Reports Second Consecutive Profitable Quarter
FitLife Brands, Inc. ("FitLife") 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 six months ended June 30, 2018.
For the second quarter ended June 30, 2018, total revenue was $4.4 million compared to $5.0 million reported in the second quarter of 2017. The decline in revenue was primarily attributable to a challenging retail environment driven by declining traffic and lower same store sales at our single largest customer. Gross margin was 41.2% for the quarter compared to 30.3% during the same period a year ago. The improvement in gross margin was primarily driven by lower discounting and reduced inventory write-off activity. Total operating expenses were down approximately $448,000, or 22.0%, as a result of the Company's ongoing initiatives to reduce costs, which included certain reductions in total headcount, reduced facilities expense and enhanced budgetary controls. Net income for the second quarter was $0.2 million or $0.02 per share versus a loss of $(0.6) million or $(0.05) per share last year.
For the six months ended June 30, 2018, total revenue was $9.0 million versus $10.6 million for the comparable period last year. Gross margin was 41.4% for the six month period ended June 30, 2018 versus 32.5% for the comparable period last year. The improvement in gross margin was a function of higher net pricing and reduced inventory write-off activity. Comparative numbers for the six month period ended June 30, 2018 were not burdened by the $700,000 one-time charge in connection with a margin support agreement and a $376,000 non-recurring inventory write-off that negatively impacted results for the six month period ended June 30, 2017. Total operating expenses declined $1.0 million, or 23.4%, to $3.3 million for the six months ended June 30, 2018 from $4.3 million during the comparable period last year. Net income for the six month period ended June 30, 2018 was $0.4 million or $0.04 per share compared to a net loss of $(0.9) million or $(0.08) per share last year.
The Company ended the second quarter with $0.9 million in cash, versus $1.4 million at the same time a year ago, and $1.3 million at December 31, 2017. At quarter end, the company was debt-free.
"While significant challenges and uncertainties remain, I am encouraged by our return to profitability for both the three and six month periods ended June 30, 2018. We continue to work closely with our single largest customer to create value for FitLife and our distribution partners with a renewed focus on developing innovative products across all our brands. We are hopeful that this commitment, in concert with our new omni-channel approach, will return the Company to revenue growth," said Dayton Judd, Chief Executive Officer of FitLife Brands. "I am particularly excited about the early success we have had on Amazon, which has shown impressive initial growth since launching early in the second quarter. In all that we do, we remain committed to growing shareholder value," 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
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 | ||||||||
| (Unaudited) | ||||||||
| ASSETS: | June 30, | December 31, | ||||||
| 2018 | 2017 | |||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 940,000 | $ | 1,262,000 | ||||
| Accounts receivable, net of allowance of doubtful accounts of $742,898 and $1,263,674, respectively | 382,000 | 1,958,000 | ||||||
| Accounts receivable, factored | 1,466,000 | - | ||||||
| Inventories, net of allowance for obsolescence of $23,984 and $48,730, respectively | 2,757,000 | 2,874,000 | ||||||
| Note receivable, current portion | - | 5,000 | ||||||
| Prepaid expenses | 82,000 | 221,000 | ||||||
| Total current assets | $ | 5,627,000 | $ | 6,320,000 | ||||
| PROPERTY AND EQUIPMENT, net | 257,000 | 296,000 | ||||||
| Intangibles assets, net | 225,000 | 225,000 | ||||||
| Security deposits | 22,000 | 22,000 | ||||||
| TOTAL ASSETS | $ | 6,131,000 | $ | 6,863,000 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 3,017,000 | $ | 2,974,000 | ||||
| Accrued expenses and other liabilities | 538,000 | 612,000 | ||||||
| Secured payable | 1,159,000 | - | ||||||
| Line of credit | - | 1,950,000 | ||||||
| Term loan agreement, current portion | - | 415,000 | ||||||
| Total current liabilities | 4,714,000 | 5,951,000 | ||||||
| CONTINGENCIES AND COMMITMENTS | - | - | ||||||
| STOCKHOLDERS' EQUITY: | ||||||||
|
Common stock, $.01 par value, 150,000,000 shares authorized; 10,997,958 and 10,681,710 issued and outstanding as of June 30, 2018 and December 31, 2017, respectively |
110,000 | 107,000 | ||||||
| Additional paid-in capital | 31,127,000 | 31,013,000 | ||||||
| Accumulated deficit | (29,820,000 | ) | (30,208,000 | ) | ||||
