☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For
the quarterly period ended March 31, 2020
|
☐
|
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
|
☐
|
|
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PAGE
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3
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15
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19
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20
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21
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21
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21
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21
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FITLIFE BRANDS, INC.
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CONDENSED
CONSOLIDATED BALANCE SHEETS
|
||
|
|
|
ASSETS:
|
March
31,
|
December
31,
|
|
2020
|
2019
|
|
(Unaudited)
|
|
CURRENT
ASSETS
|
|
|
Cash
|
$2,666,000
|
$265,000
|
Accounts
receivable, net of allowance of doubtful accounts, $33,000 and
$27,000 respectively
|
4,692,000
|
2,366,000
|
Inventories,
net of allowance for obsolescence of $130,000 and $130,000,
respectively
|
3,023,000
|
2,998,000
|
Prepaid
expenses and other current assets
|
25,000
|
72,000
|
Total
current assets
|
10,406,000
|
5,701,000
|
|
|
|
Property and
equipment, net
|
124,000
|
136,000
|
Right of use asset,
net of amortization, $241,000 and $226,000
respectively
|
239,000
|
254,000
|
Goodwill
|
225,000
|
225,000
|
Security
deposits
|
10,000
|
10,000
|
TOTAL
ASSETS
|
$11,004,000
|
$6,326,000
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
Accounts
payable
|
$2,747,000
|
$2,010,000
|
Accrued
expense and other liabilities
|
543,000
|
464,000
|
Product
returns
|
276,000
|
256,000
|
Lease
liability - current portion
|
44,000
|
46,000
|
Line
of credit
|
2,500,000
|
-
|
Total
current liabilities
|
6,110,000
|
2,776,000
|
|
|
|
LONG-TERM LEASE
LIABILITY, net of current portion
|
196,000
|
208,000
|
|
|
|
TOTAL
LIABILITIES
|
6,306,000
|
2,984,000
|
|
|
|
STOCKHOLDERS'
EQUITY:
|
|
|
Preferred
stock, $0.01 par value, 10,000,000 shares authorized, none
outstanding
|
|
|
as
of March 31, 2020 and December 31, 2019
|
|
|
Common
stock, $.01 par value, 15,000,000 shares authorized; 1,060,033 and
1,054,516
|
|
|
issued
and outstanding as of March 31, 2020 and December 31, 2019
respectively
|
12,000
|
12,000
|
Treasury
stock, 210,631 and 198,731 shares, respectively
|
(1,790,000)
|
(1,619,000)
|
Additional
paid-in capital
|
32,154,000
|
32,055,000
|
Accumulated
deficit
|
(25,678,000)
|
(27,106,000)
|
Total
stockholders' equity
|
$4,698,000
|
$3,342,000
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$11,004,000
|
$6,326,000
|
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 of goods
sold
|
3,414,000
|
3,337,000
|
Gross
profit
|
2,737,000
|
2,541,000
|
|
|
|
OPERATING
EXPENSES:
|
|
|
General
and administrative
|
733,000
|
774,000
|
Selling
and marketing
|
671,000
|
550,000
|
Depreciation
and amortization
|
12,000
|
15,000
|
Total
operating expenses
|
1,416,000
|
1,339,000
|
OPERATING
INCOME
|
1,321,000
|
1,202,000
|
|
|
|
OTHER EXPENSES
(INCOME)
|
|
|
Interest
expense
|
4,000
|
15,000
|
Gain
on settlement
|
(70,000)
|
-
|
Total
other expenses (income)
|
(66,000)
|
15,000
|
|
|
|
NET
INCOME
|
1,387,000
|
1,187,000
|
|
|
|
PROVISION FOR
INCOME TAXES
|
(41,000)
|
-
|
|
|
|
NET
INCOME
|
1,428,000
|
1,187,000
|
|
|
|
NET INCOME
AVAILABLE TO COMMON SHAREHOLDERS
|
$1,428,000
|
$1,187,000
|
|
|
|
NET INCOME PER
SHARE AVAILABLE TO COMMON SHAREHOLDERS:
|
|
|
Basic
|
$1.36
|
$1.07
|
|
|
|
Diluted
|
$1.27
|
$0.94
|
|
|
|
Basic
weighted average common shares
|
1,051,752
|
1,111,943
|
|
|
|
Diluted
weighted average common shares
|
1,126,303
|
1,268,526
|
FITLIFE BRANDS, INC.
