☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT
For the transition period from N/A to N/A
|
Nevada
|
|
20-3464383
|
(State or other jurisdiction of incorporation)
|
|
(IRS Employer Identification No.)
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non–Accelerated filer
|
☒
|
Small reporting company
|
☒
|
|
|
Emerging growth company
|
☐
|
|
|
|
PAGE
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
1
|
|
|
|
2
|
|
|
|
3
|
|
|
|
4
|
|
|
|
5
|
|
|
|
|
|
|
14
|
||
|
|
|
|
|
19
|
||
|
|
|
|
|
19
|
||
|
|
|
|
|
|
||
|
|
||
|
21
|
||
|
|
||
|
21
|
||
|
|
||
|
21
|
||
|
|
||
|
21
|
||
|
|
||
|
21
|
||
|
|
||
|
21
|
FITLIFE BRANDS, INC.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
|
|
|
September 30,
|
December 31,
|
|
2019
|
2018
|
ASSETS:
CURRENT
ASSETS
|
|
|
Cash
|
$557,000
|
$259,000
|
Accounts
receivable, net of allowance of doubtful accounts, product
returns,
|
|
|
sales
returns and incentive programs of $290,000 and $455,000,
respectively
|
3,170,000
|
1,433,000
|
Inventories,
net of allowance for obsolescence of $143,000 and $107,000,
respectively
|
2,482,000
|
3,523,000
|
Prepaid
expenses and other current assets
|
63,000
|
223,000
|
Total
current assets
|
6,272,000
|
5,438,000
|
|
|
|
Property
and equipment, net
|
148,000
|
189,000
|
Right
of use asset, net of amortization of $203,000
|
277,000
|
-
|
Goodwill
|
225,000
|
225,000
|
Security
deposits
|
10,000
|
10,000
|
TOTAL
ASSETS
|
$6,932,000
|
$5,862,000
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
Accounts
payable
|
$2,033,000
|
$2,628,000
|
Accrued
expenses and other liabilities
|
957,000
|
420,000
|
Lease
liability - current portion
|
58,000
|
-
|
Notes
payable - related parties
|
-
|
500,000
|
Total
current liabilities
|
3,048,000
|
3,548,000
|
|
|
|
LONG-TERM
LEASE LIABILITY, net of current portion
|
219,000
|
-
|
|
|
|
TOTAL
LIABILITIES
|
3,267,000
|
3,548,000
|
|
|
|
CONTINGENCIES
AND COMMITMENTS
|
-
|
-
|
|
|
|
STOCKHOLDERS'
EQUITY:
|
|
|
Preferred
stock, $0.01 par value, 10,000,000 shares authorized; none
outstanding
|
|
|
as
of September 30, 2019 and December 31, 2018
|
|
|
Preferred
stock Series A Preferred, $0.01 par value 1,000 shares authorized;
600
|
|
|
and
600 shares issued and outstanding as of September 30, 2019 and
December 31, 2018, respectively
|
-
|
-
|
Common
stock, $.01 par value, 15,000,000 shares authorized; 933,305 and
1,111,943
|
|
|
issued
and outstanding as of September 30, 2019 and December 31, 2018
respectively
|
11,000
|
11,000
|
Treasury
stock, 181,454 shares
|
(1,385,000)
|
-
|
Additional
paid-in capital
|
32,218,000
|
32,107,000
|
Accumulated
deficit
|
(27,179,000)
|
(29,804,000)
|
Total
stockholders' equity
|
$3,665,000
|
$2,314,000
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$6,932,000
|
$5,862,000
|
|
FITLIFE BRANDS,
INC.
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND
2018
|
|
|
(Unaudited)
|
(Unaudited)
|
||
|
Three Months Ended
|
Nine Months Ended
|
||
|
September 30
|
September 30
|
||
|
2019
|
2018
|
2019
|
2018
|
|
|
|
|
|
Revenue
|
$5,316,000
|
$4,583,000
|
$15,812,000
|
$13,576,000
|
|
|
|
|
|
Cost
of goods sold
|
3,063,000
|
2,831,000
|
9,163,000
|
8,102,000
|
Gross
profit
|
2,253,000
|
1,752,000
|
6,649,000
|
5,474,000
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
General
and administrative
|
782,000
|
784,000
|
2,352,000
|
2,493,000
|
Selling
and marketing
|
583,000
|
547,000
|
1,749,000
|
2,070,000
|
Depreciation
and amortization
|
12,000
|
16,000
|
40,000
|
54,000
|
Total
operating expenses
|
1,377,000
|
1,347,000
|
4,141,000
|
4,617,000
|
OPERATING
INCOME
|
876,000
|
405,000
|
2,508,000
|
857,000
|
|
|
|
|
|
OTHER
EXPENSES (INCOME)
|
|
|
|
|
Interest
expense
|
14,000
|
39,000
|
47,000
|
104,000
|
Other
income
|
-
|
1,000
|
-
|
-
|
Gain
on settlement
|
(29,000)
|
-
|
(171,000)
|
-
|
Total
other expense (income)
|
(15,000)
|
40,000
|
(124,000)
|
104,000
|
|
|
|
|
|
NET
INCOME BEFORE INCOME TAXES
|
891,000
|
365,000
|
2,632,000
|
753,000
|
|
|
|
|
|
INCOME
TAXES
|
-
|
-
|
7,000
|
-
|
|
|
