10-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

☒  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2020

OR

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number:  000-52369

FITLIFE BRANDS, INC.

(Exact name of Registrant as specified in its charter)

Nevada	20-3464383
(State of Incorporation)	(IRS Employer Identification No.)

5214 S. 136th Street, Omaha, NE 68137

(Address of principal executive offices)

(402) 991-5618

(Registrant’s telephone number)

Securities registered under Section 12(b) of the Exchange Act:

None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $0.01 par value per share 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ☐  No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes ☒  No ☐

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☐  No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such a shorter period that the registrant was required to submit such files).  Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:

Large accelerated filer	☐	Accelerated filer	☐
Non–Accelerated filer	☒	Small reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ Yes ☒ No  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No  

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter, was $5,120,383.

As of March 26, 2021, there were 1,090,818 shares of common stock, $0.01 par value per share, issued and outstanding.

FITLIFE BRANDS, INC.

FORM 10-K ANNUAL REPORT

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2020 and 2019

TABLE OF CONTENTS

		PAGE
PART I
ITEM 1.	Business	1
ITEM 1A.	Risk Factors	8
ITEM 1B.	Unresolved Staff Comments	12
ITEM 2.	Properties	12
ITEM 3.	Legal Proceedings	12
ITEM 4.	Mine Safety Disclosures	12
PART II
ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	13
ITEM 6.	Selected Financial Data	13
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	28
ITEM 8.	Consolidated Financial Statements and Supplementary Data	28
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	28
ITEM 9A.	Controls and Procedures	29
ITEM 9B.	Other Information	29
PART III
ITEM 10.	Directors, Executive Officers, and Corporate Governance	30
ITEM 11.	Executive Compensation	30
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	30
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	30
ITEM 14.	Principal Accountant Fees and Services	30
PART IV
ITEM 15.	Exhibits and Financial Statement Schedules	31
ITEM 16.	Form 10-K Summary	32
SIGNATURES		33
CERTIFICATIONS
Exhibit 31 – Certification pursuant to Rule 13a-14(a) and 15d-14(a)
Exhibit 32 – Certification pursuant to 18 U.S.C 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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Forward Looking Statements — Cautionary Language

This Comprehensive Annual Report on Form 10-K (the “Comprehensive Annual Report”) contains various “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), regarding future events or the future financial performance of the Company that involve risks and uncertainties. Certain statements included herein, including, without limitation, statements related to anticipated cash flow sources and uses, and words including but not limited to “anticipates”, “believes”, “plans”, “expects”, “future” and similar statements or expressions, identify forward looking statements. Any forward-looking statements herein are subject to certain risks and uncertainties in the Company’s business, including but not limited to, reliance on key customers and competition in its markets, market demand, product performance, technological developments, maintenance of relationships with key suppliers, difficulties of hiring or retaining key personnel and any changes in current accounting rules, all of which may be beyond the control of the Company. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth herein.

This Comprehensive Annual Report, quarterly reports on Form 10-Q, current reports on Form 8-K and other documents filed with the SEC include additional factors, which could impact FitLife Brands, Inc.’s (“FitLife”) business and financial performance. Moreover, FitLife operates in a rapidly changing and competitive environment. New risks emerge from time to time and it is not possible for management to predict all such risks. Further, it is not possible to assess the impact of all risks on FitLife’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. In addition, FitLife disclaims any obligation to update any forward-looking statements to reflect events or circumstances that occur after the date of the report.

Use of Market and Industry Data 

This Comprehensive Annual Report includes market and industry data that we have obtained from third party sources, including industry publications, as well as industry data prepared by our management on the basis of its knowledge of and experience in the industries in which we operate (including our management’s estimates and assumptions relating to such industries based on that knowledge). Management has developed its knowledge of such industries through its experience and participation in these industries. While our management believes the third-party sources referred to in this Comprehensive Annual Report are reliable, neither we nor our management have independently verified any of the data from such sources referred to in this Comprehensive Annual Report or ascertained the underlying economic assumptions relied upon by such sources. Furthermore, references in this Comprehensive Annual Report to any publications, reports, surveys or articles prepared by third parties should not be construed as depicting the complete findings of the entire publication, report, survey or article. The information in any such publication, report, survey or article is not incorporated by reference in this Comprehensive Annual Report. 

Forecasts and other forward-looking information obtained from these sources involve risks and uncertainties and are subject to change based on various factors, including those discussed in sections entitled “Forward-Looking Statements,” “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Comprehensive Annual Report.

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Explanatory Note

General

On August 24, 2022, the Audit Committee of the Board of Directors (the “Audit Committee”) of FitLife Brands, Inc. (the “Company”) was advised by Weaver and Tidwell, L.L.P. (“Weaver”), its registered independent public accounting firm, that the Company’s previously issued financial statements included in its Annual Reports on Form 10-K for the years ended December 31, 2019 and 2020, and each of the interim financial statements for the quarterly periods in 2019, 2020 and 2021 included in its Quarterly Reports on Form 10-Q for the periods ending March 31, 2019, June 30, 2019, September 30, 2019, March 31, 2020, June 30, 2020, September 30, 2020, March 31, 2021, and June 30, 2021 (collectively, the "Restated Periods") should be restated to correct historical errors related to the recognition of  revenue, expensing of costs of inventory, inventory, accounts receivable and the financial reporting and internal controls related to such arrangements, and should therefore no longer be relied upon (the "Restatement"). As a result, we determined that we would restate such financial statements to correct the accounting errors.

Restatement

This Comprehensive Annual Report for the year ended December 31, 2020 includes audited consolidated financial statements at December 31, 2020 and December 31, 2019 and for the years ended December 31, 2020, and December 31, 2019, as well as relevant unaudited interim financial information for the quarterly periods ended September 30, 2020, June 30, 2020, March 31, 2020, September 30, 2019, June 30, 2019, and March 31, 2019 (collectively known as the “Financial Statements”). We have restated certain information within this Comprehensive Annual Report, including our consolidated Financial Statements.