| Total stockholders' equity | $ | 1,417,000 | $ | 912,000 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 6,131,000 | $ | 6,863,000 | ||||
| The accompanying notes are an integral part of these consolidated financial statements | ||||||||
| FITLIFE BRANDS, INC. | |||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
| FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017 | |||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30 | June 30 | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Revenue | $ | 4,379,000 | $ | 5,022,000 | $ | 8,993,000 | $ | 10,612,000 | |||||||
| Cost of Goods Sold | 2,573,000 | 3,499,000 | 5,271,000 | 7,168,000 | |||||||||||
| Gross Profit | 1,806,000 | 1,523,000 | 3,722,000 | 3,444,000 | |||||||||||
| OPERATING EXPENSES: | |||||||||||||||
| General and administrative | 856,000 | 1,010,000 | 1,709,000 | 2,170,000 | |||||||||||
| Selling and marketing | 718,000 | 913,000 | 1,523,000 | 1,861,000 | |||||||||||
| Depreciation and amortization | 18,000 | 117,000 | 38,000 | 237,000 | |||||||||||
| Total operating expenses | 1,592,000 | 2,040,000 | 3,270,000 | 4,268,000 | |||||||||||
| OPERATING INCOME (LOSS) | 214,000 | (517,000 | ) | 452,000 | (824,000 | ) | |||||||||
| OTHER (INCOME) AND EXPENSES | |||||||||||||||
| Interest expense | 44,000 | 29,000 | 65,000 | 56,000 | |||||||||||
| Other expense (income) | - | 5,000 | (1,000 | ) | 4,000 | ||||||||||
| Total other (income) expense | 44,000 | 34,000 | 64,000 | 60,000 | |||||||||||
| INCOME TAXES | - | - | - | - | |||||||||||
| NET INCOME | $ | 170,000 | $ | (551,000 | ) | $ | 388,000 | $ | (884,000 | ) | |||||
| NET INCOME (LOSS) PER SHARE: | |||||||||||||||
| Basic and diluted | $ | 0.02 | $ | (0.05 | ) | $ | 0.04 | $ | (0.08 | ) | |||||
| Basic and diluted weighted average common shares | 10,955,099 | 10,470,158 | 10,840,905 | 10,455,814 | |||||||||||
| The accompanying notes are an integral part of these consolidated financial statements | |||||||||||||||
| FITLIFE BRANDS, INC. | |||||||||||
| CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED) | |||||||||||
| FOR THE SIX MONTHS ENDED JUNE 30, 2018 | |||||||||||
| 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 | 316,248 | 3,000 | 95,000 | - | 98,000 | ||||||
| Fair value of options issued for services | - | - | 19,000 | - | 19,000 | ||||||
| Net income | - | - | - | 388,000 | 388,000 | ||||||
| June 30, 2018 | 10,997,958 | 110,000 | 31,127,000 | (29,820,000 | ) | 1,417,000 | |||||
| The accompanying notes are an integral part of these consolidated financial statements | |||||||||||
| FITLIFE BRANDS, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017 | ||||||||
| (Unaudited) | ||||||||
| 2018 | 2017 | |||||||
| Net income (loss) | $ | 388,000 | $ | (884,000 | ) | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 38,000 | 237,000 | ||||||
| Allowance for doubtful accounts | (521,000 | ) | - | |||||
| Allowance for inventory obsolescence | (25,000 | ) | (119,000 | ) | ||||
| Common stock issued for services | 98,000 | 35,000 | ||||||
| Fair value of options issued for services | 19,000 | 23,000 | ||||||
| Loss (gain) on disposal of assets | (1,000 | ) | 5,000 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable - trade | 2,097,000 | (884,000 | ) | |||||
| Accounts receivable - factored | (1,466,000 | ) | - | |||||
| Inventories | 142,000 | 1,311,000 | ||||||
| Prepaid expenses | 139,000 | 14,000 | ||||||
| Customer note receivable | 5,000 | 5,000 | ||||||
| Accounts payable | 43,000 | 552,000 | ||||||
| Accrued liabilities and other liabilities | (74,000 | ) | 129,000 | |||||
| Net cash provided by operating activities | 882,000 | 424,000 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | - | (10,000 | ) | |||||
| Proceeds from the sale of assets | 2,000 | - | ||||||
| Net cash used in investing activities | 2,000 | (10,000 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repayment of line of credit | (1,950,000 | ) | - | |||||
| Secured payable to Factor | 1,159,000 | - | ||||||
| Repayments of term loan | (415,000 | ) | (276,000 | ) | ||||
| Net cash provided by (used in) financing activities | (1,206,000 | ) | (276,000 | ) | ||||
| INCREASE IN CASH | (322,000 | ) | 138,000 | |||||
| CASH, BEGINNING OF PERIOD | 1,262,000 | 1,293,000 | ||||||
| CASH, END OF PERIOD | $ | 940,000 | $ | 1,431,000 | ||||
| Supplemental disclosure operating activities | ||||||||
| Cash paid for interest | $ | 65,000 | $ | 56,000 | ||||
| Non-cash investing and financing activities | ||||||||
| Cancellation of Treasury Stock | $ | - | $ | 44,000 | ||||
| The accompanying notes are an integral part of these consolidated financial statements | ||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180814005144/en/
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