|
CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
|
FOR
THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019
|
|
|
|
|
|
|
Additional
|
|
|
|
Series
A Preferred
|
Common
Stock
|
Treasury
|
Paid-in
|
Accumulated
|
|
||
|
Shares
|
Amount
|
Shares
|
Amount
|
Stock
|
Capital
|
Deficit
|
Total
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
MARCH 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DECEMBER 31,
2019
|
-
|
$-
|
1,054,516
|
$12,000
|
$(1,619,000)
|
$32,055,000
|
$(27,106,000)
|
$3,342,000
|
Fair value of
common stock issued for services
|
-
|
-
|
417
|
-
|
-
|
16,000
|
-
|
16,000
|
Repurchase of common
stock
|
-
|
-
|
(11,900)
|
-
|
(171,000)
|
-
|
-
|
(171,000)
|
Exercise of stock
options
|
-
|
-
|
17,000
|
-
|
-
|
71,000
|
-
|
71,000
|
Fair value of
vested common shares and options issued for services
|
-
|
-
|
-
|
-
|
-
|
12,000
|
-
|
12,000
|
Net
income
|
-
|
-
|
-
|
-
|
-
|
-
|
1,428,000
|
1,428,000
|
|
|
|
|
|
|
|
|
|
MARCH 31,
2020
|
-
|
$-
|
1,060,033
|
$12,000
|
$(1,790,000)
|
$32,154,000
|
$(25,678,000)
|
$4,698,000
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
MARCH 31, 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
|
-
|
-
|
2,009
|
-
|
-
|
23,000
|
-
|
23,000
|
Fair value of
vested common shares and options issued for services
|
-
|
-
|
-
|
-
|
-
|
26,000
|
-
|
26,000
|
Net
income
|
-
|
-
|
-
|
-
|
-
|
-
|
1,187,000
|
1,187,000
|
|
|
|
|
|
|
|
|
|
MARCH 31,
2019
|
600
|
$-
|
1,113,952
|
$11,000
|
$-
|
$32,156,000
|
$(28,617,000)
|
$3,550,000
|
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 FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
Net
income
|
$1,428,000
|
$1,187,000
|
Adjustments
to reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
Depreciation
and amortization
|
12,000
|
15,000
|
Allowance
for doubtful accounts
|
6,000
|
(4,000)
|
Allowance
for inventory obsolescence
|
-
|
12,000
|
Common
stock issued for services
|
16,000
|
23,000
|
Fair
value of options issued for services
|
12,000
|
26,000
|
Right
of use asset net of amortization and lease liability
|
2,000
|
3,000
|
Changes
in operating assets and liabilities:
|
|
|
Accounts
receivable - trade
|
(2,332,000)
|
(2,244,000)
|
Inventories
|
(25,000)
|
1,173,000
|
Prepaid
expense
|
46,000
|
110,000
|
Accounts
payable
|
737,000
|
(321,000)
|
Accrued
interest
|
4,000
|
15,000
|
Accrued
liabilities and other liabilities
|
75,000
|
20,000
|
Product
returns
|
20,000
|
(136,000)
|
Net
cash provided by (used in) operating activities
|
1,000
|
(121,000)
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
Net
cash provided by investing activities
|
-
|
-
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
Proceeds
from issuance of notes payable