Restatement Background

The intended Restatement follows the determination that the revenue associated for all customers with standard FOB destination terms, as reported in the Company’s prior period consolidated financial statements, was incorrectly recognized at the time of shipment instead of when the performance obligation was satisfied upon delivery. In addition, the accounting treatment related to the recognition of corresponding accounts receivables, inventory and expensing of costs of goods sold. The Company’s errors in the misapplication of revenue recognition resulted in certain errors recorded in various account balances in the Company’s consolidated balance sheets, statements of operations, statements of stockholders’ equity, statement of cash flows, and the related notes to the consolidated financial statements (collectively referred to as the consolidated financial statements) for the Restated Periods.

Restatement of Previously Issued Consolidated Financial Statements

This Comprehensive Annual Report restates amounts included in the 2020 and 2019 Annual Reports described above, including the audited consolidated financial statements at December 31, 2020 and 2019 and for the fiscal years ended December 31, 2020 and 2019. In addition to the misstatements related to revenue recognition, we corrected additional identified uncorrected misstatements that were not material, individually or in the aggregate, to our consolidated Financial Statements. These misstatements are mentioned in more detail in Note 2, Restatement of Previously Issued Consolidated Financial Statements, in Item 8, Consolidated Financial Statements and Supplementary Data, for additional information.

This Comprehensive Form 10-K also reflects Management’s Discussion and Analysis of Financial Condition and Results of Operations based on the restated financial information.

The net effect of the adjustments on the Consolidated Statements of Operations was to increase (decrease) net income by $111,000 and ($88,000) for the years ended December 31, 2020 and 2019, respectively.

	For the year ended December 31,
	2020		2019
Revenue	$	367,000	$	(361,000	)
Cost of goods sold		224,000		(281,000	)
Gross profit		143,000		(80,000	)
Total operating expenses		1,000		8,000
Operating income		142,000		(88,000	)
Net Income	$	111,000	$	(88,000	)

The decrease to accumulated deficit from the adjustments as of December 2020, is as follows:

	As of December 31,
	2020			2019
Accounts receivable	$	(247,000	)	$	(648,000	)
Inventories		128,000			360,000
Deferred tax asset		(31,000	)		-
Total Assets		(150,000	)		(288,000	)
Total current liabilities		10,000			(17,000	)
Accumulated deficit		(160,000	)		(271,000	)

The relevant unaudited interim financial information for the quarterly periods ended September 30, 2020, June 30, 2020, March 31, 2020, September 30, 2019, June 30, 2019, and March 31, 2019, has also been restated.  We intend to amend relevant unaudited interim financial information for the quarterly periods ended March 31, 2021 and June 30, 2021 in the 2021 annual report on Form 10-K for the fiscal year ended December 31, 2021. We do not intend to amend any other annual reports on Form 10-K or quarterly reports on Form 10-Q for periods affected by these errors. 

See Note 11, Quarterly Financial Data (Unaudited), in Item 8, Consolidated Financial Statements and Supplementary Data, for such restated information, and see Supplemental Unaudited Quarterly Financial Information, in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for additional interim financial information.

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PART I

ITEM 1.  BUSINESS

As used in this Comprehensive Annual Report, “we”, “us”, “our”, “FitLife”, “FitLife Brands”, the “Company” or “our company” refers to FitLife Brands, Inc. and all of its subsidiaries.

Overview

We are a national provider of innovative and proprietary nutritional supplements for health-conscious consumers marketed under the following brand names: (i) NDS Nutrition, PMD Sports, SirenLabs, Core Active, and Metis Nutrition (together, “NDS Products”); and (ii) iSatori, BioGenetic Laboratories, and Energize (together, the "iSatori Products").  The Company distributes the NDS Products 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 17,000 retail locations, which include specialty, mass, and online.

FitLife Brands is headquartered in Omaha, Nebraska. For more information on the Company, please go to www.fitlifebrands.com. The Company’s common stock currently trades under the symbol “FTLF” on the OTC: PINK market.

Recent Developments

Share Repurchase Plan 

On August 16, 2019, the Company's Board of Directors (the "Board") authorized management to repurchase up to $500,000 of the Company's 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. 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 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.

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.

Subsequent to the end of the fiscal year, on February 1, 2021, the Board approved an additional amendment to the previously authorized Share Repurchase Program. Under the terms of the amendment, the Company is authorized to repurchase up to $5.0 million of securities issued by the Company.

The Company intends to conduct its Share Repurchase Program in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Exchange Act. 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 year ended December 31, 2020, the Company repurchased 11,900 shares of Common Stock under the Share Repurchase Program, or approximately 1% of the issued and outstanding shares of the Company’s Common Stock, through private transactions, as follows:

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
Subtotal		11,900	$	14.35		11,900

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COVID-19 Pandemic

The COVID-19 pandemic has had an effect on the Company’s employees, business and operations during the fiscal year ended December 31, 2020, and those of its customers, vendors and business partners. In this respect, the temporary or permanent closure of some of our retail partners’ store locations and the stay-at-home orders that occurred early in the pandemic negatively affected our results from operations, although much of the impact has been offset by an increase in revenue attributable to online sales, and increased sales during the more recent quarters. Our future financial position and operating results could be materially and adversely affected in the event that a resurgence of COVID-19 cases leads to new stay-at-home orders and/or disruptions in both our supply chain and manufacturing lead-times, which could lower demand for the Company’s products and/or prevent the Company from producing and delivering its products in a timely manner, although the extent of these effects 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 business and operations accordingly.

