FitLife Brands Announces 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 its fiscal year ended December 31, 2018.

Information


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 its fiscal year ended December 31, 2018.

Highlights for the full year ended December 31, 2018 include:

  • Total revenue declined 4.2% to $17.1 million
  • Gross profit improved 32.5% to $6.7 million
  • Gross margin increased from 28.6% in 2017 to 39.5% in 2018
  • Excluding the impairment charge in 2017, operating expense declined
    24.9%, or $2.0 million
  • Net income improved from a loss of $(9.8) million, or $(0.93)/share,
    in 2017 to $0.5 million, or $0.04/share, in 2018
  • Outstanding debt declined from $2.4 million at the end of 2017 to $0.5
    million at the end of 2018

For the full year ended December 31, 2018, total revenue was $17.1
million versus $17.8 million in 2017. The decline was primarily
attributable to a reduction in store count and declining customer
traffic at our largest customer.

Despite the revenue decline, gross profit improved to $6.7 million in
2018 from $5.1 million in 2017, an increase of 32.5%. The improvement in
gross margin was primarily driven by a reduction in both sales returns
and customer discounts. Gross margin improved from 28.6% in 2017 to
39.5% in 2018.

Total operating expenses declined approximately $7.9 million, from $14.0
million in 2017 to $6.1 million in 2018. Excluding the impairment of
$5.9 million in intangible assets during 2017, total operating expenses
declined $2.0 million, or 24.9% due to continued focus on cost reduction.

Net income for 2018 was $0.5 million, or $0.04 per common share, versus
a loss of $(9.8) million, or $(0.93) per common share, in 2017. Over the
course of the year, the company reduced its debt burden from $2.4
million to $0.5 million. The company ended the year with $0.3 million of
cash.

Dayton Judd, the company’s Chairman and CEO, stated, “2018 was a year of
transition for FitLife Brands. While revenue declined for the full year,
we returned the company to year-over-year revenue growth in the third
and fourth quarters of the year. We also right-sized the company’s cost
structure, eliminating over $2 million, or 25%, of our annual operating
expense. The combination of returning to revenue growth and a reduced
cost structure should drive improved performance for the business going
forward. We also significantly improved the company’s balance sheet,
transitioning from being in default on $2.4 million of debt at the end
of 2017 to a much more manageable debt load of $0.5 million at the end
of 2018.“

Mr. Judd added, “We continue to focus on selling more of our products
online. We expect to launch a new, integrated website within the next
couple of weeks, offering the full product lines for each of our eight
brands to the end consumer in one location. In addition, we continue to
experience growth in sales of our products on Amazon and on eBay.
Beginning with the first quarter of 2019, we intend to provide a
breakdown of our online revenue compared to our wholesale revenue.”

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.
CONSOLIDATED STATEMENTS OF
OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2018 AND
2017

 
2018 2017
 
Revenue $ 17,077,000 $ 17,799,000
Cost of Goods Sold   10,332,000   12,708,000
Gross Profit   6,745,000   5,091,000
 
OPERATING EXPENSE:
General and administrative 3,333,000 4,180,000
Selling and marketing 2,690,000 3,525,000
Impairment of intangible assets and goodwill - 5,929,000
Depreciation and amortization   69,000   409,000
Total operating expense   6,092,000   14,043,000
OPERATING INCOME (LOSS)   653,000   (8,952,000 )
 
OTHER EXPENSE
Interest expense 133,000 112,000
Other - 8,000
Total other expense   133,000   120,000
 
INCOME (LOSS) BEFORE INCOME TAXES 520,000 (9,072,000 )
 
PROVISION FOR INCOME TAXES 11,000 689,000
   
NET INCOME (LOSS) 509,000 (9,761,000 )
 
PREFERRED STOCK DIVIDEND   (105,000 )   -
 
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ 404,000 $ (9,761,000 )
 