|
-
|
300,000
|
Proceeds
from exercise of stock options
|
71,000
|
-
|
Proceeds
from line of credit
|
2,500,000
|
-
|
Repurchases
of common stock
|
(171,000)
|
-
|
Net
cash provided by financing activities
|
2,400,000
|
300,000
|
|
|
|
CHANGE IN
CASH
|
2,401,000
|
179,000
|
CASH, BEGINNING OF
PERIOD
|
265,000
|
259,000
|
CASH, END OF
PERIOD
|
$2,666,000
|
$438,000
|
|
|
|
Supplemental
disclosure operating activities
|
|
|
Cash paid for
interest
|
$-
|
$15,000
|
|
|
|
Non-cash
investing and financing activities
|
|
|
Recording of lease
asset and liability upon adoption of ASU-2016-02
|
$-
|
$343,000
|
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
|
January
2020
|
11,900
|
$14.35
|
11,900
|
$1,110,917
|
February
2020
|
-
|
-
|
-
|
$1,110,917
|
March
2020
|
-
|
-
|
-
|
$1,110,917
|
Subtotal
|
11,900
|
$14.35
|
11,900
|
|
|
Three months ended
March 31,
|
|
|
2020
|
2019
|
|
(unaudited)
|
|
Net
income available to common shareholders
|
$1,428,000
|
$1,187,000
|
Weighted
average common shares - basic
|
1,051,752
|
1,111,943
|
Dilutive
effect of outstanding warrants and stock options
|
74,551
|
156,583
|
Weighted
average common shares - diluted
|
1,126,303
|
1,268,526
|
|
|
|
Net
income per common share:
|
|
|
Basic
|
$1.36
|
$1.07
|
Diluted
|
$1.27
|
$0.94
|
|
|
|
|
March 31,
2020
|
December 31,
|
|
(unaudited)
|
2019
|
Finished
goods
|
$2,669,000
|
$2,688,000
|
Components
|
484,000
|
440,000
|
Allowance
for obsolescence
|
(130,000)
|
(130,000)
|
Total
|
$3,023,000
|
$2,998,000
|
|
|
|
|
March 31,
2020
|
December 31,
|
|
(unaudited)
|
2019
|
Equipment
|
$902,000
|
$902,000
|
Accumulated
depreciation
|
(778,000)
|
(766,000)
|
Total
|
$124,000
|
$136,000
|
|
Three months ended
|
Lease
Cost
|
March 31, 2020
|
|
(unaudited)
|
Operating
lease cost (included in general and administrative in the Company's
unaudited
|
|
and
condensed consolidated statement of operations)
|
$22,000
|
|
|
Other
information
|
|
Cash
paid for amounts included in the measurement of lease liabilities
for the first quarter 2020
|
$-
|
Weighted
average remaining lease term - operating leases (in
years)
|
4.56
|
Average
discount rate - operating leases
|
9%
|
Operating
leases
|
At
March 31, 2020
|
Long-term
right-of-use assets
|
$239,000
|
Short-term
operating lease liabilities
|
$44,000
|
Long-term
operating lease liabilities
|
196,000
|
Total
operating lease liabilities
|
$240,000
|
Year ending
|
Operating leases
|
2020
(remaining 9 months)
|
47,000
|
2021
|
67,000
|
2022
|
67,000
|
2023
|
61,000
|
2024
|
51,000
|
Less:
Imputed interest/present value discount
|
(53,000)
|
Present
value of lease liabilities
|
$240,000
|
a.
|
Common
Stock Issued for Services
|
b.
|
Share
Repurchase Program
|
c.