|
|
|
NET
INCOME
|
891,000
|
365,000
|
2,625,000
|
753,000
|
|
|
|
|
|
PREFERRED
STOCK DIVIDEND
|
(19,000)
|
-
|
(37,000)
|
-
|
|
|
|
|
|
NET
INCOME AVAILABLE TO COMMON SHAREHOLDERS
|
$ 872,000
|
$365,000
|
$2,588,000
|
$753,000
|
|
|
|
|
|
NET
INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS:
|
||||
Basic
|
$0.87
|
$0.33
|
$2.46
|
$0.69
|
|
|
|
|
|
Diluted
|
$0.72
|
$0.31
|
$2.08
|
$0.65
|
|
|
|
|
|
Basic
weighted average common shares
|
1,001,715
|
1,100,786
|
1,053,292
|
1,089,659
|
|
|
|
|
|
Diluted
weighted average common shares
|
1,207,024
|
1,173,642
|
1,241,875
|
1,166,602
|
FITLIFE BRANDS, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’
EQUITY
|
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(Unaudited)
|
|
|
|
|
|
|
Additional
|
|
|
|
Series A Preferred
|
Common Stock
|
Treasury
|
Paid-in
|
Accumulated
|
|||
|
Shares
|
Amount
|
Shares
|
Amount
|
Stock
|
Capital
|
Deficit
|
Total
|
|
|
|
|
|
|
|
|
|
THREE
MONTHS ENDED SEPTEMBER 30, 2019
|
||||||||
|
|
|
|
|
|
|
|
|
JUNE
30, 2019
|
600
|
$-
|
1,015,120
|
$11,000
|
$(566,000)
|
$32,199,000
|
$(28,070,000)
|
$3,574,000
|
Fair value of common stock issued for services
|
|
401
|
|
|
4,000
|
|
4,000
|
|
Repurchase
of common stock
|
-
|
-
|
(82,216)
|
-
|
(819,000)
|
-
|
|
(819,000)
|
Dividends
payments on preferred stock
|
|
|
|
-
|
|
(19,000)
|
-
|
(19,000)
|
Fair
value of vested common shares and
options issued for services
|
|
|
34,000
|
|
34,000
|
|||
Net
income
|
|
|
|
|
|
-
|
891,000
|
891,000
|
|
|
|
|
|
|
|
|
|
SEPTEMBER
30, 2019
|
600
|
-
|
933,305
|
$11,000
|
$(1,385,000)
|
$32,218,000
|
$(27,179,000)
|
$3,665,000
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED SEPTEMBER 30,
2018
|
||||||||
|
|
|
|
|
|
|
|
|
JUNE
30, 2018
|
-
|
$-
|
1,099,796
|
$11,000
|
$-
|
$31,227,000
|
$(29,820,000)
|
$1,418,000
|
Fair value of common stock issued for services
|
|
8,659
|
-
|
|
37,000
|
|
37,000
|
|
Fair
value of vested common shares and
options issued for services
|
|
|
66,000
|
|
66,000
|
|||
Net
income
|
|
|
|
|
|
-
|
365,000
|
365,000
|
|
|
|
|
|
|
|
|
|
SEPTEMBER
30, 2018
|
-
|
-
|
1,108,455
|
$11,000
|
-
|
$31,330,000
|
$(29,455,000)
|
$1,886,000
|
|
|
|
|
|
|
|
|
|
NINE
MONTHS ENDED SEPTEMBER 30, 2019
|
||||||||
|
|
|
|
|
|
|
|
|
DECEMBER
31, 2018
|
600
|
$-
|
1,111,943
|
$11,000
|
$-
|
$32,107,000
|
$(29,804,000)
|
$2,314,000
|
Fair value of common stock issued for services
|
|
2,816
|
-
|
|
43,000
|
|
43,000
|
|
Repurchase
of common stock
|
-
|
-
|
(181,454)
|
-
|
(1,385,000)
|
-
|
|
(1,385,000)
|
Dividends
payments on preferred stock
|
|
|
|
-
|
|
(37,000)
|
|
(37,000)
|
Fair
value of vested common shares and
options issued for services
|
|
|
105,000
|
|
105,000
|
|||
Net
income
|
|
|
|
|
|
-
|
2,625,000
|
2,625,000
|
|
|
|
|
|
|
|
|
|
SEPTEMBER
30, 2019
|
600
|
-
|
933,305
|
$11,000
|
(1,385,000)
|
$32,218,000
|
$(27,179,000)
|
$3,665,000
|
|
|
|
|
|
|
|
|
|
NINE MONTHS ENDED SEPTEMBER 30,
2018
|
||||||||
|
|
|
|
|
|
|
|
|
DECEMBER
31, 2017
|
|
$-
|
1,068,171
|
$11,000
|
$-
|
$31,113,000
|
$(30,208,000)
|
$913,000
|
Fair value of common stock issued for services
|
|
40,284
|
-
|
|
132,000
|
|
135,000
|
|
Fair
value of vested common shares and options
issued
for services
|
|
|
|
85,000
|
|
85,000
|
||
Net
income
|
|
|
|
|
|
-
|
753,000
|
753,000
|
|
|
|
|
|
|
|
|
|
SEPTEMBER
30, 2018
|
-
|
-
|
1,108,455
|
$11,000
|
-
|
$31,330,000
|
$(29,455,000)
|
$1,886,000
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
2019
|
2018
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
Net
income
|
$2,625,000
|
$753,000
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
Depreciation
and amortization
|
40,000
|
54,000
|
Decrease
in allowance for sales returns and doubtful accounts
|
(166,000)
|
(557,000)
|
Increase
(decrease) in allowance for inventory obsolescence
|
36,000
|
(42,000)
|
Common
stock issued for services
|
55,000
|
136,000
|
Fair
value of options issued for services
|
94,000
|
85,000
|
Gain
on disposal of assets
|
-
|
34,000
|
Right
of use asset - amortization