CARES Act

The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted on March 27, 2020 in the United States. On April 27, 2020, the Company received proceeds from a loan in the amount of $449,700 from its lender, CIT Bank, N.A. (the “PPP Lender”), pursuant to approval by the U.S. Small Business Administration (the “SBA”) for the PPP Lender to fund the Company’s request for a loan under the SBA’s Paycheck Protection Program (“PPP Loan”) created as part of the CARES ACT administered by the SBA (the “Loan Agreement”). In accordance with the requirements of the CARES Act, the Company used 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 was scheduled to mature on April 27, 2022, had a 1.0% interest rate, and was 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. Subsequent to the end of the fiscal year, the Company was informed by the PPP Lender and the SBA that the full balance of the PPP Loan, including accrued interest, was forgiven on January 15, 2021.

The CARES Act permits employers to defer payment of the employer portion of payroll taxes owed on wages paid through December 31, 2020 for a period of up to two years. Through December 31, 2020, the Company has deferred payment of $77,000, which amount has been expensed and is included in accrued liabilities. 

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"), subsequently acquired by CIT Bank, 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. See Note 6 of the Notes to the Financial Statements included elsewhere in this Comprehensive Annual Report. On March 20, 2020, the Company drew on the Line of Credit in an amount equal to $2.5 million (the "Advance"), which Advance was repaid on April 29, 2020. The Company elected to borrow such amounts to ensure it maintained ample financial flexibility in light of the spread of the novel coronavirus ("COVID-19"). The Advance was intended to provide the Company with additional liquidity given the uncertainty regarding the timing of collection of certain accounts receivable and in anticipation of an expected negative impact on sales to GNC and our other wholesale customers resulting from the COVID-19 outbreak. 

On August 4, 2020, the Company and the Lender amended the Line of Credit Agreement to extend the Maturity Date to September 23, 2021. The amendment also added a LIBOR floor of 75 bps to the Line of Credit Agreement. All other terms of the Line of Credit remain unchanged.

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Industry Overview

We compete principally in the nutrition industry. The Nutrition Business Journal categorizes the industry in the following segments:

● Natural & Organic Foods (products such as cereals, milk, non-dairy beverages and frozen meals);

● Functional Foods (products with added ingredients or fortification specifically for health or performance purposes);

● Natural & Organic Personal Care and Household Products; and

● Supplements (products focused on sports nutrition and weight management).

Management believes that the following factors drive growth in the nutrition industry:

● The general public’s awareness and understanding of the connection between diet and health;

● The aging population in the Company’s markets who tend to use more nutritional supplements as they age;

● Increasing healthcare costs and the consequential trend toward preventative medicine and non-traditional medicines; and

● Product introductions in response to new scientific studies.

Our Products

The Company currently focuses its sales and marketing efforts on its full line of sports, weight loss and general nutrition products that are currently marketed and sold both nationally and internationally. The Company currently markets more than 75 different NDS Products to more than 750 GNC franchise locations located in the United States, as well as to additional franchise locations in other countries, all of which are distributed primarily through GNC’s distribution system. In addition, following the launch of Metis Nutrition, we distribute products through more than 1,600 corporate GNC stores in the United States. We sell iSatori Products through more than 17,000 specialty, mass, and online retail locations. A complete product list is available on our website at fitlifebrands.com.

NDS Products

The Company’s NDS Products include:

● NDS – Innovative weight loss, general health and sports nutrition supplements – examples include Censor, Cardio Cuts and LipoRUSH XT;

● PMD – Precision sports nutrition formulations for professional muscular development – examples include Amplify XL, Pump Fuel and Flex Stack;

● Siren Labs – Weight loss and sports nutrition performance enhancing supplements for fitness enthusiasts – examples include Isolate, Ultrakarbs, NeuroLean, and Vaso-Vol;

● Metis Nutrition – Multifaceted men’s health and weight loss formulations, including JXT5 and PyroStim.

NDS Products also include innovative diet, health and sports nutrition supplements and related products marketed through its Core Active Nutrition product line (“Core Active”). Core Active products, which are sold exclusively online, provide essential support for accelerated fitness and nutrition goals.

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iSatori Products

iSatori Products include scientifically engineered nutritional products that are sold online as well as through multiple retail partners. iSatori Products include:

● Sports Nutritionals: Products including Bio-Active Peptides (Bio-Gro™), advanced creatine powder (Creatine A5X), and a natural testosterone booster (Isa-TestGF™);

● Energy Products: iSatori’s energy supplement, Energize, designed to safely boost energy through a combination of time-released caffeine, vitamins, and herbal formulations;

● Meal Replacements: protein-based products related to health nutrition and performance, including iSatori’s 100% Bio-Active Whey, a premium protein blend with Bio-Active Peptides; and

● Weight Loss Products: iSatori’s weight loss products are principally sold under the BioGenetic Laboratories brand and include Forskolin Lean & Tone™ and hCG Alternative, as well as iSatori’s thermogenic, LIPO-DREX™ with C3G nutrient partitioning technology.

Manufacturing, Sources and Availability of Raw Materials

All of the Company’s products are manufactured by FDA-regulated contract manufacturers within the United States and Canada. Each contract manufacturer is required by the Company to abide by current Good Manufacturing Practices (“cGMPs”) to ensure quality and consistency, and to manufacture its products according to the Company’s strict specifications, and nearly all our contract manufacturers are certified through a governing body such as the NPA (“Natural Products Association”) or NSF International. In most cases, contract manufacturers purchase the raw materials based on the Company’s specifications; however, from time to time, the Company will license particular raw material ingredients and supply its own source to the manufacturer. Once produced, in addition to in-house testing performed by the contract manufacturer, the Company may also perform independent analysis and testing. The contract manufacturer either ships the finished product to one of our fulfillment centers or directly to our customers. The Company has implemented vendor qualification programs for all of its suppliers and manufacturers, including analytical testing of purchased products. As part of the vendor program, the Company also periodically inspects vendors’ facilities to monitor quality control and assurance procedures.

