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.

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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,
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
 

FitLife Brands, Inc.
Mike Abrams
[email protected]

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