|
Reverse/Forward
Split
|
|
|
|
Weighted
|
|
|
Weighted
|
Average
|
|
Number
of
|
Average
Exercise
|
Remaining
Life
|
|
Options
|
Price
|
(Years)
|
Outstanding,
December 31, 2018
|
154,521
|
$13.10
|
5.7
|
Issued
|
8,000
|
6.85
|
|
Exercised
|
-
|
|
|
Forfeited
|
(13,236)
|
24.45
|
|
Outstanding,
December 31, 2019
|
149,285
|
$11.76
|
5.0
|
Issued
|
-
|
|
|
Exercised
|
(17,000)
|
4.20
|
|
Forfeited
|
(36,500)
|
19.46
|
|
Outstanding,
March 31, 2020
|
95,785
|
$10.17
|
6.6
|
|
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
|
90,210
|
6.76
|
$5.23
|
66,710
|
$6.08
|
$23.10 - $144.34
|
5,575
|
3.52
|
$90.20
|
5,575
|
$90.20
|
|
95,785
|
6.57
|
$10.17
|
72,285
|
$11.20
|
Outstanding
|
|
Exercise
Price
|
|
Issuance
Date
|
|
Expiration
Date
|
|
Vesting
|
35,870
|
|
$
4.60
|
|
11/13/18
|
|
11/13/23
|
|
Yes
|
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
|
January
2020
|
11,900
|
$14.35
|
11,900
|
$1,110,917
|
February
2020
|
-
|
-
|
-
|
$1,110,917
|
March
2020
|
-
|
-
|
-
|
$1,110,917
|
Subtotal
|
11,900
|
$14.35
|
11,900
|
|
|
Three months ended
|
|
|
|
|
March 31, 2020
|
March 31, 2019
|
Change
|
%
|
|
(unaudited)
|
|
|
|
Revenue
|
$6,151,000
|
$5,878,000
|
$273,000
|
5%
|
Cost of goods
sold
|
(3,414,000)
|
(3,337,000)
|
(77,000)
|
2%
|
Gross
profit
|
2,737,000
|
2,541,000
|
196,000
|
8%
|
Operating
expenses
|
(1,416,000)
|
(1,339,000)
|
(77,000)
|
6%
|
Income from
operations
|
1,321,000
|
1,202,000
|
119,000
|
10%
|
Other income
(expense)
|
66,000
|
(15,000)
|
81,000
|
n/a
|
Provision for
income tax
|
41,000
|
-
|
41,000
|
n/a
|
Net
income
|
$1,428,000
|
$1,187,000
|
$241,000
|
20%
|
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
|
January
2020
|
11,900
|
$14.35
|
11,900
|
$1,110,917
|
February
2020
|
-
|
-
|
-
|
$1,110,917
|
March
2020
|
-
|
-
|
-
|
$1,110,917
|
Subtotal
|
11,900
|
$14.35
|
11,900
|
|
|
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.
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Certification of
Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act.
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Certification of
Chief Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act.
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101.INS
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XBRL
Instance Document
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101.SCH
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XBRL
Taxonomy Extension Schema
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101.CAL
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XBRL
Taxonomy Extension Calculation Linkbase
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101.DEF
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XBRL
Taxonomy Extension Definition Linkbase
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101.LAB
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XBRL
Taxonomy Extension Label Linkbase
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101.PRE
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XBRL
Taxonomy Extension Presentation Linkbase
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Registrant
Date:
May 15, 2020
|
FitLife Brands, Inc.
By: /s/ Dayton
Judd
|
|
|
Dayton
Judd
|
|
|
Chief
Executive Officer and Chair
(Principal
Executive Officer)
|
Registrant
Date:
May 15, 2020
|
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: May 15, 2020
|
|
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: May 15, 2020
|
|
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: May 15, 2020
|
|
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: May 15, 2020
|
|
FitLife Brands, Inc.
By: /s/ Susan
Kinnaman
|
|
|
Susan Kinnaman
|
|
|
Chief Financial Officer
(Principal Financial Officer)
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). Significant accounting policies are as follows:
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 consolidated financial statements.
Goodwill
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment. ASU 2017-04 removes Step 2 of the goodwill impairment test, which required a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This update also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The Company adopted ASU 2017-04 on January 1, 2020 and applied the requirements prospectively. While we have concluded that a triggering event did not occur during the quarter ended March 31, 2020, the prolonged duration and severity of the COVID-19 pandemic could result in future goodwill impairment charges. We will continue to monitor the effects of the COVID-19 pandemic’s impact on our business, and review for impairment indicators as necessary in the upcoming months.
Customer Concentration
Net sales to GNC during the three-month periods ended March 31, 2020 and 2019 were $4,697,000 and $4,864,000, respectively, representing 76% and 82% of total net revenue, respectively.
Gross accounts receivable attributable to GNC as of March 31, 2020 and March 31, 2019 were $4,186,000 and $3,692,000, respectively, representing 91% and 91% of the Company’s total accounts receivable balance, respectively.
For the quarters ended March 31, 2020 and 2019, online sales accounted for 14% and 10% 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.
For direct-to-consumer sales, the Company allows for returns within 30 days of purchase. Our wholesale customers, such as GNC, may return purchased products to the Company under certain circumstances, which include expired or soon-to-be-expired products located in GNC corporate stores or at any of its distribution centers, and products that are subject to a recall or that contain an ingredient or ingredients that are subject to a recall by the U.S. Food and Drug Administration.