Product Reformulations and New Product Identification

From time to time we reformulate existing products to address market developments and trends, and to respond to customer requests. We also continually expand our product line through the development of new products. New product ideas are derived from a number of sources including trade publications, scientific and health journals, consultants, distributors, and other third parties. Prior to reformulating existing products or introducing new products, we investigate product formulations as they relate to regulatory compliance and other issues. We introduced a total of 32 new products during the year ended December 31, 2020, which included 12 completely new products, and 20 product reformulations and flavor extensions, and 11 new products during the year ended December 31, 2019, which included 6 completely new products, and 5 product reformulations and flavor extensions.

Management continually assesses and analyzes developing market trends to detect and proactively address what they believe are areas of unmet or growing demand that represent an opportunity for the Company and, where deemed appropriate, attempt to introduce new products and/or packaging solutions in direct response to meet that demand.

Sales, Marketing and Distribution

NDS Products

NDS Products are sold through more than 750 GNC franchise locations located throughout the United States. The Company also distributes NDS Products to additional franchise locations in other countries. On May 1, 2014, the Company transitioned the majority of its distribution of NDS Products to GNC’s centralized distribution platform for all NDS Products, excluding protein products, which transitioned in mid-September 2014. Prior to the change, the majority of the Company’s revenue was realized upon direct shipment of NDS Products to individual franchise locations. For the years ended December 31, 2020 and 2019, the majority of NDS Product sales were through GNC’s centralized distribution platform.

Our sales and marketing efforts are designed to expand sales of NDS Products to additional GNC franchise locations both domestically and internationally. In addition, we have recently relaunched our Core Active brand as a new online-exclusive brand. The GNC domestic franchise market remains the core of our operations. Management is committed to continue to work collaboratively with GNC and its franchisees to build on our established track records of growth and innovation.

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iSatori Products

iSatori Products are distributed directly to consumers through the Company's own websites and through other e-commerce platforms such as Amazon.com, Inc. ("Amazon"), as well as through the specialty, drug and mass-market distribution channels. iSatori products are currently sold in over 17,000 retail locations.

In some cases, iSatori utilizes independent brokers, who work in conjunction with iSatori’s experienced sales employees and management to oversee the drug and mass-market channels. iSatori sells its products to mass-market merchandisers either directly or through distributors of nutritional supplement products. In addition to the Company’s online distribution channels for direct-to-consumer sales, major iSatori customers include BodyBuilding.com, CVS, GNC, Rite Aid, Vitamin Shoppe, Walgreens and Wal-Mart.

iSatori’s core strategy is to build and strengthen brands among consumers seeking nutritional supplement products with a reputation for quality and innovation. iSatori utilizes social media campaigns, coupons, radio, and online advertising, plus cooperative and other incentive programs, to build consumer awareness and generate trial and repeat purchases to drive sales revenue. Our marketing team regularly reviews the media mix for its effectiveness in creating consumer demand and the highest return on investment dollars.

Product Returns

We currently have a 30-day product return policy for NDS Products, which allows for a 100% sales price refund for the return of unopened and undamaged products purchased from us online through one of our websites. Product sold to GNC may be returned from store shelves or the distribution center in the event the product is damaged, short dated, expired or recalled. GNC maintains a customer satisfaction program that allows customers to return product to the store for credit or refund. Subject to certain terms and restrictions, GNC may require reimbursement from vendors for unsaleable returned product through either direct payment or credit against a future invoice. We also support a product return policy for iSatori Products, whereby customers can return product for credit or refund. Product returns can and do occur from time to time and can be material.

Competition

The nutrition industry is highly competitive, and the Company has many competitors that sell products similar to the Company’s products. Many of the Company’s competitors have significantly greater financial and human resources than our own. The Company seeks to differentiate its products and marketing from its competitors based on product quality, benefits, and functional ingredients. Patent and trademark applications that cover new formulas and embody new technologies are pursued whenever possible. While we cannot assure that such measures will block competitive products, we believe our continued emphasis on innovation and new product development targeted at the needs of the consumer will enable the Company to effectively compete in the marketplace.

Regulatory Matters

Our business is subject to varying degrees of regulation by a number of government authorities in the U.S., including the Federal Drug Administration (“FDA”), the Federal Trade Commission (“FTC”), the Consumer Product Safety Commission, the U.S. Department of Agriculture, and the Environmental Protection Agency. Various agencies of the states and localities in which we operate and in which our products are sold also regulate our business, such as the California Department of Health Services, Food and Drug Branch. The areas of our business that these and other authorities regulate include, among others:

● product claims and advertising;

● product labels;

● product ingredients; and

● how we manufacture, package, distribute, import, export, sell, and store our products.

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The FDA, in particular, regulates the formulation, manufacturing, packaging, storage, labeling, promotion, distribution and sale of vitamins and other nutritional supplements in the U.S., while the FTC regulates marketing and advertising claims. In August 2007, a new rule issued by the FDA went into effect requiring companies that manufacture, package, label, distribute or hold nutritional supplements to meet cGMPs to ensure such products are of the quality specified and are properly packaged and labeled. We are committed to meeting or exceeding the standards set by the FDA and believe we are currently operating within the FDA mandated cGMPs.

The FDA also regulates the labeling and marketing of dietary supplements and nutritional products, including the following:

● the identification of dietary supplements or nutritional products and their nutrition and ingredient labeling;

● requirements related to the wording used for claims about nutrients, health claims, and statements of nutritional support;

● labeling requirements for dietary supplements or nutritional products for which “high potency” and “antioxidant” claims are made;

● notification procedures for statements on dietary supplements or nutritional products; and

● premarket notification procedures for new dietary ingredients in nutritional supplements.

