8-K
Fitlife Brands, Inc. (FTLF)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 15, 2020
Commission File Number: 000-52369
FitLife Brands, Inc.
(Exact name of registrant as specified in its charter.)
| Nevada | 20-3464383 |
|---|---|
| (State or other jurisdiction of<br>incorporation or organization) | (IRS Employer Identification<br>No.) |
5214 S. 136th Street, Omaha, Nebraska 68137
(Address of principal executive offices)
402-333-5260
(Registrant's Telephone number)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each<br>class | Trading<br>Symbol(s) | Name of each exchange on which<br>registered |
|---|---|---|
| None | FTLF | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2)
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02 Results of Operations and Financial Condition.
On May 15, 2020, FitLife Brands, Inc. issued a press release announcing its financial results for the first quarter ended March 31, 2020. A copy of the press release is attached hereto as Exhibit 99.1.
In accordance with General Instruction B.2 for Form 8-K, the information in this Form 8-K, including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 8.01 Other Events.
See Item 2.02.
Item 9.01 Financial Statements and Exhibits.
See Exhibit Index.
Exhibit Index
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated May 15,<br>2020 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FitLife<br>Brands, Inc. | |
|---|---|
| Date: <br>May 15, 2020 | By: <br>/s/ Dayton<br>Judd<br><br>Name: Dayton<br>Judd<br><br><br>Title: Chief<br>Executive Officer |
ex99-1
EXHIBIT 99.1
FitLife Brands Announces First Quarter 2020 Results
OMAHA, NE – May 15, 2020 -- 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, 2020.
Highlights for the quarter ended March 31, 2020 include:
●
Total revenue increased 4.6% to $6.2 million.
●
Direct-to-consumer online sales increased to 14% of total revenue, compared to 10% in the same quarter last year.
●
Gross profit improved 7.7% to $2.7 million.
●
Gross margin increased to 44.5% compared to 43.2% in the same quarter last year.
●
Net income increased 20.3% to $1.4 million.
●
Net income per share increased to $1.36 per share, or $1.27 per diluted share, compared to $1.07 per share, or $0.94 per diluted share, in the same quarter last year.
For the first quarter ended March 31, 2020, total revenue was $6.2 million versus $5.9 million in the same quarter last year, an increase of 4.6%. The increase was primarily attributable to continued growth in our online direct-to-consumer business. During the first quarter of 2020, online sales accounted for approximately 14% of the Company’s revenue, compared to 10% during the first quarter of 2019.
Gross profit improved to $2.7 million, an increase of 7.7% from the first quarter of 2019. Gross margin improved from 43.2% to 44.5% over the same time period. The improvement in gross margin was driven by product mix and higher online sales volumes.
Total operating expenses increased 5.8% from $1.3 million to $1.4 million, driven by an increased investment in sales and marketing.
Net income for the first quarter of 2020 was $1.4 million, an increase of 20.3% over the same quarter in 2019. The Company delivered basic earnings per share of $1.36 in the first quarter of 2020, compared to $1.07 in the same quarter last year. Diluted earnings per share increased from $0.94 in the first quarter of last year to $1.27 this year.
Dayton Judd, the Company’s Chairman and CEO, commented “I am very pleased with the Company’s performance during the first quarter, especially given the disruption that began in mid-March due to the COVID-19 pandemic. That said, given the uncertainty brought on by the current environment, I know our stakeholders are more interested in how the business is performing during the second quarter. Therefore, to be as transparent as possible, the Company provides the following information, not subject to any procedures by our Independent Registered Public Accounting Firm, regarding its performance and position as of May 14, 2020.”
●
Total accounts receivable outstanding is $1.1 million, of which approximately 66% is due from GNC.
●
Most of our customers continue to pay us timely in the ordinary course of business. However, several customers owing a combined total of $0.1 million are currently three or more weeks behind in making payments, and roughly 30% of that amount has already been fully reserved and is not included in the total accounts receivable balance reported above.
