FitLife Brands Announces First Quarter 2019 Results

OMAHA, Neb.–(BUSINESS WIRE)–FitLife Brands, Inc. (“FitLife” or the “Company”) (OTC Pink: FTLF), an
international provider of innovative and proprietary nutritional
supplements for health-conscious consumers marketed under the brand
names NDS Nutrition™, PMD®, SirenLabs®, CoreActive®,
Metis Nutrition™, iSatori™, Energize, and BioGenetic Laboratories, today
announced results for the three months ended March 31, 2019.

Highlights for the quarter ended March 31, 2019 include:

  • Total revenue increased 27.4% to $5.9 million.
  • Direct-to-consumer online sales increased to 10% of total revenue,
    compared to 1% in the same quarter last year, with Energize and select
    iSatori products achieving the strongest unit movement.
  • Gross profit improved 32.7% to $2.5 million.
  • Gross margin increased to 43.2% compared to 41.5% in the same quarter
    last year.
  • Operating expense declined 21.0% to $1.3 million.
  • Net income improved to $1.2 million compared to $0.2 million in the
    same quarter last year.
  • EPS increased to $1.07 per share, or $0.94 per diluted share, compared
    to $0.20 per share in the same quarter last year

For the first quarter ended March 31, 2019, total revenue was $5.9
million versus $4.6 million in the same quarter last year, an increase
of 27.4%. The increase was primarily attributable to increased wholesale
purchases from our retail partners coupled with a significant increase
in online direct-to-consumer sales. During the first quarter of 2019,
online sales accounted for approximately 10% of the Company’s revenue,
compared to 1% during the first quarter of 2018.

Gross profit improved to $2.5 million, an increase of 32.7% from the
first quarter of 2018. Gross margin improved from 41.5% to 43.2% over
the same time period. The improvement in gross margin was driven by
higher total sales volume, reduced returns, and the increase in online
revenue, which delivers a substantially higher gross margin for the
Company.

Total operating expenses declined 21% to $1.3 million, driven by ongoing
cost reduction initiatives and budgetary controls.

Net income for the first quarter of 2019 was $1.2 million, which
represents the largest quarterly profit the company has ever achieved.
The Company delivered basic earnings per share of $1.07—or $0.94 per
diluted share—in the quarter, compared to $0.20 per share in the same
quarter last year.

As previously announced, subsequent to the end of the first quarter of
2019, the Company implemented a 1-for-8,000 reverse stock split, which
was followed immediately thereafter by an 800-for-1 forward stock split
(the “Reverse/Forward Split”). As a result of the Reverse/Forward Split,
holders of fewer than 8,000 pre-split shares of the Company’s common
stock received cash in lieu of fractional shares at a value of $0.57 per
pre-split share. The Reverse/Forward Split resulted in the repurchase of
fractional shares equivalent to 992,659 pre-split shares, or
approximately 8.9% of our shares of common stock outstanding prior to
the Reverse/Forward Split. Following the Reverse/Forward Split, there
are 1,014,740 shares of the Company’s common stock outstanding.

Dayton Judd, the Company’s Chairman and CEO, commented, “I am pleased
with the Company’s performance during the first quarter of 2019. Our
team has improved the performance of almost all of our brands, and our
efforts to diversify into online revenue sources are off to a good
start. The combination of stronger top-line performance, expanding
margins due to online sales, and lower operating costs resulted in a
record quarter for the Company.”

Mr. Judd continued, “Our online strategy varies by brand. For our
GNC-exclusive brands, our focus is on eliminating unauthorized online
resellers in order to protect our GNC franchise partners. For our other
brands, we are pricing our products competitively to drive revenue and
unit growth. Given this strategy, our top-selling products online
include Energize as well as some of our iSatori products. Going forward,
we intend to continue executing our strategy. With our improved
performance and stronger balance sheet, we also intend to invest more
money into marketing in an effort to continue to drive profitable
top-line growth for all of our 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 STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
   
Three Months Ended
March 31
(Unaudited)
2019     2018
 
Revenue $ 5,878,000 $ 4,614,000
Cost of Goods Sold   3,337,000   2,699,000  
Gross Profit   2,541,000   1,915,000  
 
OPERATING EXPENSES:
General and administrative 774,000 870,000
Selling and marketing 550,000 806,000
Depreciation and amortization   15,000   19,000  
Total operating expenses   1,339,000   1,695,000  
OPERATING INCOME   1,202,000   220,000  
 