The Dietary Supplement Health and Education Act of 1994 (“DSHEA”) revised the provisions of the Federal Food, Drug and Cosmetic Act (“FDCA”) concerning the composition and labeling of dietary supplements, and defined dietary supplements to include vitamins, minerals, herbs, amino acids and other dietary substances used to supplement diets. DSHEA generally provides a regulatory framework to help ensure safe, quality dietary supplements and the dissemination of accurate information about such products. The FDA is generally prohibited from regulating active ingredients in dietary supplements as drugs unless product claims, such as claims that a product may heal, mitigate, cure or prevent an illness, disease or malady, trigger drug status.

DSHEA also permits statements of nutritional support to be included in labeling for nutritional supplements without FDA premarket approval. These statements must be submitted to the FDA within 30 days of marketing and must bear a label disclosure that includes the following: “This statement has not been evaluated by the FDA. This product is not intended to diagnose, treat, cure, or prevent any disease.” These statements may describe a benefit related to a nutrient deficiency disease, the role of a nutrient or nutritional ingredient intended to affect the structure or function in humans, the documented mechanism by which a nutrient or dietary ingredient acts to maintain such structure or function, or the general well-being from consumption of a nutrient or dietary ingredient, but may not expressly or implicitly represent that a nutritional supplement will diagnose, cure, mitigate, treat or prevent a disease. An entity that uses a statement of nutritional support in labeling must possess scientific evidence substantiating that the statement is truthful and not misleading. If the FDA determines that a particular statement of nutritional support is an unacceptable drug claim or an unauthorized version of a disease claim for a food product, or if the FDA determines that a particular claim is not adequately supported by existing scientific data or is false or misleading, we will be prevented from using the claim. 

In addition, DSHEA provides that so-called “third-party literature”, for example a reprint of a peer-reviewed scientific publication linking a particular nutritional ingredient with health benefits, may be used in connection with the sale of a nutritional supplement to consumers without the literature being subject to regulation as labeling. Such literature must not be false or misleading; the literature may not promote a particular manufacturer or brand of nutritional supplement; the literature must present a balanced view of the available scientific information on the nutritional supplement; if displayed in an establishment, the literature must be physically separate from the nutritional supplement; and the literature may not have appended to it any information by sticker or any other method. If the literature fails to satisfy each of these requirements, we may be prevented from disseminating it with our products, and any dissemination could subject our products to regulatory action as an illegal drug. Moreover, any written or verbal representation by us that would associate a nutrient in a product that we sell with an effect on a disease will be deemed evidence of intent to sell the product as an unapproved new drug, a violation of the FDCA. 

In December 2006, the Dietary Supplement and Nonprescription Drug Consumer Protection Act (“DSNDCPA”) was passed, which further revised the provisions of the FDCA. Under the act, manufacturers, packers or distributors whose name appears on the product label of a dietary supplement or nonprescription drug are required to include contact information on the product label for consumers to use in reporting adverse events associated with the product’s use and are required to notify the FDA of any serious adverse event report within 15 business days of receiving such report. Events reported to the FDA would not be considered an admission from a company that its product caused or contributed to the reported event. We are committed to meeting or exceeding the requirements of the DSNDCPA.

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We are also subject to a variety of other regulations in the U.S., including those relating to bioterrorism, taxes, labor and employment, import and export, the environment, and intellectual property. All of these regulations require significant financial and operational resources to ensure compliance, and we cannot assure that we will always be in compliance despite our best efforts to do so.

Our operations outside the U.S. are similarly regulated by various agencies and entities in the countries in which we operate and in which our products are sold. The regulations of these countries may conflict with those in the U.S. and may vary from country to country. The sale of our products in certain European countries is subject to the rules and regulations of the European Union, which may be interpreted differently among the countries within the European Union. In other markets outside the U.S., we may be required to obtain approvals, licenses or certifications from a country’s ministry of health or comparable agency before we begin operations or the marketing of products in that country. Approvals or licenses may be conditioned on the reformulation of our products for a particular market or may be unavailable for certain products or product ingredients. These regulations may limit our ability to enter certain markets outside the U.S. Similar to the costs of regulatory compliance in the U.S., foreign regulations require significant financial and operational resources to ensure compliance, and we cannot assure that we will always be in compliance despite our best efforts to do so. Our failure to maintain regulatory compliance within and outside the U.S. could impact our ability to sell our products, and thus, materially impact our financial position and results of operations.

Patents, Trademarks and Proprietary Rights

The Company regards intellectual property, including its trademarks, service marks, website URLs (domains) and other proprietary rights, as valuable assets and part of its brand equity. The Company believes that protecting such intellectual property is crucial to its business strategy. The Company pursues registration of the registrable trademarks, service marks and patents, associated with its key products in the United States, Canada, Europe and other places it distributes its products.

The Company formulates its products using proprietary ingredient formulations, flavorings and delivery systems. To further protect its product formulations and flavors, the Company enters into agreements with manufacturers that provide exclusivity to certain products formulations and delivery technologies. When appropriate, the Company will seek to protect its research and development efforts by filing patent applications for proprietary product technologies or ingredient combinations. We have abandoned or not pursued efforts to register certain other patents and marks identifying other items in our product line for various reasons, including the inability of some names to qualify for registration or patent applications to qualify for patent protection, and due to our abandonment of certain such products. All trademark registrations are protected for a period of ten years and then are renewable thereafter if still in use.

Employees

We had 23 and 28 full-time employees as of December 31, 2020 and 2019, respectively. In addition, the Company retains consultants for certain services on an as-needed basis. We consider our employee relations to be good.

Cost of Compliance with Environmental Laws

We have not incurred any costs associated with compliance with environmental regulations, nor do we anticipate any future costs associated with environmental compliance; however, no assurances can be given that we will not incur such costs in the future.

Available Information

As a public company, we are required to file our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A and other information (including any amendments) with the Securities and Exchange Commission (the “SEC”). The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. You can find our SEC filings at the SEC’s website at www.sec.gov.

