Company: LIFD
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001096906-25-000346
Chunk: 1332

Company: LFTD PARTNERS INC.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1C
Chunk 1332
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 labor, co-packing fees, freight and shipping charges, and certain quality control costs, such as lab testing costs. Cost of goods sold amounted to $24,570,399, $31,906,278 and $36,423,246 during the years ended December 31, 2024, 2023, and 2022, respectively. $1,550,599, $2,056,603 and $4,418,922 of cost of goods sold relates to spoiled and obsolete inventory written off during the years ended December 31, 2024, 2023 and 2022, respectively.  Operating Expenses – Operating expenses include accounts such as payroll expenses, deferred stock compensation expense, the company-wide management bonus pool, management bonuses, professional fees, bank charges and merchant fees, advertising and marketing, bad debt expense, depreciation and amortization, collaboration commissions and royalties expense, and other operating expenses.  Total operating expenses increased to $13,528,293 for the year ended December 31, 2024, up from $17,294,095 for the year ended December 31, 2023, and up from $11,180,562 for the year ended December 31, 2022.  The primary driver for this increase in operating expenses from 2023 to 2024 was $1,469,078 of bad debt expense, which stems from the Company’s CECL Model analysis, which is described above, in the Accounts Receivable section.  As described in ITEM 1A. RISK FACTORS, 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. As described in the Accounts Receivable section above, 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. The primary driver for the increase in operating expenses from 2022 to 2023 was that during the first quarter