|
66,000
|
-
|
Changes
in operating assets and liabilities:
|
|
|
Accounts
receivable - trade
|
(1,572,000)
|
1,829,000
|
Accounts
receivable - factored
|
-
|
(2,458,000)
|
Inventories
|
1,005,000
|
(33,000)
|
Prepaid
expenses
|
160,000
|
(14,000)
|
Customer
note receivable
|
-
|
5,000
|
Security
deposits
|
-
|
12,000
|
Accounts
payable
|
(595,000)
|
(103,000)
|
Accrued
liabilities and other liabilities
|
41,000
|
(19,000)
|
Right
of use asset - lease liability
|
(65,000)
|
-
|
Net
cash provided by (used in) operating activities
|
1,724,000
|
(318,000)
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
Proceeds
from the sale of assets
|
-
|
4,000
|
Net
cash provided by investing activities
|
-
|
4,000
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
Proceeds
from issuance of notes payable, related party
|
300,000
|
-
|
Dividend
payments on preferred stock
|
(37,000)
|
-
|
Secured
payable to factor
|
-
|
1,950,000
|
Repurchases
of common stock
|
(889,000)
|
-
|
Repayment
of line of credit
|
-
|
(1,950,000)
|
Repayments
of term loan
|
-
|
(415,000)
|
Repayments
of notes payable
|
(800,000)
|
-
|
Net
cash used in financing activities
|
(1,426,000)
|
(415,000)
|
|
|
|
INCREASE
IN CASH
|
298,000
|
(729,000)
|
CASH,
BEGINNING OF PERIOD
|
259,000
|
1,262,000
|
CASH,
END OF PERIOD
|
$557,000
|
$533,000
|
|
|
|
Supplemental disclosure operating activities
|
|
|
Cash
paid for interest
|
$47,000
|
$104,000
|
|
|
|
Non-cash investing and financing activities
|
|
|
Recording
of lease asset and liability upon adoption of
ASU-2016-02
|
$343,000
|
$-
|
Accrued
liability for stock buyback
|
$496,000
|
$-
|
Trade date
|
Total number of shares purchased
|
Average price paid per share
|
Total number of shares purchased as part of publicly
announced programs
|
Dollar value of shares that may yet be purchased
|
July
2019
|
-
|
-
|
-
|
-
|
August
2019
|
-
|
-
|
-
|
$500,000
|
September
2019
|
82,216
|
$9.96
|
82,216
|
$181,000
|
Subtotal
|
82,216
|
$9.96
|
82,216
|
|
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||
|
2019
|
2018
|
2019
|
2018
|
|
|
|
|
|
Net
income available to common shareholders
|
$872,000
|
$365,000
|
$2,588,000
|
$753,000
|
Weighted
average common shares - basic
|
1,001,715
|
1,100,786
|
1,053,292
|
1,089,659
|
Dilutive
effect of outstanding warrants and stock options
|
205,309
|
72,856
|
188,583
|
76,943
|
Weighted
average common shares - diluted
|
1,207,024
|
1,173,642
|
1,241,875
|
1,166,602
|
|
|
|
|
|
Net
income per common share:
|
|
|
|
|
Basic
|
$0.87
|
$0.33
|
$2.46
|
$0.69
|
Diluted
|
$0.72
|
$0.31
|
$2.08
|
$0.65
|
|
September 30,
|
|
|
2019
|
December 31,
|
|
(unaudited)
|
2018
|
Finished
goods
|
$2,106,000
|
$3,168,000
|
Components
|
519,000
|
462,000
|
Allowance
for obsolescence
|
(143,000)
|
(107,000)
|
Total
|
$2,482,000
|
$3,523,000
|
|
September 30,
|
|
|
2019
|
December 31,
|
|
(unaudited)
|
2018
|
Equipment
|
$902,000
|
$902,000
|
Accumulated
depreciation
|
(754,000)
|
(713,000)
|
Total
|
$148,000
|
$189,000
|
|
Nine
Months Ended
|
Lease
Cost
|
September
30, 2019
|
|
|
Operating
lease cost (included in general and administrative in the Company's
unaudited
|
|
condensed
and consolidated statements of operations)
|
$66,000
|
|
|
Other
Information:
|
|
Cash
paid for amounts included in the measurement of lease liabilities
for the third quarter 2019
|
$-
|
Weighted
average remaining lease term - operating leases (in
years)
|
5.1
|
Average
discount rate - operating leases
|
9%
|
Operating
Leases
|
At September 30, 2019
|
Long-term
right-of-use assets
|
$277,000
|
Short-term
operating lease liabilities
|
$58,000
|
Long-term
operating lease liabilities
|
219,000
|
Total
operating lease liabilities
|
$277,000
|
Maturities
of the Company's lease liabilities are as follows:
|
|
|
|
Year
Ending
|
Operating Leases
|
2019
(remaining 3 months)
|
$29,000
|
2020
|
67,000
|
2021
|
67,000
|
2022
|
67,000
|
2023
|
61,000
|
Less:
Imputed interest/present value discount
|
(14,000)
|
Present
value of lease liabilities
|
$277,000
|
a.
