FitLife Brands Announces Fiscal 2017 Third Quarter, Nine Months Results

OMAHA, Neb.--()--FitLife Brands, Inc. (“FitLife”) (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, 2017.

For the third quarter ended September 30, 2017, total revenue was $4.0 million compared to $5.3 million reported in the third quarter of 2016. The decline in revenue was primarily attributable to a challenging retail environment in concert with the continued inventory reduction initiatives of our single largest customer. Gross margin was 36.6% for the quarter compared to 37.2% during the same period a year ago. Total operating expenses were down approximately $390,000, or 16.5%, as a result of the Company’s ongoing initiatives to reduce costs and maximize efficiency. Net loss for the third quarter was $0.5 million or $0.05 per share versus a loss of $0.4 million or $0.03 per share last year.

For the nine months ended September 30, 2017, total revenue was $14.6 million versus $21.6 million for the comparable period last year. Gross margin was 33.6% for the nine month period ended September 30, 2017 versus 42.3% for the comparable period last year. Excluding a non-recurring $700,000 revenue adjustment in the first quarter related to a margin support agreement with our largest customer and a $376,000 non-recurring inventory write-off during the second quarter primarily related to picamilion, gross margin of the nine month period ended September 30, 2017 would have been 39.1%. Total operating expenses declined $1.1 million, or 15.5%, to $6.2 million for the nine months ended September 30, 2017 from $7.4 million during the comparable period last year. Net loss for the nine months ended September 30, 2017 was $1.4 million or $0.13 per share compared to net income of $1.5 million or $0.13 per share last year.

The Company ended the third quarter with $1.1 million in cash, versus $2.0 million at the same time a year ago, and $1.3 million at December 31, 2016. At quarter end, total debt decreased to $2.5 million.

“We continue to experience significant challenges in our business related to both the health of the overall industry and our largest customer. In spite of such difficulties, some of which were the result of two devastating hurricanes, our performance remains strong as measured in both units sold and dollars spent at retail, representing continued strong end-consumer demand for our products,” said John S. Wilson, Chief Executive Officer of FitLife Brands. “While significant challenges remain, we are starting to see improved foot traffic and other positive macro trends for the industry as a whole. We believe our differentiation at retail and lower overall cost structure ideally positions us to benefit from such factors as they unfold during the fourth quarter and into 2018. Moreover, our channel differentiation strategy for iSatori is beginning to yield results both online and continued expansion into the food, drug and mass space. We look forward to the remainder of 2017 and an expected return to profitability and growth in 2018,” concluded Mr. Wilson.

About FitLife Brands
FitLife Brands is a marketer and manufacturer 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. FitLife is headquartered in Omaha, Nebraska. For more information please visit our new website at www.fitlifebrands.com.

Forward-Looking Statement
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.

Non-GAAP Financial Measures
This press release includes the following financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission: non-GAAP net income, non-GAAP earnings per share. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. Reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures will be provided upon the completion of the Company’s annual audit.

Non-GAAP net income excludes items such as impairment charges, allowance for doubtful accounts, charges to consolidate and integrate recently acquired businesses, costs of closing corporate facilities, non-cash stock based compensation and other one-time cash and non-cash charges. Non-GAAP EPS excludes items such as non-cash stock based compensation, charges to consolidate and integrate recently acquired businesses, costs for closing corporate facilities, amortization of acquired intangible assets and other one-time cash and non-cash charges. The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses or net purchases of property and equipment, as the case may be, which may not be indicative of its core operation results and business outlook.

 
FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
    (Unaudited)    
ASSETS: September 30, December 31,
2017 2016
 
CURRENT ASSETS
Cash $ 1,104,872 $ 1,293,041
Accounts receivable, net 3,380,984 2,792,649
Security deposits 24,956 24,956
Inventory 2,869,383 3,756,716
Note receivable, current portion 48,727 2,782
Prepaid income tax 120,000 120,000
Prepaid expenses and other current assets   184,958     136,014  
Total current assets 7,733,880 8,126,158
 
PROPERTY AND EQUIPMENT, net 145,910 171,004
 
Note receivable, net of current portion - 52,696
Deferred Taxes 689,000 689,000
Intangibles assets, net   6,212,193     6,507,505  
TOTAL ASSETS $ 14,780,983   $ 15,546,363  
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
 
CURRENT LIABILITIES:
Accounts payable $ 2,476,417 $ 1,596,748
Accrued expenses and other liabilities 590,756 539,765
Litigation Reserve - -
Income tax payable - -
Line of credit 1,950,000 1,950,000
Term loan agreement, current portion 506,889 544,825
Notes payable   4,131     12,700  
Total current liabilities 5,528,193 4,644,038
 
