company: LFTD PARTNERS INC.
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 2
Chunk 259
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During the quarter ended March 31, 2025, the Company recognized net sales of $9,123,850. In comparison, during the quarter ended March 31, 2024, the Company recognized net sales of $10,666,649. Reasons for the decrease in net sales between the two periods include, but are not limited to: prohibition of, or tighter regulation of, intoxicating hemp-derived products has been adopted or proposed in many states that are significant markets for Lifted, such as in Florida, Texas, Illinois and California; greater competition in the marketplace for branded hemp-derived and psychoactive products that are similar to those that Lifted sells; more distributors creating their own brands and selling their own branded products at a lower price than Lifted’s products; increased competition for products containing more milligrams of cannabinoids or active ingredients per unit at a lower price point; and other competing brands paying distributors and wholesalers more than what Lifted is willing to pay (if anything), for valuable shelf space.

During the quarter ended March 31, 2025, Lifted has launched several initiatives in order to attempt to increase net sales and decrease operating expenses, including: laying off certain employees and independent contractors in Kenosha and Durango; restructuring its sales team; consolidating operations; emphasizing sales of hemp-free brands including Rebel Energy Gummy, Mielos, and other products; increasing spending on SEO; and online advertising and marketing. 

Write-offs of Inventory

Lifted's industry, and customer preferences, are constantly and quickly evolving. Consequently, Lifted finds it extremely difficult to predict future sales of its products and to anticipate raw goods needs for future production. This exposes Lifted to the risk that it will need to write off obsolete raw goods and slow-moving finished goods, causing an increase in cost of goods sold. During the quarters ended March 31, 2025 and 2024, $464,521 and $398,815, respectively, of obsolete and spoiled inventory was written off. 

Payroll Expenses

During the quarters ended March 31, 2025 and 2024, the Company reported $1,299,570 and $1,602,078 of payroll expenses. In March 2025, an Employee Retention Tax Credit (“ERC”) of $22,357 related to the second quarter of 2020 was recovered. The $22,357 ERC is accounted for as a reduction in payroll expenses in the first quarter of 2025. 

Payroll expenses