|
Common
Stock Issued for Services
|
b.
|
Repurchase
of Common Stock
|
c.
|
Share
Repurchase Program
|
d.
|
Reverse/Forward
Split
|
|
|
Weighted
|
Weighted
|
|
|
Average
|
Average
|
|
Number of
|
Exercise
|
Remaining
|
|
Options
|
Price
|
Life (Years)
|
Outstanding,
December 31, 2018
|
154,521
|
$13.10
|
5.69
|
Issued
|
8,000
|
6.85
|
4.26
|
Exercised
|
-
|
|
|
Forfeited
|
(13,236)
|
26.26
|
|
Outstanding,
September 30, 2019
|
149,285
|
$11.76
|
5.29
|
|
Outstanding
|
Exercisable
|
||||
|
|
|
|
|
|
|
Exercise Price Per share
|
Total Number of Options
|
Weighted Average Remaining Life (Years)
|
Weighted Average Exercise Price
|
Number of Vested Options
|
Weighted Average Exercise Price
|
|
|
|
|
|
|
|
|
$
|
$2.80- 23.00
|
143,710
|
5.33
|
$8.72
|
83,372
|
$12.66
|
$
|
$23.10 - 144.34
|
5,575
|
4.02
|
$90.20
|
5,575
|
$90.20
|
|
|
149,285
|
$5.29
|
$11.76
|
$88,947
|
$17.52
|
Outstanding
|
|
Exercise Price
|
|
Issuance Date
|
|
Expiration Date
|
|
Vesting
|
39,130
|
|
$ 4.60
|
|
11/13/18
|
|
11/13/23
|
|
Yes
|
|
Three
Months Ended
|
|
Nine
Months Ended
|
|
||||
|
September
30,
2019
|
September
30,
2018
|
Change
|
|
September
30,
2019
|
September
30,
2018
|
Change
|
|
Revenue
|
$5,316,000
|
$4,583,000
|
$733,000
|
16%
|
$15,812,000
|
$13,576,000
|
$2,236,000
|
16%
|
Cost
of goods sold
|
(3,063,000)
|
(2,831,000)
|
(232,000)
|
8%
|
(9,163,000)
|
(8,102,000)
|
(1,061,000)
|
13%
|
Gross
profit
|
2,253,000
|
1,752,000
|
501,000
|
29%
|
6,649,000
|
5,474,000
|
1,175,000
|
21%
|
Operating
expenses
|
(1,377,000)
|
(1,347,000)
|
(30,000)
|
2%
|
(4,141,000)
|
(4,617,000)
|
476,000
|
-10%
|
Income
(loss) from operations
|
876,000
|
405,000
|
471,000
|
116%
|
2,508,000
|
857,000
|
1,651,000
|
193%
|
Other
expense (income)
|
(15,000)
|
40,000
|
(55,000)
|
|
(124,000)
|
104,000
|
(228,000)
|
|
Provision
for income tax
|
-
|
-
|
-
|
|
7,000
|
-
|
7,000
|
|
Net income (loss)
|
$891,000
|
$365,000
|
$526,000
|
144%
|
$2,625,000
|
$753,000
|
$1,872,000
|
249%
|
Trade date
|
Total number of shares purchased
|
Average price paid per share
|
Total number of shares purchased as part of publicly
announced programs
|
Dollar value of shares that may yet be purchased
|
July
2019
|
-
|
-
|
-
|
-
|
August
2019
|
-
|
$-
|
-
|
$500,000
|
September
2019
|
82,216
|
$9.96
|
82,216
|
$181,000
|
Subtotal
|
82,216
|
$9.96
|
82,216
|
|
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act.
|
|
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act.
|
|
|
Certification
of Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act.
|
|
|
Certification
of Chief Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act.
|
|
101.INS
|
|
XBRL
Instance Document
|
101.SCH
|
|
XBRL
Taxonomy Extension Schema
|
101.CAL
|
|
XBRL
Taxonomy Extension Calculation Linkbase
|
101.DEF
|
|
XBRL
Taxonomy Extension Definition Linkbase
|
101.LAB
|
|
XBRL
Taxonomy Extension Label Linkbase
|
101.PRE
|
|
XBRL
Taxonomy Extension Presentation Linkbase
|
Registrant
Date: November 12, 2019
|
FitLife Brands, Inc.
By:
/s/ Dayton
Judd
|
|
|
Dayton Judd
|
|
|
Chief Executive Officer and Chair
(Principal Executive Officer)
|
Registrant
Date: November 12, 2019
|
FitLife Brands, Inc.
