OMAHA, Neb.--(BUSINESS WIRE)--FitLife Brands, Inc. (“FitLife”) (OTC Pink: 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 and nine months ended September 30, 2018.
For the third quarter ended September 30, 2018, total revenue was $4.6 million compared to $4.0 million in the third quarter of 2017. Gross margin was 38.2% for the quarter compared to 36.6% during the same period a year ago. The improvement in gross margin was primarily driven by lower discounting and growth in ecommerce sales, which generate a higher gross margin. Total operating expenses declined approximately $0.6 million, or 31.0%, as a result of the Company’s ongoing initiatives to reduce costs. Net income for the third quarter was $0.4 million, or $0.03 per share, versus a loss of $(0.5) million, or $(0.05) per share, last year.
For the nine months ended September 30, 2018, total revenue was $13.6 million versus $14.6 million for the comparable period last year. Gross margin was 40.3% for the nine months ended September 30, 2018 versus 33.6% for the comparable period last year. The improvement in gross margin was a function of higher net pricing and higher ecommerce revenues. Total operating expenses declined $1.6 million, or 26%, to $4.6 million for the nine months ended September 30, 2018 from $6.2 million during the comparable period last year. Net income for the nine months ended September 30, 2018 was $0.8 million, or $0.07 per share, compared to a net loss of $(1.4) million, or $(0.13) per share, last year.
The Company ended the third quarter with $0.5 million in cash, versus $1.1 million at the same time a year ago, and $1.3 million at December 31, 2017.
As previously disclosed, during the fourth quarter of 2017, the Company established a reserve to account for the pending return of several iSatori products from our largest retail partner. Although the Company has not fully exhausted the reserve, the majority of those returns have occurred, resulting in the Company using substantially all of its cash generated from operations year-to-date to pay for those returns.
On November 13, 2018, the Company raised $0.6 million through the sale of preferred stock to a small number of investors, including two members of the Company’s board of directors. The fourth quarter is seasonally difficult in the supplement industry, and the Company will use the proceeds to strengthen its working capital and position the company for the seasonally strong first half of the year.
“We continue to face revenue pressures with our brick and mortar retail partners, driven by declining traffic and lower sell-through at retail. To counter these challenges, we have significantly reduced our cost structure to restore the Company to profitability. We are also focused on developing our ecommerce capability, and have achieved a significant increase in ecommerce revenue over the course of the year,” said Dayton Judd, Chief Executive Officer of FitLife Brands.
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
loss and general health primarily through domestic and international
GNC® franchise locations as well as through more than 25,000 additional
domestic retail locations and, increasingly, online. FitLife is
headquartered in Omaha, Nebraska. For more information please visit our
new website at www.fitlifebrands.com.
Forward-Looking Statements
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 continue 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.
| FITLIFE BRANDS, INC. | ||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| ASSETS: | September 30, | December 31, | ||||||||
| 2018 | 2017 | |||||||||
| (Unaudited) | ||||||||||
| CURRENT ASSETS | ||||||||||
| Cash | $ | 533,000 | $ | 1,262,000 | ||||||
| Accounts receivable, net of allowance of doubtful accounts and sales returns of $707,000 and $1,264,000, respectively | ||||||||||
| - Trade | 686,000 | 1,958,000 | ||||||||
| - Factored | 2,458,000 | - | ||||||||
| Inventories, net of allowance for obsolescence of $7,000 and $49,000, respectively | 2,949,000 | 2,874,000 | ||||||||
| Note receivable | - | 5,000 | ||||||||
| Prepaid expense | 235,000 | 221,000 | ||||||||
| Total current assets | 6,861,000 | 6,320,000 | ||||||||
| PROPERTY AND EQUIPMENT, net | 204,000 | 296,000 | ||||||||
| Goodwill | 225,000 | 225,000 | ||||||||
| Security deposits | 10,000 | 22,000 | ||||||||
| TOTAL ASSETS | $ | 7,300,000 | $ | 6,863,000 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||||||||
| CURRENT LIABILITIES: | ||||||||||
| Accounts payable | $ | 2,871,000 | $ | 2,974,000 | ||||||
| Accrued expense and other liabilities | 593,000 | 612,000 | ||||||||
| Secured payable to factor | 1,950,000 | - | ||||||||
| Line of credit | - | 1,950,000 | ||||||||
| Term loan agreement, current portion | - | 415,000 | ||||||||
| Total current liabilities | 5,414,000 | 5,951,000 | ||||||||
| CONTINGENCIES AND COMMITMENTS | - | - | ||||||||
| STOCKHOLDERS' EQUITY: | ||||||||||
| Common stock, $0.01 par value, 150,000,000 shares authorized; | ||||||||||
| 11,084,545 and 10,681,710 issued and outstanding | ||||||||||
| as of September 30, 2018 and December 31, 2017, respectively | 111,000 | 107,000 | ||||||||
| Additional paid-in capital | 31,230,000 | 31,013,000 | ||||||||
| Accumulated deficit | (29,455,000 | ) | (30,208,000 | ) | ||||||