Our Internet address is www.fitlifebrands.com. Information contained on our website is not part of this Comprehensive Annual Report. Our SEC filings (including any amendments) will be made available free of charge on www.fitlifebrands.com, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

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ITEM 1A - Risk Factors

An investment in our securities involves a high degree of risk. You should carefully consider the following information about these risks, together with the other information contained in this Comprehensive Annual Report, before investing in our securities. If any of the events anticipated by the risks described below occur, our results of operations and financial condition could be adversely affected, which could result in a decline in the market price of our securities, causing you to lose all or part of your investment.

Risk Factors Relating to our Business and Industry

The Company was profitable during the years ended December 31, 2020 and 2019. However, we may not be able to achieve sustained profitability. Our failure to sustain profitability or effectively manage growth could result in net losses, and therefore negatively affect our financial condition.

In the event of any decrease in sales, if we are not able to maintain growth, or if we are unable to effectively manage our growth, we may not be able to sustain profitability, and may incur net losses in the future, and those net losses could be material.  In the event we incur net losses, our financial condition could be negatively affected, and such affect could be material.

We are currently dependent on sales to GNC for a substantial portion of our total sales.

Sales to GNC’s centralized distribution platform, including indirect distribution of product to domestic and international franchisees, accounted for approximately 71% and 75% of our total sales for the years ended December 31, 2020 and 2019, respectively. GNC’s franchisees are not required to carry our products. In the event GNC ceases purchasing products from us, or otherwise reduces its purchases, our total revenue will be negatively impacted, and such impact could be material. Moreover, the transition to GNC’s centralized distribution system has had the effect of concentrating the majority of our accounts receivable with a single payor. Prior to the transition, we collected receivables directly from over 300 franchisees. Although the acquisition of iSatori has reduced the percentage of total accounts receivable attributable to GNC, we anticipate that GNC will continue to represent a substantial portion of all accounts receivable for the foreseeable future. In the event that our sales to GNC decrease, our results from operations will be negatively affected, and such effect may be material. 

Our ability to materially increase sales is largely dependent on the ability to increase sales of product to our wholesale partners as well as directly to the end consumer. We may invest significant amounts in these expansions with little success, and if we are unable to maintain good relationships with our existing customers and e-commerce platforms, our business could suffer.

We currently are focusing our marketing efforts on increasing the sale of products to GNC, both domestically and internationally, as well as increasing the number of retailers selling iSatori Products. In addition, we are focused on increasing our direct-to-consumer revenue through e-commerce platforms such as Amazon. We may not be able to successfully increase sales through these channels.  Moreover, unilateral decisions could be taken by our distributors, customers, or third-party e-commerce platforms such as Amazon, to discontinue carrying all or any of our products that they are carrying or selling at any time, which would cause our business to suffer. The inability to sell our products through e-commerce platforms, including Amazon, would materially impact our sales and operating results.

In addition, although we continued efforts to expand international distribution for our products in the years ended December 31, 2020 and 2019, we cannot assure that any further efforts to sell our products outside the United States will result in material increased revenue. We may need to overcome significant regulatory and legal barriers in order to continue to sell our products internationally, and we cannot give assurances as to whether we will be able to comply with such regulatory or legal requirements.

We are affected by extensive laws, governmental regulations, administrative determinations, court decisions and similar constraints, which can make compliance costly and subject us to enforcement actions by governmental agencies.

The formulation, manufacturing, packaging, labeling, holding, storage, distribution, advertising and sale of our products are affected by extensive laws, governmental regulations and policies, administrative determinations, court decisions and similar constraints at the federal, state and local levels, both within the United States and in any country where we conduct business. There can be no assurance that we or our wholesale partners will be in compliance with all of these regulations. A failure by us or our wholesale partners to comply with these laws and regulations could lead to governmental investigations, civil and criminal prosecutions, administrative hearings and court proceedings, civil and criminal penalties, injunctions against product sales or advertising, civil and criminal liability for the Company and/or its principals, bad publicity, and tort claims arising out of governmental or judicial findings of fact or conclusions of law adverse to the Company or its principals. In addition, the adoption of new regulations and policies or changes in the interpretations of existing regulations and policies may result in significant new compliance costs or discontinuation of product sales, and may adversely affect the marketing of our products, resulting in decreases in revenue.

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We are currently dependent on a limited number of independent suppliers and manufacturers of our products, which may affect our ability to deliver our products in a timely manner. If we are not able to ensure timely product deliveries, potential distributors and customers may not order our products, and our revenue may decrease.

We rely on a limited number of third parties to supply and manufacture our products. Our products are manufactured on a purchase order basis only, and manufacturers can terminate their relationships with us at will. These third-party manufacturers may be unable to satisfy our supply requirements, manufacture our products on a timely basis, fill and ship our orders promptly, provide services at competitive costs, or offer reliable products and services. The failure to meet any of these critical needs would delay or reduce product shipment and adversely affect our revenue, as well as jeopardize our relationships with our distributors and customers. In the event any of our third-party manufacturers were to become unable or unwilling to continue to provide us with products in required volumes and at suitable quality levels, we would be required to identify and obtain acceptable replacement manufacturing sources. There is no assurance that we would be able to obtain alternative manufacturing sources on a timely basis. Additionally, our third-party manufacturers source the majority of the raw materials for our products and, if we were to use alternative manufacturers, we may not be able to duplicate the exact taste and consistency profile of the product from the original manufacturer. An extended interruption in the supply of our products would likely result in decreased product sales and a corresponding decline in revenue. We believe that we can meet our current supply and manufacturing requirements with our current suppliers and manufacturers or with available substitute suppliers and manufacturers. Historically, we have not experienced any material delays or disruptions to our business caused by difficulties in obtaining our products from manufacturers.