By: /s/ Susan
Kinnaman
|
|
|
Susan Kinnaman
|
|
|
Chief Financial Officer
(Principal Financial Officer)
|
1.
|
I
have reviewed this Quarterly Report on Form 10-Q of FitLife Brands,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
|
4.
|
The
registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
|
|
b.
|
Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
|
|
c.
|
Evaluated
the effectiveness of the registrant’s disclosure and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluations:
and
|
|
d.
|
Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most
recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
|
5.
|
The
registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons
performing the equivalent functions):
|
|
a.
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information;
and
|
|
b.
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
|
Registrant
Date:
November
12, 2019
|
|
FitLife Brands, Inc.
By: /s/ Dayton
Judd
|
|
|
|
Dayton
Judd
|
|
|
|
Chief
Executive Officer and Chair
(Principal
Executive Officer)
|
|
1.
|
I
have reviewed this Quarterly Report on Form 10-Q of FitLife Brands,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
|
4.
|
The
registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
|
|
b.
|
Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
|
|
c.
|
Evaluated
the effectiveness of the registrant’s disclosure and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluations:
and
|
|
d.
|
Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most
recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
|
5.
|
The
registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons
performing the equivalent functions):
|
|
a.
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information;
and
|
|
b.
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
|
Registrant
Date:
November
12, 2019
|
|
FitLife Brands, Inc.
By: /s/ Susan
Kinnaman
|
|
|
|
Susan
Kinnaman
|
|
|
|
Chief
Financial Officer
(Principal
Financial Officer)
|
|
(2)
The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations
of the Company.
|
Registrant
Date:
November
12, 2019
|
|
FitLife Brands, Inc.
By: /s/ Dayton
Judd
|
|
|
|
Dayton
Judd
|
|
|
|
Chief
Executive Officer and Chair
(Principal
Executive Officer)
|
|
(2)
The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations
of the Company.
|
Registrant
Date:
November
12, 2019
|
|
FitLife Brands, Inc.
By: /s/ Susan
Kinnaman
|
|
|
|
Susan
Kinnaman
|
|
|
|
Chief
Financial Officer
(Principal
Financial Officer)
|
|
NOTE PAYABLES (Details Narrative) - USD ($) |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Notes Payable [Abstract] | ||
Notes payable - related rarties | $ 0 | $ 500,000 |
EQUITY (Details) |
9 Months Ended |
---|---|
Sep. 30, 2019
$ / shares
shares
| |
Equity [Abstract] | |
Number of options outstanding, beginning | shares | 154,521 |
Number of options issued | shares | 8,000 |
Number of options exercised | shares | 0 |
Number of options forfeited | shares | (13,236) |
Number of options outstanding, ending | shares | 149,285 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 13.10 |
Weighted average exercise price issued | $ / shares | 6.85 |
Weighted average exercise price exercised | $ / shares | .00 |
Weighted average exercise price forfeited | $ / shares | 26.26 |
Weighted average exercise price outstanding, ending | $ / shares | $ 11.76 |
Weighted average remaining life outstanding, beginning | 5 years 8 months 5 days |
Weighted average remaining life, granted | 4 years 3 months 4 days |
Weighted average remaining life outstanding, ending | 5 years 3 months 14 days |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation | The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in the consolidated condensed financial statements.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net sales and expense recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates.
These estimates and assumptions also affect the reported amounts of accounts receivable, inventories, goodwill, revenue, costs and expense and valuations of long term assets, realization of deferred tax assets and fair value of equity instruments issued for services during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted Income (Loss) Per Share | Our computation of earnings per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income (loss) available to common stockholders divided by the weighted average common shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution, using the treasury stock method, that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income (loss) of the Company as if they had been converted at the beginning of the periods presented, or issuance date, if later. In computing diluted income (loss) per share, the treasury stock method assumes that outstanding options and warrants are exercised and the proceeds are used to purchase common stock at the average market price during the period. Options and warrants may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants. Potential common shares that have an antidilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease | We lease certain corporate office space and office equipment under lease agreements with monthly payments over a period of 36 to 84 months. We determine if an arrangement is a lease at inception. Lease assets are presented as operating lease right-of-use assets and the related liabilities are presented as lease liabilities in our consolidated balance sheets.
Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases. Effective January 1, 2019, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect for those periods. The adoption of ASC 842 on January 1, 2019 resulted in the recognition of operating lease right-of-use assets of and, lease liabilities for operating leases of $480,000 and $480,000, respectively. There was no cumulative-effect adjustment to accumulated deficit. See Note 7 for further information regarding the adoption of ASC 842 on the Company’s condensed financial statements.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | The Company had goodwill of $225,000 as of September 30, 2019 and December 31, 2018, respectively, as a result of the acquisition of NDS in October 2008. The Company adopted ASC Topic 350 – Goodwill and Other Intangible Assets. In accordance with ASC Topic 350, goodwill, which represents the excess of purchase price and related costs over the value assigned to net tangible and identifiable intangible assets of businesses acquired and accounted for under the purchase method, acquired in business combinations is assigned to reporting units that are expected to benefit from the synergies of the combination as of the acquisition date. Under this standard, goodwill and intangibles with indefinite useful lives are no longer amortized. The Company assesses goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter, or more frequently if events and circumstances indicate impairment may have occurred in accordance with ASC Topic 350. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, the Company records an impairment loss equal to the difference. ASC Topic 350 also requires that the fair value of indefinite-lived purchased intangible assets be estimated and compared to the carrying value. The Company recognizes an impairment loss when the estimated fair value of the indefinite-lived purchased intangible assets is less than the carrying value.
