FitLife Brands Announces Third Quarter 2018 Results

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 Companys 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 Companys 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,
20182017
(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
– Trade686,0001,958,000
– Factored2,458,000
Inventories, net of allowance for obsolescence of $7,000 and $49,000, respectively2,949,0002,874,000
Note receivable5,000
Prepaid expense235,000221,000
Total current assets6,861,0006,320,000
PROPERTY AND EQUIPMENT, net204,000296,000
Goodwill225,000225,000
Security deposits10,00022,000
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 liabilities593,000612,000
Secured payable to factor1,950,000
Line of credit1,950,000
Term loan agreement, current portion415,000
Total current liabilities5,414,0005,951,000
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, respectively111,000107,000
Additional paid-in capital31,230,00031,013,000
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 EndedNine Months Ended
September 30September 30
2018201720182017
(Unaudited)(Unaudited)
Revenue$4,583,000$4,026,000$13,576,000$14,637,000
Cost of Goods Sold2,831,0002,551,0008,102,0009,719,000
Gross Profit1,752,0001,475,0005,474,0004,918,000
OPERATING EXPENSES:
General and administrative784,0001,030,0002,493,0003,200,000
Selling and marketing547,000829,0002,070,0002,690,000
Depreciation and amortization16,00099,00054,000336,000
Total operating expenses1,347,0001,958,0004,617,0006,226,000
OPERATING INCOME (LOSS)405,000(483,000)857,000(1,308,000)
OTHER EXPENSE
Interest expense39,00028,000104,00084,000
Other expense1,0004,000
Total other expense40,00028,000104,00088,000
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 shares11,007,95810,537,80510,896,58910,483,144
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 StockPaid-inAccumulated
SharesAmountCapitalDeficitTotal
DECEMBER 31, 201710,681,710$107,000$31,013,000$(30,208,000)$912,000
Common stock issued for services402,8354,000133,000136,000
Fair value of options issued for services85,00085,000
Net income753,000753,000
SEPTEMBER 30, 201811,084,545111,00031,230,000(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)
20182017
(Unaudited)
Net income (loss)$753,000$(1,396,000)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization54,000336,000
Allowance for doubtful accounts and product returns(557,000)
Allowance for inventory obsolescence(42,000)
Common stock issued for services136,00082,000
Fair value of options issued for services85,00033,000
Loss on disposal of assets34,0005,000
Changes in operating assets and liabilities:
Accounts receivable – trade1,829,000(588,000)
Accounts receivable – factored(2,458,000)
Inventories(33,000)887,000
Prepaid expense(14,000)(49,000)
Customer note receivable5,0007,000
Security deposit12,000
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 assets4,000
Net cash provided by (used in) investing activities4,000(20,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of line of credit(1,950,000)
Secured payable to Factor1,950,000
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 PERIOD1,262,0001,293,000
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

FitLife Brands, Inc.
Mike Abrams
[email protected]