LONG-TERM DEBT, net of current portion - 369,177
   
TOTAL LIABILITIES 5,528,193 5,013,215
 
CONTINGENCIES AND COMMITMENTS - -
 
STOCKHOLDERS' EQUITY:

Preferred stock, $0.01 par value, 10,000,000 shares authorized as of June 30, 2017 and December 31, 2016:

Preferred stock Series A; 10,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2017 and December 31, 2016

- -

Preferred stock Series B; 1,000 shares authorized; 0 shares issued and outstanding as of June 30, 2017 and December 31, 2016

- -

Preferred stock Series C; 500 shares authorized; 0 shares issued and outstanding as of June 30, 2017 and December 31, 2016

- -

Common stock, $.01 par value, 150,000,000 shares authorized; 10,590,189 and 10,449,520 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively

106,235 104,495
Subscribed common stock - 339
Treasury stock - (44,416 )
Additional paid-in capital 30,988,947 30,919,289
Accumulated deficit   (21,842,392 )   (20,446,559 )
Total stockholders' equity $ 9,252,790   $ 10,533,148  
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,780,983   $ 15,546,363  
 
The accompanying notes are an integral part of these consolidated financial statements
 
 
FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
               
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
2017 2016 2017 2016
 
Revenue $ 4,025,580 $ 5,340,616 $ 14,637,273 $ 21,615,605
 
Cost of Goods Sold   2,550,760     3,353,224     9,718,670     12,469,081  
Gross Profit 1,474,820 1,987,392 4,918,603 9,146,524
 
OPERATING EXPENSES:
General and administrative 1,030,215 1,131,692 3,200,218 3,854,128
Selling and marketing 828,829 1,088,400 2,689,587 3,138,323
Depreciation and amortization   98,917     125,751     335,566     376,502  
Total operating expenses   1,957,961     2,345,843     6,225,371     7,368,953  
OPERATING INCOME (LOSS)   (483,141 )   (358,451 )   (1,306,768 )   1,777,571  
 
OTHER (INCOME) AND EXPENSES
Interest expense 28,243 27,417 83,920 84,016
Other expense (income)   -     (150 )   5,145     (2,917 )
Total other (income) expense 28,243 27,267 89,065 81,099
 
INCOME TAXES (BENEFIT) - (25,000 ) - 164,000
   
NET INCOME (LOSS) $ (511,384 ) $ (360,718 ) $ (1,395,833 ) $ 1,532,472  
 
NET INCOME (LOSS) PER SHARE:
Basic $ (0.05 ) $ (0.03 ) $ (0.13 ) $ 0.15  
 
Diluted $ (0.05 ) $ (0.03 ) $ (0.13 ) $ 0.13  
 
Basic   10,537,805     10,446,954     10,488,135     10,413,703  
 
Diluted   10,537,805     10,446,954     10,488,135     11,515,169  
 
The accompanying notes are an integral part of these consolidated financial statements
 
 
FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
       
(Unaudited)
2017 2016
 
Net income $ (1,395,833 ) $ 1,532,472

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization 335,566 376,502
Common stock issued (cancelled) for services 82,001 105,501
Warrants and options issued (cancelled) for services 33,474 45,028
Gain on write-up of investment 5,145 -
Changes in operating assets and liabilities:
Accounts receivable (588,335 ) (1,369,673 )
Inventory 887,333 357,326
Deferred tax asset - 123,879
Prepaid income tax - 151,000
Prepaid expenses (48,944 ) 145,167
Note receivable 6,751 9,985
Accounts payable 879,669 (666,806 )
Accrued liabilities 50,991 (369,941 )
Litigation reserve - (95,775 )
Income tax payable   -     13,000  
Net cash provided by (used in) operating activities   247,818     357,665  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (20,305 ) (21,619 )
Long-term investment - 2,027
Repurchases of common stock   -     -  
Net cash provided by (used in) investing activities   (20,305 )   (19,592 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from draw down on credit line - 520,000
Payments for redemption of preferred stock - -
Repayments of note payable   (415,682 )   (404,261 )
Net cash provided by (used in) financing activities   (415,682 )   115,739  
 
INCREASE (DECREASE) IN CASH (188,169 ) 453,812
CASH, BEGINNING OF PERIOD   1,293,041     1,532,550  
CASH, END OF PERIOD $ 1,104,872   $ 1,986,362  
 
Supplemental disclosure operating activities
 
Cash paid for interest $ 83,920   $ 84,016  
 
The accompanying notes are an integral part of these consolidated financial statements
 

Contacts

FitLife Brands, Inc.
Mike Abrams
mabrams@fitlifebrands.com

Contacts

FitLife Brands, Inc.
Mike Abrams
mabrams@fitlifebrands.com