As of September 30, 2019 and December 31, 2018, there were no indicators of impairment for the recorded goodwill of $225,000, respectively.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Customer Concentration | Gross sales prior to reduction for vendor funded discounts and coupons to GNC during the nine-month periods ended September 30, 2019 and 2018 were $13,599,000 and $12,732,000, respectively, representing 77% and 79% of total gross revenue, respectively.
Gross accounts receivable attributable to GNC as of September 30, 2019 and September 30, 2018 were $2,992,000 and $3,359,000, respectively, representing 88% and 88% of the Company’s total accounts receivable balance, respectively.
For the quarters ended September 30, 2019 and 2018, online sales accounted for 11% and 3% of the Company’s net revenue, respectively.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | The Company’s revenue is comprised of sales of nutritional supplements to consumers, primarily through GNC stores.
The Company accounts for revenues in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. Under ASC 606, revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for the Company upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the products or services to a customer.
All products sold by the Company are distinct individual products and consist of nutritional supplements and related supplies. The products are offered for sale solely as finished goods, and there are no performance obligations required post-shipment for customers to derive the expected value from them. Other than promotional activities, which can vary from time to time but nevertheless are entirely within the Company’s control, contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time.
Control of products we sell transfers to customers upon shipment from our facilities, and the Company’s performance obligations are satisfied at that time. Shipping and handling activities are performed before the customer obtains control of the goods and therefore represent a fulfillment activity rather than promised goods to the customer. Payment for sales are generally made by check, credit card, or wire transfer. Historically the Company has not experienced any significant payment delays from customers.
We provide a 30-day right of return for our products. A right of return does not represent a separate performance obligation, but because customers are allowed to return products, the consideration to which the Company expects to be entitled is variable. Upon evaluation of returns, the Company determined that substantially less than 5% of products are returned, and therefore believes it is probable that such returns will not cause a significant reversal of revenue in the future. We assess our contracts and the reasonableness of our conclusions on a quarterly basis.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | As of September 30, 2019, the Company had Federal net operating loss (“NOL”) carry forwards available to offset future taxable income of approximately $26.6 million, subject to Internal Revenue Services (“IRS”) statutory limitations.
As a result of the Company’s significant NOL, with projected $2.6 million utilized as of September 30, 2019, there was no provision for income tax recorded during the period ended September 30, 2019.
The Company accounts for income taxes using the asset and liability method, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized before the Company is able to realize their benefits, or that future deductibility is uncertain. Authoritative guidance issued by the ASC Topic 740 – Income Taxes requires that a valuation allowance be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. As a result of the limitations related to Internal Revenue Code and the Company’s lack of a prolonged history of profitable operations, the Company recorded a 100% valuation allowance against its net deferred tax assets as of September 30, 2019 and December 31, 2018.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements | Recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission are not believed by management to have a material impact on the Company’s present or future financial statements.
|
RIGHT OF USE ASSETS AND LIABILITIES |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RIGHT OF USE ASSETS AND LIABILITIES | In prior years, the Company entered into several non-cancellable leases for its office facilities and equipment. The lease agreements range from 36 months to 84 months, and require monthly payments ranging between $200 and $7,000 through October 2024. On January 1, 2019, the Company adopted ASU 2016-02, Leases which requires a lessee to record a right-of-use asset and a corresponding lease liability at the inception of the lease initially measured at the present value of the lease payments. The Company classified the leases as operating leases and determined that the fair value of the lease assets and liability at the inception of the leases was $480,000 using a discount rate of 9%.
During the nine months ended September 30, 2019, the Company made payments of $71,000 towards the lease liability. As of September 30, 2019, lease liability amounted to $277,000. ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. Rent expense, including real estate taxes, for the nine months ended September 30, 2019 was $71,000. The right-of-use asset at September 30, 2019 was $277,000, net of amortization of $203,000.
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2019 |
Dec. 31, 2018 |
|
Allowance for doubtful accounts | $ 290,000 | $ 455,000 |
Allowance for obsolescence | 143,000 | 107,000 |
Right of use asset amortization | $ 203,000 | $ 203,000 |
STOCKHOLDERS' EQUITY: | ||
Preferred Stock, Par Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares, Outstanding | 0 | 0 |
Common Stock, Par Value Per Share | $ .01 | $ .01 |
Common Stock, Shares Authorized | 15,000,000 | 15,000,000 |
Common Stock, Shares, Issued | 933,305 | 1,111,943 |
Common Stock, Shares, Outstanding | 933,305 | 1,111,943 |
Preferred Stock Series A | ||
STOCKHOLDERS' EQUITY: | ||
Preferred Stock, Par Value Per Share | $ .01 | $ 0.01 |
Preferred Stock, Shares Authorized | 1,000 | 1,000 |
Preferred Stock, Shares, Issued | 600 | 600 |
Preferred Stock, Shares, Outstanding | 600 | 600 |
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense | $ 40,000 | $ 54,000 |
DESCRIPTION OF BUSINESS |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DESCRIPTION OF BUSINESS | Summary
FitLife Brands, Inc. (the “Company”) is a national provider of innovative and proprietary nutritional supplements for health-conscious consumers marketed under the brand names NDS Nutrition, PMD, SirenLabs, CoreActive, and Metis Nutrition (together, “NDS Products”). In September 2015, the Company acquired iSatori, Inc. (“iSatori”) and as a result, the Company added three brands to its product portfolio, including iSatori, BioGenetic Laboratories, and Energize (together, “iSatori Products”). The NDS Products are distributed principally through franchised General Nutrition Centers, Inc. (“GNC”) stores located both domestically and internationally, and, with the launch of Metis Nutrition, through corporate GNC stores in the United States. The iSatori Products are sold through more than 25,000 retail locations, which include specialty, mass, and online.