COVID-19 could affect our sales and disrupt our operations and could have a material adverse impact on us.

The coronavirus (COVID-19) that was reported to have surfaced in Wuhan, China in December 2019 and that has now spread to other countries, including the U.S., could adversely impact our operations or those of our third-party suppliers, as well as our sales to wholesale partners. In addition, we rely on raw material suppliers located within and outside the U.S. who source their materials from China, among other countries. The extent to which the coronavirus impacts our operations, those of our third-party suppliers or our wholesale partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence. If the public avoids public spaces, including retail stores, or if we, or any of our third-party suppliers encounter any disruptions to our or their respective operations, facilities or stores, or if our wholesale partners’ retail stores were to partially or fully close due to the coronavirus, which has previously occurred in the case of certain GNC locations, then we or they may be prevented or delayed from effectively operating our or their business, respectively, and the manufacture, supply, distribution and sale of our products and our financial results could be adversely affected.

We are dependent on our third-party manufacturers to supply our products in the compositions we require, and we do not independently analyze each production lot of our products. Any errors in our product manufacturing could result in product recalls, significant legal exposure, and reduced revenue and the loss of distributors.

Although we require that our manufacturers verify the accuracy of the contents of our products, we do not have the expertise or personnel to monitor the production of products by these third parties. We rely primarily, with limited independent verification, on certificates of analysis regarding product content provided by our third-party suppliers and limited safety testing by them. We cannot be assured that these outside manufacturers will continue to reliably supply products to us in the compositions we require. Errors in the manufacture of our products could result in product recalls, significant legal exposure, adverse publicity, decreased revenue, and loss of distributors and endorsers.

We face significant competition from existing suppliers of products similar to ours. If we are not able to compete with these companies effectively, we may not be able to maintain profitability.

We face intense competition from numerous resellers, manufacturers and wholesalers of nutritional supplements similar to ours, including retail, online and mail-order providers. Many of our competitors have longer operating histories, more-established brands in the marketplace, revenue significantly greater than ours and better access to capital than we have. We anticipate that these competitors may use their resources to engage in various business activities that could result in reduced sales of our products. Companies with greater capital and research capabilities could re-formulate existing products or formulate new products that could gain wide marketplace acceptance, which could have a negative effect on our future sales. In addition, aggressive advertising and promotion by our competitors may require us to compete by lowering prices or by increasing our marketing expenditures, and the economic viability of our operations likely would be diminished.

Adverse publicity associated with our products, ingredients, or those of similar companies, could adversely affect our sales and revenue.

Our customers’ perception of the safety and quality of our products or even similar products distributed by others can be significantly influenced by national media attention, publicized scientific research or findings, product liability claims, and other publicity concerning our products or similar products distributed by others. Adverse publicity, whether or not accurate, that associates consumption of our products or any similar products with illness or other adverse effects, will likely diminish the public’s perception of our products. Claims that any products are ineffective, inappropriately labeled or have inaccurate instructions as to their use, could have a material adverse effect on the market demand for our products, including reducing our sales and revenue.

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The efficiency of nutritional supplement products is supported by limited conclusive clinical studies, which could result in less market acceptance of these products and lower revenue or lower growth rates in revenue.

Our nutritional supplement products are made from various ingredients, including vitamins, minerals, amino acids, herbs, botanicals, fruits, berries, and other substances for which there is a long history of human consumption. However, there is little long-term experience with human consumption of certain product ingredients or combinations of ingredients in concentrated form. Although we believe that all of our products fall within the generally known safe limits for daily doses of each ingredient contained within them, nutrition science is imperfect. Moreover, some people have peculiar sensitivities or reactions to nutrients commonly found in certain foods and may have similar sensitivities or reactions to nutrients contained in our products. Furthermore, nutrition science is subject to change based on new research. New scientific evidence may disprove the efficacy of our products or prove our products to have effects not previously known. We could be adversely affected by studies that may assert that our products are ineffective or harmful to consumers, or if adverse effects are associated with a competitor’s similar products.

Our products may not meet health and safety standards or could become contaminated.

We do not have control over the third parties involved in the manufacturing of our products and their compliance with government health and safety standards. Even if our products meet these standards, they could otherwise become contaminated. A failure to meet these standards or contamination could occur in our operations or those of our distributors or suppliers. This could result in expensive production interruptions, recalls and liability claims. Moreover, negative publicity could be generated from false, unfounded or nominal liability claims or limited recalls. Any of these failures or occurrences could negatively affect our business and financial performance.

The sale of our products involves product liability and related risks that could expose us to significant insurance and loss expense.

We face an inherent risk of exposure to product liability claims if the use of our products results in, or is believed to have resulted in, illness or injury. Most of our products contain combinations of ingredients, and there is little long-term experience with the effect of these combinations. In addition, interactions of these products with other products, prescription medicines and over-the-counter drugs have not been fully explored or understood and may have unintended consequences. Although our third-party manufacturers perform tests in connection with the formulations of our products, these tests are not designed to evaluate the inherent safety of our products.

Although we maintain product liability insurance, it may not be sufficient to cover all product liability claims, and any claims that may arise could have a material adverse effect on our business. The successful assertion or settlement of an uninsured claim, a significant number of insured claims or a claim exceeding the limits of our insurance coverage would harm us by adding further costs to our business and by diverting the attention of our senior management from the operation of our business. Even if we successfully defend a liability claim, the uninsured litigation costs and adverse publicity may be harmful to our business.

Any product liability claim may increase our costs and adversely affect our revenue and operating income. Moreover, liability claims arising from a serious adverse event may increase our costs through higher insurance premiums and deductibles and may make it more difficult to secure adequate insurance coverage in the future. In addition, our product liability insurance may fail to cover future product liability claims, which, if adversely determined, could subject us to substantial monetary damages.