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 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.
In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration. Such elements of variable consideration include, but are not limited to, product returns and sales incentives, such as markdowns and margin adjustments. For these types of arrangements, the adjustments to revenue are recorded at the later of when (i) the Company recognizes revenue for the transfer of the related products to the customers, or (ii) the Company pays, or promises to pay, the consideration.
Income Taxes
As of December 31, 2019, the Company had federal net operating loss (“NOL”) carryforwards available to offset future taxable income of approximately $26.6 million, subject to Internal Revenue Service (“IRS”) statutory limitations. To the extent the Company reports federal taxable income for 2020, such income will be eliminated by net operating losses. This reduction in deferred tax assets would be offset by a corresponding reduction in the deferred tax asset valuation allowance resulting in no federal income tax expense. Accordingly, no federal income tax expense is recorded for the quarter ended March 31, 2020 based on anticipated utilization of net operating loss carryforwards.
During the quarter ended March 31, 2020, the Company received a tax refund of $41,000 relating to a portion of the Company’s alternative minimum tax carryforward, which became refundable as a result of the 2017 Tax Cuts and Jobs Act.
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 March 31, 2020 and December 31, 2019.
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.
|
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
May 14, 2020 |
|
Document And Entity Information | ||
Entity Registrant Name | FITLIFE BRANDS, INC. | |
Entity Central Index Key | 0001374328 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 1,060,033 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | NV | |
Entity File Number | 000-52369 |
INVENTORIES (Details) - USD ($) |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished goods | $ 2,669,000 | $ 2,688,000 |
Components | 484,000 | 440,000 |
Allowance for obsolescence | $ (130,000) | $ (130,000) |
EQUITY (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option activity |
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Options issued and outstanding |
|
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Warrants issued and outstanding |
|
COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Legal Proceedings
We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of the Company or any of its subsidiaries, threatened against or affecting the Company, our Common Stock, any of our subsidiaries or of the Company’s or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
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PROPERTY AND EQUIPMENT |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT | The Company’s fixed assets as of March 31, 2020 and December 31, 2019 were as follows:
Depreciation expense for the three months ended March 31, 2020 and 2019 was $12,000 and $15,000, respectively.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Table) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share |
|
RIGHT OF USE ASSETS AND LIABILITIES (Details 1) - USD ($) |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Leases [Abstract] | ||
Long-term right-of-use assets | $ 239,000 | |
Short-term operating lease liabilities | 44,000 | $ 46,000 |
Long-term operating lease liabilities | 196,000 | $ 208,000 |
Total operating lease liabilities | $ 240,000 |
EQUITY (Details 2) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Dec. 31, 2019 |
|
Equity [Abstract] | ||
Outstanding | 35,870 | 35,870 |
Exercise price | $ 4.60 | |
Issuance date | 11/13/18 | |
Expiration date | 11/13/23 | |
Vesting | Yes |
DESCRIPTION OF BUSINESS (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares repurchased |
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EQUITY |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY | Common Stock
The Company is authorized to issue 15.0 million shares of Common Stock of which 1,060,033 shares of Common Stock were issued and outstanding as of March 31, 2020.
In July 2018, in connection with the appointment of Mr. Dayton Judd as Chief Executive Officer, the Company granted Mr. Judd an aggregate of 45,000 shares of restricted Common Stock, which include vesting conditions subject to the achievement of certain market prices of the Company’s Common Stock. Such shares are also subject to forfeiture in the event Mr. Judd resigns from his position or is terminated by the Company. As the vesting of the 45,000 shares of restricted Common Stock is subject to certain market conditions, pursuant to current accounting guidelines, the Company determined the fair value to be $105,000, computed using Monte Carlo simulations on a binomial model with the assistance of a valuation specialist using a derived service period of nine years. During the three months ended March 31, 2020, the Company recorded compensation expense of $12,000 to amortize the fair value of these shares of restricted Common Stock based upon the prorated derived service period.