The Company was incorporated in the State of Nevada on July 26, 2005. In October 2008, the Company acquired the assets of NDS Nutritional Products, Inc., a Nebraska corporation, and moved those assets into its wholly owned subsidiary NDS Nutrition Products, Inc., a Florida corporation (“NDS”). The Company’s NDS Products are sold through NDS and the iSatori Products are sold through iSatori, Inc., a Delaware corporation and a wholly owned subsidiary of the Company.
FitLife Brands is headquartered in Omaha, Nebraska. For more information on the Company, please go to www.fitlifebrands.com. The Company’s common stock trades under the symbol “FTLF” on the OTC: PINK market.
Recent Developments
Line of Credit Agreement
On September 24, 2019, the Company entered into a Revolving Line of Credit Agreement (the "Line of Credit Agreement") with Mutual of Omaha Bank (the "Lender") providing the Company with a $2.5 million revolving line of credit (the "Line of Credit"). The Line of Credit allows the Company to request advances thereunder and to use the proceeds of such advances for working capital purposes until September 23, 2020 (the “Maturity Date”), unless renewed at maturity upon approval by the Company’s Board of Directors and the Lender. The Line of Credit is secured by all assets of the Company.
Advances drawn under the Line of Credit bear interest at an annual rate of the one-month LIBOR rate plus 2.75%, and each advance will be payable on the Maturity Date with the interest on outstanding advances payable monthly. The Company may, at its option, prepay any borrowings under the Line of Credit, in whole or in part at any time prior to the Maturity Date, without premium or penalty.
The Line of Credit Agreement includes customary events of default. If any such event of default occurs, the Lender may declare all outstanding loans under the Line of Credit to be due and payable immediately.
Repayment of Outstanding Notes
On September 24, 2019, the Company repaid all outstanding balances due on certain promissory notes issued to Sudbury Capital Fund, LP ("Sudbury") and Dayton Judd, the Company’s Chairman and Chief Executive Officer (the “Notes”), in the aggregate principal amount, including accrued but unpaid interest thereon, of $615,000. Mr. Judd is the managing partner of Sudbury. As a result of the repayment of the Notes, the Company terminated its line of credit entered into between the Company and Sudbury on December 26, 2018 providing for maximum borrowings of up to $600,000.
Amendment of Share Repurchase Plan
On September 23, 2019, the Company's Board of Directors (the "Board") approved an amendment the Company’s share repurchase program as approved on August 16, 2019, pursuant to which the Board authorized management to repurchase up to $500,000 of the Company's common stock, par value $0.01 per share ("Common Stock"), over the next 24 months (the "Share Repurchase Program"), which Share Repurchase Program was previously reported on the Company's Current Report on Form 8-K filed August 20, 2019. The Board approved an amendment to the Share Repurchase Program to increase the repurchase of up to $1,000,000 of the Company's Common Stock, its Series A Convertible Preferred Stock, par value $0.01 per share ("Series A Preferred"), and warrants to purchase shares of the Company's Common Stock ("Warrants"), over the next 24 months, at a purchase price, in the case of Common Stock, equal to the fair market value of the Company's Common Stock on the date of purchase, and in the case of Series A Preferred and Warrants, at a purchase price determined by management, with the exact date and amount of such purchases to be determined by management.
The Company intends to conduct its Share Repurchase Program in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. Repurchases may be made at management's discretion from time to time in the open market or through privately negotiated transactions. The Company may suspend or discontinue the Share Repurchase Program at any time, and may thereafter reinstitute purchases, all without prior announcement.