NET INCOME (LOSS) PER SHARE AVAILABLE TO COMMON SHAREHOLDERS:
Earnings (loss) Per Share - Basic and diluted $ 0.04 $ (0.93 )
Weighted average shares - Basic and diluted   10,943,578   10,518,239
 

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

   

FITLIFE BRANDS, INC.
CONSOLIDATED BALANCE SHEETS

 
ASSETS: December 31, December 31,
2018 2017
CURRENT ASSETS
Cash $ 259,000 $ 1,262,000
Accounts receivable, net of allowance for doubtful accounts, product
returns, sales returns and incentive programs of $455,000 and
$1,264,000, respectively
1,433,000 1,958,000
Inventories, net of allowance for obsolescence of $107,000 and
$49,000, respectively
3,523,000 2,874,000
Note receivable - 5,000
Prepaid expenses and other current assets   223,000   221,000
Total current assets 5,438,000 6,320,000
 
Property and equipment, net 189,000 296,000
Goodwill 225,000 225,000
Security deposits   10,000   22,000
TOTAL ASSETS $ 5,862,000 $ 6,863,000
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
 
CURRENT LIABILITIES:
Accounts payable $ 2,628,000 $ 2,974,000
Accrued expense and other liabilities 420,000 612,000
Line of credit - 1,950,000
Term loan agreement - 415,000
Notes payable – Related Parties   500,000   -
Total current liabilities   3,548,000   5,951,000
 
CONTINGENCIES AND COMMITMENTS
 
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.01 par value 1,000 shares authorized; 600 shares
and no shares issued and outstanding as of December 31, 2018 and
2017, respectively
- -
Common stock, $0.01 par value, 150,000,000 shares authorized;
11,119,430 and 10,681,710 shares issued and outstanding as of
December 31, 2018 and 2017, respectively
111,000 107,000
Additional paid-in capital 32,007,000 31,013,000
Accumulated deficit   (29,804,000 )   (30,208,000 )
Total stockholders' equity   2,314,000   912,000
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,862,000 $ 6,863,000
 

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

   

FITLIFE BRANDS, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2018 AND
2017

 
2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 509,000 $ (9,761,000 )
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 69,000 409,000
Allowance for doubtful accounts, product returns, sales returns and
incentive programs
(809,000 ) 1,097,000
Allowance for inventory obsolescence 58,000 (90,000 )
Loss on disposal of assets 34,000 5,000
Fair value of common stock issued for services 163,000 96,000
Fair value of options issued for services 130,000 44,000
Impairment of intangible assets and goodwill - 5,929,000
Loss on write-off of note receivable - 44,000
Changes in operating assets and liabilities:
Accounts receivable 1,334,000 (429,000 )
Inventories (707,000 ) 973,000
Deferred taxes - 689,000
Prepaid expenses (2,000 ) 35,000
Customer note receivable 5,000 7,000
Security deposits 12,000 3,000
Accounts payable (346,000 ) 1,377,000
Accrued expense and other liabilities   (192,000 )   238,000
Net cash provided by operating activities   258,000   666,000
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment - (185,000 )
Proceeds from the sale of property and equipment   4,000   -
Net cash provided (used) in investing activities   4,000   (185,000 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of Notes Payable – Related Parties 500,000 -
Proceeds from issuance of Series A Preferred Stock 600,000 -
Repayment of line of credit (1,950,000 ) -
Repayments of term loan   (415,000 )   (512,000 )
Net cash used in financing activities   (1,265,000 )   (512,000 )
 
CHANGE IN CASH (1,003,000 ) (31,000 )
CASH, BEGINNING OF PERIOD   1,262,000   1,293,000
CASH, END OF PERIOD $ 259,000 $ 1,262,000
 
Supplemental disclosure operating activities
Cash paid for interest $ 133,000 $ 112,000
 

Non-Cash investing and financing activities

Cancellation of Treasury Stock

-

$

44,000

Accretion of beneficial conversion feature on Series A Preferred
stock

$

105,000

 

-

 

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