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Note 8 - Acquisition of Irwin Naturals
 3 Months Ended
Mar. 31, 2026
Notes to Financial Statements  
Business Combination [Text Block]

NOTE 8. ACQUISITION OF IRWIN NATURALS

 

On August 8, 2025 (“the Closing Date”), the Company acquired substantially all of the assets and assumed certain liabilities of Irwin through an asset purchase transaction under Section 363 of the US Bankruptcy Code. Total consideration for the acquisition was $42,500. Of this amount, $29,750 was funded using proceeds from a new term loan provided by the Bank and $6,000 was funded from a new $10,000 revolving line of credit from the Bank, with the remainder funded from the Company’s available cash balances.

 

During the three months ended March 31, 2026, the Company did not incur any transaction-related costs for the acquisition of Irwin.

 

The Company accounted for the acquisition as a business combination under Accounting Standards Codification (“ASC”) 805, Business Combinations. The following table summarizes the fair value of the assets acquired and liabilities assumed on the date of acquisition, and is as follows:

 

   

August 8, 2025

  
         

Accounts receivable

   $ 7,306  

Inventories

     10,754  

Prepaid expense and other current assets

     355  

Right of use asset

     487  

Property and equipment

     69  

Intangible assets

     25,500  

Goodwill

     6,288  

Other non-current assets

     83  

Accounts payable and accrued expense

     (2,056 )

Accrued expense and other current liabilities

     (5,240 )

Product returns

     (533 )

Lease liabilities

     (513 )

Net assets acquired

   $ 42,500  

 

The purchase was intended to augment and diversify the Company’s product offerings and lineup.  Key factors that contributed to the recorded intangible assets and goodwill were the opportunity to complement existing operations of the Company and the opportunity to generate future synergies within the nutritional supplement and wellness business. 

 

Pro Forma Condensed Combined Financial Information (Unaudited) (In thousands)

 

The following presents the Company’s unaudited pro forma financial information for the three months ended March 31, 2026 and 2025, respectively, giving effect to the acquisition of Irwin as if it had occurred at January 1, 2025. Included in the pro forma information is: removal of Irwin revenue and cost of sales from the three months ended March 31, 2025 for Irwin business no longer in place as of the closing date (Costco US) as well as removal of CBD revenue due to the Company’s decision to exit the CBD business, fair value adjustment to inventory acquired,  transaction-related costs related to the acquisition of Irwin moved from the three months ended March 31, 2025 to 2024, removal of the interest costs from the Company’s debt prior to the closing of the acquisition, and interest on borrowings made by the Company based on the projected balance of the Irwin Term Loan and revolving line of credit for the respective periods in this pro forma presentation.

 

    Three months ended  
    March 31, 2025  
         

Revenue

   $ 31,915  

Net income

   $ 1,790  

Diluted net income per share

   $ 0.18  

 

The pro forma adjustments do not reflect adjustments for anticipated operating efficiencies that the Company expects to achieve as a result of this acquisition. The pro forma financial information is for informational purposes only and does not purport to present what the Company’s results would actually have been had the transaction actually occurred on the dates presented or to project the combined Company’s results of operations or financial position for any future period. 

 

Irwin revenue for the three months ended March 31, 2026 was $12,849.