During the quarter ended September 30, 2019, the Company repurchased 82,216 shares of Common Stock, or approximately 8% of the issued and outstanding shares of the Company, through both open market and private transactions, as follows:
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Accounting Policies [Abstract] | ||||
Net Income available to common shareholders | $ 872,000 | $ 365,000 | $ 2,588,000 | $ 753,000 |
Weighted average common shares - basic | 1,001,715 | 1,100,786 | 1,053,292 | 1,089,659 |
Dilutive effect of outstanding warrants, stock options, and preferred stock | 205,309 | 72,856 | 188,583 | 76,943 |
Weighted average Shares - diluted | 1,207,024 | 1,173,642 | 1,241,875 | 1,166,602 |
Net income per common share: | ||||
Basic | $ .87 | $ 0.33 | $ 2.46 | $ 0.69 |
Diluted | $ .72 | $ .31 | $ 2.08 | $ .65 |
PROPERTY AND EQUIPMENT (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment |
|
INVENTORIES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories |
|
PROPERTY AND EQUIPMENT (Details) - USD ($) |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Equipment | $ 902,000 | $ 902,000 |
Accumulated depreciation | (754,000) | (713,000) |
Total | $ 148,000 | $ 189,000 |
RIGHT OF USE ASSETS AND LIABILITIES (Details) |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
| |
Leases [Abstract] | |
Operating lease cost (included in general and administrative in the Company's unaudited and consolidated statement of operations) | $ 66,000 |
Cash paid for amounts included in the measurement of lease liabilities for the first quarter 2019 | $ 0 |
Weighted Average remaining lease term - operating leases (in years) | 5 years 1 month 6 days |
Average discount rate - operating leases | 9.00% |
EQUITY (Details 1) - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Dec. 31, 2018 |
|
Number of options outstanding | 149,285 | 154,521 |
Weighted average remaining contractual life (in years) | 5 years 3 months 14 days | |
Weighted average exercise price outstanding | $ 11.76 | |
Number of vested options | 88,947 | |
Weighted average exercise price exercisable | $ 17.52 | |
Stock Option 1 | ||
Exercise price range | $2.80 - $23.00 | |
Number of options outstanding | 143,710 | |
Weighted average remaining contractual life (in years) | 5 years 3 months 29 days | |
Weighted average exercise price outstanding | $ 8.72 | |
Number of vested options | 83.372 | |
Weighted average exercise price exercisable | $ 12.66 | |
Stock Option 2 | ||
Exercise price range | $23.10 - $144.34 | |
Number of options outstanding | 5,575 | |
Weighted average remaining contractual life (in years) | 4 years 7 days | |
Weighted average exercise price outstanding | $ 90.20 | |
Number of vested options | 5,575 | |
Weighted average exercise price exercisable | $ 90.20 |
SUBSEQUENT EVENTS |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | On November 6, 2019, the Company’s Board of Directors amended the previously approved Share Repurchase Program to increase the amount of authorized repurchases to $2.5 million. All other terms of the Share Repurchase Program remain unchanged. |
NOTES PAYABLE |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | Notes Payable – Related Parties
On December 26, 2018, the Company issued a line of credit promissory note to Sudbury Capital Fund, LP, an entity controlled by Dayton Judd, the Company’s CEO, in the principal amount of $600,000, with an initial advance to the Company in the amount of $300,000 which was outstanding at December 31, 2018. During the nine months ended September 30, 2019, an additional $300,000 was advanced to the Company, resulting in aggregate borrowings of $600,000. In addition, on December 26, 2018, the Company also issued a promissory note to Mr. Judd in the principal amount of $200,000 (collectively, the “Notes”). On September 24, 2019, the Company repaid all outstanding balances due under the terms of the Notes in the aggregate principal amount, including accrued but unpaid interest thereon, of $615,000. As a result of the repayment of the Notes, the Company terminated its line of credit entered into between the Company and Sudbury on December 26, 2018 providing for maximum borrowings of up to $600,000.
As of September 30, 2019 and December 31, 2018, the aggregate balance of the Notes amounted to $0 and $501,000, respectively, including accrued interest of $0 and $1,000, respectively.
|
OJBC\4G!>\WE J$%31S@<.XH)W0(ZC\ 9W.'Z[^@]9^SJ>,&
MW (V@ T[X+^-"%(^G/40_8V8W=2^C-$*7&GC#\]R)<)H]'?A$[<"0C:"31[
MN*\30=K7B2#CR]1 )@M]F;:P1(Q$!)GQU,
M/PGH9USZ28"U-,WX[ "ASPY&GP3H,R[ZY".D348 '1]/C^>%&L#/N/"3G&G,
M#\">$OZ'N<38DZ!*-
,P*5]8_^0>L=>+L+#DU4_9!7:G#Y0
M4D$M>A6>[? 1IG[N*9F:_PQ74)@>E6"-TBJ?OJ3L?;!Z8D$I6KR.IS3I'";^
M&VP=P"< ?P-@8Z&D_+T(HLB<'8@;9]^)>,7;(\?9E#&81I'^H7B/T6NQ/1PR
M=HU$4\YIS.'+G#F#(?M<@J^5./%_X'P=OEM5N$OPW5\*[]<)]JL$^T2P_V^+
M:SD/;XJPQ4PUN"9MDR>E[4W:Y$5T7MA'GN[D3_JX[5^$:Z3QY&(#WFR:?VUM
M )2RN<,5:O&!S8Z".D3S@+8;UVQT@NVF%\3F9US\!E!+ P04 " +.6Q/
M!+N ![4! #2 P & 'AL+W=O
'Z3P&6]V%79@.0=.A91K'@]K-&DS4&R<*4&SYF8>6GS!*
M SL]6P]%*<(6<&D+HB!*XJLI1F"*$9!B,$@1P@PF;W$;&PO=V]R:W-H965TT'D-S\#G=T.H_&E;K
MCO;9UXE?.ZB]=E![[:#VVD'MM8/::P>UUPYJOU,'M8:?B#8=EFH_J/':8.VU
MP=IK@[77!FNO#=;^#1NL-?P^],Y^:WOY?:\]V3ZS)UM-<;?\4+8XO$7