OMAHA, Neb.--(BUSINESS WIRE)--FitLife Brands, Inc. (“FitLife”) (OTCPink: FTLF), an international provider of innovative and proprietary nutritional supplements for health conscious consumers marketed under the brand names NDS Nutrition Products™ ("NDS") (www.ndsnutrition.com), PMD® (www.pmdsports.com), SirenLabs® (www.sirenlabs.com), CoreActive® (www.coreactivenutrition.com), Metis Nutrition™ (www.metisnutrition.com), iSatori™ (www.isatori.com), Energize (www.tryenergize.com), and BioGenetic Laboratories (www.biogeneticlabs.com), today announced results for the three months ended March 31, 2018.
For the first quarter ended March 31, 2018, total revenue was $4.6 million compared to $5.6 million reported in the first quarter of 2017. The decline in revenue was primarily attributable to declining foot traffic trends and lower unit sales in our primary distribution channel worsened by certain inventory adjustments by our largest customer in response to such trends. Moreover, continued general weakness at retail and the reduced effectiveness of our distribution partners outside GNC also contributed to revenue declines during the period. Despite lower revenue, gross profit was relatively flat for the three-month period ended March 31, 2018 at $1.9 million versus $1.9 million during the comparable period last year. Gross margin was 41.5% for the quarter versus 34.4% during the comparable period last year, which was negatively impacted by the $0.7 million non-recurring margin support agreement with our largest customer. Absent that charge, gross margin for the three-month period ended March 31, 2017 would have been 41.7%. Total operating expenses were down more than $0.5 million for the quarter ended March 31, 2018 versus the comparable period a year ago driven by the Company’s ongoing initiatives to reduce costs and maximize efficiency. We posted a net profit, our first since the second quarter of 2016, of $0.2 million for the quarter versus a loss of $(0.3) million during the same quarter last year. Adjusted EBITDA, which adds back interest, taxes, depreciation, amortization, and non-cash equity issuance costs for the three-month period ended March 31, 2018 was $0.3 million as compared to $(0.2) million for the comparable period last year. The Company ended the first quarter with $0.6 million in cash versus $1.3 million at the same time a year ago.
“The first quarter saw the Company achieve several critical milestones. To begin, we posted our first quarterly profit since the second quarter of 2016, driven by more frequent and significant purchasing activity from our largest customer. We still have a long way to go, but I am optimistic that the recent improvement, in concert with our commitment to a strong partnership with our largest customer, will continue to positively impact the business throughout 2018 and beyond. Second, we began factoring select receivables during the quarter, which has provided the Company with enhanced liquidity and, perhaps more importantly, enabled the Company to pay-off all remaining debt obligations and end the quarter debt-free,” stated Dayton Judd, Interim Chief Executive Officer of FitLife Brands. “Finally, we successfully launched our first storefront on Amazon during the quarter. While still very early in the process, an enhanced emphasis on online sales is a major element of our new omni-channel strategy, which, if successful, will enable us to better support and protect all our brands while providing opportunities for revenue growth and margin expansion for the business. While significant challenges remain, we are beginning to see improving trends both at a macro-level and in the results of our largest customer. We remain committed to building on these trends to bring stability and growth potential back to the Company,” concluded Mr. Judd.
About FitLife Brands
FitLife Brands is a developer and marketer of innovative and proprietary nutritional supplements for health conscious consumers. FitLife markets over 80 different dietary supplements to promote sports nutrition, improved performance, weight management and general health primarily through domestic and international GNC® franchise locations as well as through more than 25,000 additional domestic retail locations and online. FitLife is headquartered in Omaha, Nebraska. For more information please visit our website at www.fitlifebrands.com.
Forward-Looking Statement
Statements in this release that are forward looking involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to be materially different from any future performance that may be suggested in this news release. Such factors may include, but are not limited to: the ability to of the Company to grow revenue; and the Company's ability to continue to achieve positive cash flow given the Company's existing and anticipated operating and other costs. Many of these risks and uncertainties are beyond the Company's control. Reference is made to the discussion of risk factors detailed in the Company's filings with the Securities and Exchange Commission including its reports on Form 10-K and 10-Q. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.
Non-GAAP Financial Measures
This press release includes the following financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission: non-GAAP Adjusted EBITDA. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles.
Non-GAAP Adjusted EBITDA excludes items such as interest, taxes, depreciation, amortization and non-cash stock based compensation and, when applicable, other one-time cash and non-cash charges. The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, which may not be indicative of its core operation results and business outlook.