OTHER INCOME (EXPENSES)
Interest expense 15,000 3,000
Other     (1,000 )
Total other expense 15,000 2,000
 
NET INCOME $ 1,187,000 $ 218,000  
 
NET INCOME PER SHARE
Basic $ 1.07 $ 0.20  
 
Diluted $ 0.94 $ 0.20  
 
Basic weighted average common shares   1,111,943   1,072,671  
 
Diluted weighted average common shares   1,268,526   1,072,671  
 

The accompanying notes are an integral part of these condensed
consolidated financial statements

 
 
FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
       
ASSETS: March 31, December 31,
2019 2018
(Unaudited)
CURRENT ASSETS
Cash $ 438,000 $ 259,000

Accounts receivable, net of allowance of doubtful accounts,
product returns, sales returns and incentive programs of $315,000
and $455,000, respectively

3,817,000 1,433,000
Inventories, net of allowance for obsolescence of $119,000 and
$107,000, respectively
2,338,000 3,523,000
Prepaid expenses and other current assets   113,000     223,000  
Total current assets 6,706,000 5,438,000
 
Property and equipment, net 174,000 189,000
Right of use asset 320,000
Goodwill 225,000 225,000
Security deposits   10,000     10,000  
TOTAL ASSETS $ 7,435,000   $ 5,862,000  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY:
 
CURRENT LIABILITIES:
Accounts payable $ 2,307,000 $ 2,628,000
Accrued expenses and other liabilities 440,000 420,000
Lease liability – current portion 83,000
Notes payable – Related Parties   815,000     500,000  
Total current liabilities 3,645,000 3,548,000
 
LONG-TERM LEASE LIABILITY, net of current portion 240,000
   
TOTAL LIABILITIES   3,885,000     3,548,000  
 
STOCKHOLDERS’ EQUITY:

Preferred Stock, $0.01 par value, 10,000,000 shares authorized,
none outstanding as of March 31, 2019 and December 31, 2018:

Preferred Stock Series A Preferred, $0.01 par value 1,000 shares
authorized; 600 and 0 shares issued and outstanding as of March
31, 2019 and December 31, 2018, respectively

Common stock, $0.01 par value, 15,000,000 shares authorized;
1,113,952 and 1,111,943 issued and outstanding as of March 31,
2019 and December 31, 2018, respectively

111,000 111,000
Additional paid-in capital 32,056,000 32,007,000
Accumulated deficit   (28,617,000 )   (29,804,000 )
Total stockholders’ equity   3,550,000   $ 2,314,000  
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 7,435,000   $ 5,862,000  
 

The accompanying notes are an integral part of these condensed
consolidated financial statements

 
 
FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
   

 

Three Months Ended

 

March 31

(Unaudited)
2019     2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,187,000 $ 218,000
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization 15,000 19,000
Allowance for doubtful accounts and product returns (140,000 ) (87,000 )
Allowance for inventory obsolescence 12,000 33,000
Common stock issued for services 23,000 83,000
Fair value of options issued for services 26,000 10,000
Gain on disposal of assets (1,000 )
Right of use asset – Amortization 23,000
Right of use asset – Lease Liability (20,000 )
Changes in operating assets and liabilities:
Accounts receivable – trade (2,244,000 ) (427,000 )
Inventories 1,173,000 456,000
Prepaid expense 110,000 139,000
Customer note receivable 5,000
Accounts payable (321,000 ) (266,000 )
Accrued interest on notes 15,000
Accrued liabilities and other liabilities   20,000     (232,000 )
Net cash used in operating activities   (121,000 )   (50,000 )
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of assets       2,000  
Net cash provided by investing activities       2,000  
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of Notes Payable – related party 300,000
Repayment of line of credit (1,950,000 )
Repayments of term loan (415,000 )
Repayments of note payable       1,715,000  
Net cash provided by (used in) financing activities   300,000     (650,000 )
 
CHANGE IN CASH 179,000 (698,000 )
CASH, BEGINNING OF PERIOD   259,000     1,262,000  
CASH, END OF PERIOD $ 438,000   $ 564,000  
 
Supplemental disclosure operating activities
Cash paid for interest $ 15,000   $ 3,000  
 
Non-cash investing and financing activities
Recording of lease asset and liability upon adoption of ASU-2016-02 $ 343,000   $  
 

The accompanying notes are an integral part of these condensed
consolidated financial statements

 

Contacts

FitLife Brands
Dayton Judd
Chief Executive Officer
djudd@fitlifebrands.com