●
The Company repaid its line of credit in late April, and the full balance of the $2.5 million facility is available to draw again in the future as needed, subject to any borrowing base limitations.
●
Total cash on hand is $2.9 million.
●
The Company continues to pay all of its vendors timely in the ordinary course of business.
●
Thus far during the second quarter, the Company’s direct-to-consumer online revenue is pacing roughly 100% higher than online revenue during the same time period last year.
●
Retail sales of the Company’s products through GNC franchise locations experienced a year-over-year decline of 50-55% during late March and early April, but have been improving consistently each week since then, with recent declines in the 10-20% range relative to the same time period last year.
●
The Company generated no revenue from GNC during April, as the warehouses and the franchisees worked through existing inventory.
●
Beginning in the first half of May, the Company received orders from and has begun shipping products to GNC. Nevertheless, the Company anticipates that its revenue from GNC will be materially lower during the second quarter of 2020 compared to the same quarter last year.
●
Due to cost-cutting efforts, the Company anticipates that operating expense for the second quarter of 2020 will be at least 7-10% lower than the first quarter of 2020.
Mr. Judd continued, “While much uncertainty remains, I am pleased with how our team is navigating this pandemic. The Company will provide additional updates as warranted.”
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: | December 31, |
| 2019 | |
| CURRENT<br>ASSETS | |
| Cash | $265,000 |
| Accounts<br>receivable, net of allowance of doubtful accounts, 33,000 and<br>27,000 respectively | 2,366,000 |
| Inventories,<br>net of allowance for obsolescence of 130,000 and 130,000,<br>respectively | 2,998,000 |
| Prepaid<br>expenses and other current assets | 72,000 |
| Total<br>current assets | 5,701,000 |
| Property<br>and equipment, net | 136,000 |
| Right<br>of use asset, net of amortization, 241,000 and 226,000<br>respectively | 254,000 |
| Goodwill | 225,000 |
| Security<br>deposits | 10,000 |
| TOTAL<br>ASSETS | $6,326,000 |
| LIABILITIES<br>AND STOCKHOLDERS' EQUITY: | |
| CURRENT<br>LIABILITIES: | |
| Accounts<br>payable | $2,010,000 |
| Accrued<br>expense and other liabilities | 464,000 |
| Product<br>returns | 256,000 |
| Lease<br>liability - current portion | 46,000 |
| Line<br>of credit | - |
| Total<br>current liabilities | 2,776,000 |
| LONG-TERM<br>LEASE LIABILITY, net of current portion | 208,000 |
| TOTAL<br>LIABILITIES | 2,984,000 |
| STOCKHOLDERS'<br>EQUITY: | |
| Preferred<br>stock, 0.01 par value, 10,000,000 shares authorized, none<br>outstanding | |
| as<br>of March 31, 2020 and December 31, 2019 | |
| Common<br>stock, .01 par value, 15,000,000 shares authorized; 1,060,033 and<br>1,054,516 | |
| issued<br>and outstanding as of March 31, 2020 and December 31, 2019<br>respectively | 12,000 |
| Treasury<br>stock, 210,631 and 198,731 shares, respectively | (1,619,000) |
| Additional<br>paid-in capital | 32,055,000 |
| Accumulated<br>deficit | (27,106,000) |
| Total<br>stockholders' equity | $3,342,000 |
| TOTAL<br>LIABILITIES AND STOCKHOLDERS' EQUITY | $6,326,000 |
| The<br>accompanying notes are an integral part of these condensed<br>consolidated financial statements |
All values are in US Dollars.