During the three-month period ended March 31, 2019, the Company issued 2,009 shares of Common Stock with a fair value of $11,000 to employees and directors for services rendered. The shares were valued at their respective dates of issuance.
During the three-month period ended March 31, 2020, the Company issued 417 shares of Common Stock with a fair value of $4,000 to directors for services rendered. The shares were valued at their respective date of issuance.
On August 16, 2019, the Company's Board authorized management to repurchase up to $500,000 of the Company's Common Stock over the next 24 months, which Share Repurchase Program was previously reported on the Company's Current Report on Form 8-K filed August 20, 2019. On September 23, 2019, the Board approved an amendment to the Company’s share repurchase program to increase the repurchase of up to $1,000,000 of the Company's Common Stock, its Series A Preferred, and 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. 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.
During the three-month period ended March 31, 2020, the Company repurchased 11,900 shares of Common Stock, or approximately 1% of the issued and outstanding shares of the Company, through private transactions for the aggregate purchase price of $171,000. The Company is accounting for these shares as treasury stock.
On April 11, 2019, the Company filed two Certificates of Change with the Secretary of State of the State of Nevada, the first to effect a reverse stock split of both the Company’s issued and outstanding and authorized Common Stock, at a ratio of 1-for-8,000, and the second to effect a forward stock split of both the Company’s issued and outstanding and authorized Common Stock at a ratio of 800-for-1. The Reverse/Forward Split became effective, and the Company’s Common Stock began trading on a post-split basis, on Tuesday, April 16, 2019.
The Company did not issue any fractional shares as a result of the Reverse/Forward Split. Holders of fewer than 8,000 shares of the Common Stock immediately prior to the Reverse/Forward Split received cash in lieu of fractional shares based on the 5-day volume weighted average price of the Company’s Common Stock immediately prior to the Reverse/Forward Split, which was $0.57 per pre-split share. As a result, such holders ceased to be stockholders of the Company. Holders of more than 8,000 shares of Common Stock immediately prior to the Reverse/Forward Split did not receive fractional shares; instead any fractional shares resulting from the Reverse/Forward Split were rounded up to the next whole share.
As a result of the Reverse/Forward Split, the number of shares of Company Common Stock authorized for issuance under the Company’s Articles of Incorporation, as amended, was decreased from 150,000,000 shares to 15,000,000 shares. The Reverse/Forward Split did not affect the Company’s preferred stock, nor did it affect the par value of the Company’s Common Stock.
The share and per share amounts included in these unaudited interim condensed consolidated financial statements and footnotes have been retroactively adjusted to reflect the 1-for-10 aspect of the Reverse/Forward Split as if it occurred as of the earliest period presented.
Options
Information regarding options outstanding as of March 31, 2020 is as follows:
During the three-month periods ended March 31, 2020 and 2019, the Company recognized compensation expense of $12,000 and $26,000, respectively, to account for the fair value of stock options that vested during the period.
Total intrinsic value of outstanding stock options as of March 31, 2020 amounted to $437,000. Future unamortized compensation expense on the unvested outstanding options at March 31, 2020 amounted to $11,750, which will be recognized through October 2020.
Warrants
Total outstanding warrants to purchase shares of Company Common Stock as of March 31, 2020 and December 31, 2019 amounted to 35,870 shares. Total intrinsic value as of March 31, 2020 amounted to $157,828.
During the period ended March 31, 2020, no warrants were granted and no warrants expired unexercised.