| Total stockholders' equity | $ | 1,886,000 | $ | 912,000 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 7,300,000 | $ | 6,863,000 | ||||||
| The accompanying notes are an integral part of these condensed consolidated financial statements | ||||||||||
| FITLIFE BRANDS, INC. | ||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||
| FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 | ||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| September 30 | September 30 | |||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||
| Revenue | $ | 4,583,000 | $ | 4,026,000 | $ | 13,576,000 | $ | 14,637,000 | ||||||||||
| Cost of Goods Sold | 2,831,000 | 2,551,000 | 8,102,000 | 9,719,000 | ||||||||||||||
| Gross Profit | 1,752,000 | 1,475,000 | 5,474,000 | 4,918,000 | ||||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||||
| General and administrative | 784,000 | 1,030,000 | 2,493,000 | 3,200,000 | ||||||||||||||
| Selling and marketing | 547,000 | 829,000 | 2,070,000 | 2,690,000 | ||||||||||||||
| Depreciation and amortization | 16,000 | 99,000 | 54,000 | 336,000 | ||||||||||||||
| Total operating expenses | 1,347,000 | 1,958,000 | 4,617,000 | 6,226,000 | ||||||||||||||
| OPERATING INCOME (LOSS) | 405,000 | (483,000 | ) | 857,000 | (1,308,000 | ) | ||||||||||||
| OTHER EXPENSE | ||||||||||||||||||
| Interest expense | 39,000 | 28,000 | 104,000 | 84,000 | ||||||||||||||
| Other expense | 1,000 | - | - | 4,000 | ||||||||||||||
| Total other expense | 40,000 | 28,000 | 104,000 | 88,000 | ||||||||||||||
| NET INCOME (LOSS) | $ | 365,000 | $ | (511,000 | ) | $ | 753,000 | $ | (1,396,000 | ) | ||||||||
| NET INCOME (LOSS) PER SHARE: | ||||||||||||||||||
| Basic and diluted | $ | 0.03 | $ | (0.05 | ) | $ | 0.07 | $ | (0.13 | ) | ||||||||
| Basic and diluted weighted average common shares | 11,007,958 | 10,537,805 | 10,896,589 | 10,483,144 | ||||||||||||||
| The accompanying notes are an integral part of these condensed consolidated financial statements | ||||||||||||||||||
| FITLIFE BRANDS, INC. | ||||||||||||||||||||
| CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY | ||||||||||||||||||||
| FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Additional | ||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| DECEMBER 31, 2017 | 10,681,710 | $ | 107,000 | $ | 31,013,000 | $ | (30,208,000 | ) | $ | 912,000 | ||||||||||
| Common stock issued for services | 402,835 | 4,000 | 133,000 | - | 136,000 | |||||||||||||||
| Fair value of options issued for services | - | - | 85,000 | - | 85,000 | |||||||||||||||
| Net income | - | - | - | 753,000 | 753,000 | |||||||||||||||
| SEPTEMBER 30, 2018 | 11,084,545 | 111,000 | 31,230,000 | (29,455,000 | ) | 1,886,000 | ||||||||||||||
| The accompanying notes are an integral part of these condensed consolidated financial statements | ||||||||||||||||||||
| FITLIFE BRANDS, INC. | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
| FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 | ||||||||||
| (Unaudited) | ||||||||||
| 2018 | 2017 | |||||||||
| (Unaudited) | ||||||||||
| Net income (loss) | $ | 753,000 | $ | (1,396,000 | ) | |||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||||
| Depreciation and amortization | 54,000 | 336,000 | ||||||||
| Allowance for doubtful accounts and product returns | (557,000 | ) | - | |||||||
| Allowance for inventory obsolescence | (42,000 | ) | - | |||||||
| Common stock issued for services | 136,000 | 82,000 | ||||||||
| Fair value of options issued for services | 85,000 | 33,000 | ||||||||
| Loss on disposal of assets | 34,000 | 5,000 | ||||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable - trade | 1,829,000 | (588,000 | ) | |||||||
| Accounts receivable - factored | (2,458,000 | ) | - | |||||||
| Inventories | (33,000 | ) | 887,000 | |||||||
| Prepaid expense | (14,000 | ) | (49,000 | ) | ||||||
| Customer note receivable | 5,000 | 7,000 | ||||||||
| Security deposit | 12,000 | - | ||||||||
| Accounts payable | (103,000 | ) | 880,000 | |||||||
| Accrued liabilities and other liabilities | (19,000 | ) | 51,000 | |||||||
| Net cash used in operating activities | (318,000 | ) | 248,000 | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
| Purchase of property and equipment | - | (20,000 | ) | |||||||
| Proceeds from the sale of assets | 4,000 | - | ||||||||
| Net cash provided by (used in) investing activities | 4,000 | (20,000 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
| Repayment of line of credit | (1,950,000 | ) | - | |||||||
| Secured payable to Factor | 1,950,000 | - | ||||||||
| Repayments of term loan | (415,000 | ) | (416,000 | ) | ||||||
| Net cash used in financing activities | (415,000 | ) | (416,000 | ) | ||||||
| CHANGE IN CASH | (729,000 | ) | (188,000 | ) | ||||||
| CASH, BEGINNING OF PERIOD | 1,262,000 | 1,293,000 | ||||||||
| CASH, END OF PERIOD | $ | 533,000 | $ | 1,105,000 | ||||||
| Supplemental disclosure operating activities | ||||||||||
| Cash paid for interest | $ | 104,000 | $ | 84,000 | ||||||
| Non-cash investing and financing activities | ||||||||||
| Cancellation of Treasury Stock | $ | - | $ | 44,000 | ||||||
| The accompanying notes are an integral part of these condensed consolidated financial statements | ||||||||||