| FITLIFE BRANDS, INC. | ||
|---|---|---|
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
| FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019 | ||
| Three months ended | ||
| March 31 | ||
| 2020 | 2019 | |
| (Unaudited) | ||
| Revenue | $6,151,000 | $5,878,000 |
| Cost<br>of goods sold | 3,414,000 | 3,337,000 |
| Gross<br>profit | 2,737,000 | 2,541,000 |
| OPERATING<br>EXPENSES: | ||
| General<br>and administrative | 733,000 | 774,000 |
| Selling<br>and marketing | 671,000 | 550,000 |
| Depreciation<br>and amortization | 12,000 | 15,000 |
| Total<br>operating expenses | 1,416,000 | 1,339,000 |
| OPERATING<br>INCOME | 1,321,000 | 1,202,000 |
| OTHER<br>EXPENSES (INCOME) | ||
| Interest<br>expense | 4,000 | 15,000 |
| Gain<br>on settlement | (70,000) | - |
| Total<br>other expenses (income) | (66,000) | 15,000 |
| NET<br>INCOME | 1,387,000 | 1,187,000 |
| PROVISION<br>FOR INCOME TAXES | (41,000) | - |
| NET<br>INCOME | 1,428,000 | 1,187,000 |
| NET<br>INCOME AVAILAB LE TO COMMON SHAREHOLDERS | $1,428,000 | $1,187,000 |
| NET<br>INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS: | ||
| Basic | $1.36 | $1.07 |
| Diluted | $1.27 | $0.94 |
| Basic<br>weighted average common shares | 1,051,752 | 1,111,943 |
| Diluted<br>weighted average common shares | 1,126,303 | 1,268,526 |
| The<br>accompanying notes are an integral part of these condensed<br>consolidated financial statements | ||
| FITLIFE BRANDS, INC. | ||
| --- | --- | --- |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019 | ||
| Three months ended March 31 | ||
| 2020 | 2019 | |
| (Unaudited) | ||
| CASH<br>FLOWS FROM OPERATING ACTIVITIES: | ||
| Net<br>income | $1,428,000 | $1,187,000 |
| Adjustments<br>to reconcile net income to net cash used in operating<br>activities: | ||
| Depreciation<br>and amortization | 12,000 | 15,000 |
| Allowance<br>for doubtful accounts | 6,000 | (4,000) |
| Allowance<br>for inventory obsolescence | - | 12,000 |
| Common<br>stock issued for services | 16,000 | 23,000 |
| Fair<br>value of options issued for services | 12,000 | 26,000 |
| Right<br>of use asset net of amortization and lease liability | 2,000 | 3,000 |
| Changes<br>in operating assets and liabilities: | ||
| Accounts<br>receivable - trade | (2,332,000) | (2,244,000) |
| Inventories | (25,000) | 1,173,000 |
| Prepaid<br>expense | 46,000 | 110,000 |
| Accounts<br>payable | 737,000 | (321,000) |
| Accrued<br>interest | 4,000 | 15,000 |
| Accrued<br>liabilities and other liabilities | 75,000 | 20,000 |
| Product<br>returns | 20,000 | (136,000) |
| Net<br>cash provided by (used in) operating activities | 1,000 | (121,000) |
| CASH<br>FLOWS FROM INVESTING ACTIVITIES: | ||
| Net<br>cash provided by investing activities | - | - |
| CASH<br>FLOWS FROM FINANCING ACTIVITIES: | ||
| Proceeds<br>from issuance of notes payable | - | 300,000 |
| Proceeds<br>from exercise of stock options | 71,000 | - |
| Proceeds<br>from line of credit | 2,500,000 | - |
| Repurchases<br>of common stock | (171,000) | - |
| Net<br>cash provided financing activities | 2,400,000 | 300,000 |
| CHANGE<br>IN CASH | 2,401,000 | 179,000 |
| CASH,<br>BEGINNING OF PERIOD | 265,000 | 259,000 |
| CASH,<br>END OF PERIOD | $2,666,000 | $438,000 |
| Supplemental disclosure operating activities | ||
| Cash<br>paid for interest | $- | $15,000 |
| Non-cash investing and financing activities | ||
| Recording<br>of lease asset and liability upon adoption of<br>ASU-2016-02 | $- | $343,000 |
| The<br>accompanying notes are an integral part of these condensed<br>consolidated financial statements |