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INVENTORIES |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES | The Company’s inventories as of March 31, 2020 and December 31, 2019 were as follows:
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RIGHT OF USE ASSETS AND LIABILITIES (Details 2) |
Mar. 31, 2020
USD ($)
|
---|---|
Leases [Abstract] | |
2020 (remaining 9 months) | $ 47,000 |
2021 | 67,000 |
2022 | 67,000 |
2023 | 61,000 |
2024 | 51,000 |
Less: Imputed interest/present value discount | (53,000) |
Present value of lease liabilities | $ 240,000 |
EQUITY (Details Narrative) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Dec. 31, 2019 |
|
Common Stock, Shares Authorized | 15,000,000 | 15,000,000 | |
Common Stock, Shares, Issued | 1,060,033 | 1,054,516 | |
Common Stock, Shares, Outstanding | 1,060,033 | 1,054,516 | |
Common Stock, Par Value Per Share | $ 0.01 | $ 0.01 | |
Compensation expense | $ 12,000 | $ 26,000 | |
Intrinsic value of outstanding stock options | 437,000 | ||
Unamortized compensation expense | $ 11,750 | ||
Warrants issued and outstanding | 35,870 | 35,870 | |
Intrinsic value of warrants | $ 157,828 | ||
Preferred Stock Series A | |||
Preferred Stock, Par Value Per Share | $ 0.01 | $ 0.01 | |
Preferred Stock, Shares Authorized | 1,000 | 1,000 | |
Preferred Stock, Shares, Issued | 0 | 600 | |
Preferred Stock, Shares, Outstanding | 0 | 600 |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Income Statement [Abstract] | ||
Revenue | $ 6,151,000 | $ 5,878,000 |
Cost of Goods Sold | 3,414,000 | 3,337,000 |
Gross Profit | 2,737,000 | 2,541,000 |
OPERATING EXPENSES: | ||
General and administrative | 733,000 | 774,000 |
Selling and marketing | 671,000 | 550,000 |
Depreciation and amortization | 12,000 | 15,000 |
Total operating expenses | 1,416,000 | 1,339,000 |
OPERATING INCOME | 1,321,000 | 1,202,000 |
OTHER EXPENSES (INCOME) | ||
Interest expense | 4,000 | 15,000 |
Gain on settlement | (70,000) | 0 |
Total other expense | (66,000) | 15,000 |
NET INCOME | 1,387,000 | 1,187,000 |
PROVISION FOR INCOME TAXES | (41,000) | 0 |
NET INCOME | 1,428,000 | 1,187,000 |
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ 1,428,000 | $ 1,187,000 |
NET INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS: | ||
Basic | $ 1.36 | $ 1.07 |
Diluted | $ 1.27 | $ 0.94 |
Basic weighted average common shares | 1,051,752 | 1,111,943 |
Diluted weighted average common shares | 1,126,303 | 1,268,526 |
BASIS OF PRESENTATION |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | The accompanying interim condensed unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation are included. Operating results for the three-month period ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. Although management of the Company believes the disclosures presented herein are adequate and not misleading, these interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the footnotes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission on March 30, 2020.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Dec. 31, 2019 |
|
Goodwill | $ 225,000 | $ 225,000 | |
Total sales revenue | 6,151,000 | $ 5,878,000 | |
Federal net operating loss | 25,200,000 | ||
GNC | Sales Revenue Net | |||
Total sales revenue | $ 4,697,000 | $ 4,864,000 | |
Concentration risk | 76.00% | 82.00% | |
Tax refund | $ 41,000 | ||
GNC | Receivable | |||
Concentration risk | 91.00% | 91.00% | |
Sales receivable | $ 4,186,000 | $ 3,692,000 |
RIGHT OF USE ASSETS AND LIABILITIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Lease cost |
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Lease liabilities |
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Maturities of the Company's lease liabilities |
|
RIGHT OF USE ASSETS AND LIABILITIES (Details) |
3 Months Ended |
---|---|
Mar. 31, 2020
USD ($)
| |
Leases [Abstract] | |
Operating lease cost (included in general and administrative in the Company's unaudited and condensed consolidated statement of operations) | $ 22,000 |
Cash paid for amounts included in the measurement of lease liabilities | $ 0 |
Weighted Average remaining lease term - operating leases (in years) | 4 years 6 months 22 days |
Average discount rate - operating leases | 9.00% |
EQUITY (Details 1) - $ / shares |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Number of options outstanding | 95,785 | 149,285 | 154,521 |
Weighted average remaining contractual life (in years) | 6 years 7 months 6 days | 5 years | |
Weighted average exercise price outstanding | $ 10.17 | ||
Number of vested options | 72,285 | ||
Weighted average exercise price exercisable | $ 11.20 | ||
Stock Option 1 | |||
Exercise price range | $2.80- $23.00 | ||
Number of options outstanding | 90,210 | ||
Weighted average remaining contractual life (in years) | 6 years 9 months 4 days | ||
Weighted average exercise price outstanding | $ 5.23 | ||
Number of vested options | 66,710 | ||
Weighted average exercise price exercisable | $ 6.08 | ||
Stock Option 2 | |||
Exercise price range | $23.10 - $144.34 | ||
Number of options outstanding | 5,575 | ||
Weighted average remaining contractual life (in years) | 3 years 6 months 7 days | ||
Weighted average exercise price outstanding | $ 90.2 | ||
Number of vested options | 5,575 | ||
Weighted average exercise price exercisable | $ 90.2 |
SUBSEQUENT EVENTS |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | There are many uncertainties regarding the current coronavirus ("COVID-19") pandemic, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it will impact its services, customers, employees, vendors, and business partners. While the pandemic did not materially adversely affect the Company’s financial results and business operations in the Company’s first fiscal quarter ended March 31, 2020, our future financial position and operating results will likely be materially and adversely affected, although the extent of such affects cannot be determined at this time. The Company expects to continue to assess the evolving impact of the COVID-19 pandemic and intends to make adjustments to its responses accordingly.