| FITLIFE BRANDS, INC. | |||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
| (Unaudited) | |||||||||||
| March 31, | December 31, | ||||||||||
| 2018 | 2017 | ||||||||||
| CURRENT ASSETS | |||||||||||
| Cash | $ | 564,772 | $ | 1,261,933 | |||||||
| Accounts receivable, net of allowance for sales returns and doubtful accounts of $1,177,157 and $1,263,674, respectively | |||||||||||
| - Trade | 261,733 | 1,958,128 | |||||||||
| - Factored | 2,209,964 | - | |||||||||
| Inventories, net of allowance for obsolescence of $81,524 and $48,730, respectively | 2,384,942 | 2,873,831 | |||||||||
| Customer note receivable | - | 5,000 | |||||||||
| Prepaid expenses and other current assets | 82,001 | 221,200 | |||||||||
| Total current assets | 5,503,412 | 6,320,092 | |||||||||
| PROPERTY AND EQUIPMENT, net | 274,848 | 295,187 | |||||||||
| Goodwill | 225,000 | 225,000 | |||||||||
| Security deposits | 21,908 | 21,908 | |||||||||
| TOTAL ASSETS | $ | 6,025,168 | $ | 6,862,187 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY: | |||||||||||
| CURRENT LIABILITIES: | |||||||||||
| Accounts payable | $ | 2,708,221 | $ | 2,974,165 | |||||||
| Accrued expenses and other liabilities | 379,566 | 611,548 | |||||||||
| Secured payable to factor | 1,715,434 | - | |||||||||
| Line of credit | - | 1,950,000 | |||||||||
| Term loan | - | 414,877 | |||||||||
| Total current liabilities | 4,803,220 | 5,950,590 | |||||||||
| CONTINGENCIES AND COMMITMENTS | - | - | |||||||||
| STOCKHOLDERS' EQUITY: | |||||||||||
|
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of March 31, 2018 and December 31, 2017: |
|||||||||||
|
Preferred stock Series A; 10,000,000 shares authorized; none issued and outstanding as of March 31, 2018 and December 31, 2017 |
- | - | |||||||||
|
Preferred stock Series B; 1,000 shares authorized; none issued and outstanding as of March 31, 2018 and December 31, 2017 |
- | - | |||||||||
|
Preferred stock Series C; 500 shares authorized; none issued and outstanding as of March 31, 2018 and December 31, 2017 |
- | - | |||||||||
|
Common stock, $.01 par value, 150,000,000 shares authorized; 10,955,099 and 10,681,710 issued and outstanding as of March 31, 2018 and December 31, 2017, respectively |
109,551 | 106,819 | |||||||||
| Additional paid-in capital | 31,103,272 | 31,013,043 | |||||||||
| Accumulated deficit | (29,990,875 | ) | (30,208,265 | ) | |||||||
| Total stockholders' equity |
$ |
1,221,948 |
$ | 911,597 | |||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 6,025,168 | $ | 6,862,187 | |||||||
| The accompanying notes are an integral part of these condensed consolidated financial statements | |||||||||||
| FITLIFE BRANDS, INC. | |||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017 | |||||||||||
| (Unaudited) | |||||||||||
| 2018 | 2017 | ||||||||||
| Revenue | $ | 4,614,286 | $ | 5,589,354 | |||||||
| Cost of Goods Sold | 2,698,618 | 3,668,790 | |||||||||
| Gross Profit | 1,915,668 | 1,920,564 | |||||||||
| OPERATING EXPENSES: | |||||||||||
| General and administrative | 870,382 | 1,160,069 | |||||||||
| Selling and marketing | 806,109 | 947,386 | |||||||||
| Depreciation and amortization | 18,840 | 119,338 | |||||||||
| Total operating expenses | 1,695,331 | 2,226,793 | |||||||||
| OPERATING INCOME (LOSS) | 220,337 | (306,229 | ) | ||||||||
| OTHER (INCOME) AND EXPENSES | |||||||||||
| Interest expense | 3,473 | 26,661 | |||||||||
| Gain on sale of assets | (526 | ) | - | ||||||||
| Total other expenses | 2,947 | 26,661 | |||||||||
| NET INCOME (LOSS) | $ | 217,390 | $ | (332,890 | ) | ||||||
| NET INCOME (LOSS) PER SHARE: | |||||||||||
| Net income (loss) per common share - basic and diluted | $ | 0.02 | $ | (0.03 | ) | ||||||
| Weighted average common shares outstanding - basic and diluted | 10,726,710 | 10,385,890 | |||||||||
| The accompanying notes are an integral part of these condensed consolidated financial statements | |||||||||||
| FITLIFE BRANDS, INC. | |||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017 | |||||||||||
| (Unaudited) | |||||||||||
| 2018 | 2017 | ||||||||||
| Net income (loss) | $ | 217,390 | $ | (332,890 | ) | ||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 18,840 | 119,338 | |||||||||
| Allowance for sales returns and doubtful accounts | (86,517 | ) | 717,706 | ||||||||
| Allowance for inventory obsolescence | 32,794 | - | |||||||||
| Common stock issued for services | 82,501 | 17,500 | |||||||||
| Fair value of options issued for services | 10,460 | 11,584 | |||||||||
| Gain on sale of assets | (526 | ) | - | ||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (427,052 | ) | (2,477,923 | ) | |||||||
| Inventories | 456,095 | 861,046 | |||||||||
| Prepaid expenses and other current assets | 139,199 | 87,465 | |||||||||
| Customer note receivable | 5,000 | 2,251 | |||||||||
| Accounts payable | (265,944 | ) | 849,445 | ||||||||
| Accrued liabilities and other liabilities | (231,983 | ) | 121,905 | ||||||||
| Net cash used in operating activities | (49,743 | ) | (22,573 | ) | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Proceeds from sale of assets | 2,025 | - | |||||||||
| Net cash provided by (used in) investing activities | 2,025 | - | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Repayment of line of credit | (1,950,000 | ) | - | ||||||||
| Repayment of term loan | (414,877 | ) | (137,320 | ) | |||||||
| Secured payable to factor | 1,715,434 | - | |||||||||
| Net cash used in financing activities | (649,443 | ) | (137,320 | ) | |||||||
| DECREASE IN CASH | (697,162 | ) | (159,893 | ) | |||||||
| CASH, BEGINNING OF PERIOD | 1,261,933 | 1,293,041 | |||||||||
| CASH, END OF PERIOD | $ | 564,772 | $ | 1,133,148 | |||||||
| Supplemental disclosure operating activities | |||||||||||
| Cash paid for interest | $ | 3,473 | $ | 26,661 | |||||||
| The accompanying notes are an integral part of these condensed consolidated financial statements | |||||||||||