The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted on March 27, 2020 in the United States. As previously disclosed in the Company’s Form 8-K filed with the SEC on May 1, 2020, on April 27, 2020, the Company received proceeds from a loan in the amount of approximately $449,700 from its lender, CIT Bank, N.A. (the “Lender”), pursuant to approval by the U.S. Small Business Administration (the “SBA”) for the Lender to fund the Company’s request for a loan under the SBA’s Paycheck Protection Program (“PPP Loan”) created as part of the recently enacted Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the SBA (the “Loan Agreement”). In accordance with the requirements of the CARES Act, the Company intends to use the proceeds from the PPP Loan primarily for payroll costs, covered rent payments, and covered utilities during the eight-week period commencing on the date of loan approval. The PPP Loan is scheduled to mature on April 27, 2022, has a 1.00% interest rate, and is subject to the terms and conditions applicable to all loans made pursuant to the Paycheck Protection Program as administered by the SBA under the CARES Act.
In accordance with the Subsequent Events Topic of the FASB ASC 855, we have evaluated subsequent events, through the filing date and noted no further subsequent events that are reasonably likely to impact the Company’s financial statements. |
NOTES PAYABLE |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
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 Chief Executive Officer and Chair of the Board, 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 three months ended March 31, 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. 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.
Line of Credit – Mutual of Omaha Bank
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.
On March 20, 2020, the Lender advanced the Company $2.5 million under the Line of Credit, which amount was repaid on April 29, 2020. The advance was intended to provide the Company with additional liquidity given the uncertainty regarding the timing of collection of certain accounts receivable, which amounts have largely been collected, and in anticipation of an expected negative impact on sales to GNC and our other wholesale customers resulting from the COVID-19 outbreak. |
DESCRIPTION OF BUSINESS (Details) |
3 Months Ended |
---|---|
Mar. 31, 2020
USD ($)
$ / shares
shares
| |
Total number of shares purchased | 11,900 |
Average price paid per share | $ / shares | $ 14.35 |
Total number of shares purchased as part of publicly announced program | 11,900 |
Dollar value of shares that may yet be purchased under the program | $ | $ 11,900 |
January 2020 | |
Total number of shares purchased | 11,900 |
Average price paid per share | $ / shares | $ 14.35 |
Total number of shares purchased as part of publicly announced program | 11,900 |
Dollar value of shares that may yet be purchased under the program | $ | $ 1,110,917 |
February 2020 | |
Total number of shares purchased | 0 |
Dollar value of shares that may yet be purchased under the program | $ | $ 1,110,917 |
March 2020 | |
Total number of shares purchased | 0 |
Dollar value of shares that may yet be purchased under the program | $ | $ 1,110,917 |
INVENTORIES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | The Company’s inventories as of March 31, 2020 and December 31, 2019 were as follows:
|
PROPERTY AND EQUIPMENT (Details) - USD ($) |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Equipment | $ 902,000 | $ 902,000 |
Accumulated depreciation | (778,000) | (766,000) |
Total | $ 124,000 | $ 136,000 |
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