If the products we sell do not have the healthful effects intended, our business may suffer.

In general, our products sold consist of nutritional supplements that are classified in the United States as “dietary supplements”, which do not currently require approval from the FDA or other regulatory agencies prior to sale. Although many of the ingredients in such products are vitamins, minerals, herbs and other substances for which there is a long history of human consumption, our products often contain innovative ingredients or combinations of ingredients. Although we believe such products and the combinations of ingredients in them are safe when taken as directed by us, there is little long-term experience with human or other animal consumption of certain of these ingredients or combinations thereof in concentrated form. The products could have certain side effects if not taken as directed or if taken by a consumer that has certain medical conditions. Furthermore, there can be no assurance that any of the products, even when used as directed, will have the effects intended or will not have harmful side effects.  

A slower growth rate in the nutritional supplement industry could lessen our sales and make it more difficult for us to sustain consistent growth.

The nutritional supplement industry has been growing at a strong pace over the past ten years. However, any reported medical concerns with respect to ingredients commonly used in nutritional supplements could negatively impact the demand for our products. Additionally, low-carb products, liquid meal replacements and similar competing products addressing changing consumer tastes and preferences could affect the market for certain categories of supplements. All these factors could have a negative impact on our sales growth.

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Our U.S. Net Operating Loss ("NOL") carryforwards may expire or could be substantially limited if we experience an ownership change as defined in the Internal Revenue Code (“IRC”) or if changes are made to the IRC. 

We have significant U.S. NOL carryforwards. Under federal tax laws, we can carry forward and use our NOLs to reduce our future U.S. taxable income and tax liabilities until such NOL carryforwards expire in accordance with the IRC of 1986, as amended. Our NOL carryforwards provide a benefit to us, if fully utilized, of significant future tax savings. However, our ability to use these tax benefits in future years will depend upon the amount of our federal and state taxable income. If we do not have sufficient federal and state taxable income in future years to use the benefits before they expire, we will permanently lose the benefit of the NOL carryforwards.

Additionally, Section 382 and Section 383 of the IRC provide an annual limitation on our ability to utilize our NOL carryforwards, as well as certain built-in losses, against the future U.S. taxable income in the event of a change in ownership, as defined under the IRC. While we have implemented a stockholder’s right plan to protect our NOL carryforwards, there is no assurance that we will not experience a change in ownership in the future as a result of changes in our stock ownership, and any such subsequent changes in ownership for purposes of the IRC could further limit our ability to use our NOL carryforwards.

If other changes are made to the IRC, they could impact our ability to utilize our NOLs. Accordingly, any such occurrences could adversely affect our financial condition, operating results and cash flows.

Compliance with changing corporate governance regulations and public disclosures may result in additional risks and exposures.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and new regulations from the SEC, have created uncertainty for public companies such as ours. These laws, regulations, and standards are subject to varying interpretations in many cases and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. As a result, our efforts to comply with evolving laws, regulations, and standards have resulted in, and are likely to continue to result in, increased expense and significant management time and attention.

Loss of key personnel could impair our ability to operate.

Our success depends on hiring, retaining and integrating senior management and skilled employees. We are currently dependent on certain current key employees, who are vital to our ability to grow our business and maintain profitability. As with all personal service providers, our officers can terminate their relationship with us at will. Our inability to retain these individuals may result in a reduced ability to operate our business.

Risk Factors Relating to Our Common Stock

A limited trading market currently exists for our Common Stock, and we cannot assure you that an active market will ever develop, or if developed, will be sustained.

There is currently a limited trading market for our Common Stock on the OTC: PINK marketplace, and an active trading market may not develop. Consequently, we cannot assure you when and if an active trading market in our Common Stock will be established, or whether any such market will be sustained or sufficiently liquid to enable holders of shares of our Common Stock to liquidate their investment in the Company.

The price of our securities could be subject to wide fluctuations and your investment could decline in value.

The market price of the securities of a company such as ours with little name recognition in the financial community and without significant revenue can be subject to wide price swings. For example, the closing price of our Common Stock has ranged from a high of $21.60 to a low of $7.70 during the year ending December 31, 2020. The market price of our securities may be subject to wide changes in response to quarterly variations in operating results, announcements of new products by us or our competitors, reports by securities analysts, volume trading, or other events or factors. In addition, the financial markets have experienced significant price and volume fluctuations for a number of reasons, including the failure of certain companies to meet market expectations. These broad market price swings, or any industry-specific market fluctuations, may adversely affect the market price of our securities.

Companies that have experienced volatility in the market price of their stock have been the subject of securities class action litigation. If we were to become the subject of securities class action litigation, it could result in substantial costs and a significant diversion of our management’s attention and resources.

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We may issue preferred stock with rights senior to the common stock.

Our Articles of Incorporation authorize the issuance of up to 10.0 million shares of preferred stock in the aggregate. Currently, 1,000 shares of Series A Preferred Stock, par value $0.01 per share, are authorized (the “Series A Preferred”) and, therefore, could be issued without shareholder approval. For purposes of enacting its Tax Benefits Preservation Plan, dated February 26, 2021, by and between the Company and Colonial Stock (the "Tax Benefits Plan"), the Company's transfer agent, the Company has designating a new class of Preferred Stock as Series B Junior Participating Preferred Stock, par value $0.01, which shall have rights, powers, and preferences similar to those of the Company's Common Stock. However, the rights and preferences of any class or series of preferred stock, were we to designate or issue additional shares of preferred stock, would be established by our Board of Directors in its sole discretion and may have dividend, voting, liquidation and other rights and preferences that are senior to the rights of our Common Stock.

You should not rely on an investment in our Common Stock for the payment of cash dividends.

We have never paid cash dividends on our Common Stock and do not anticipate paying any cash dividends in the foreseeable future. You should not make an investment in our Common Stock if you require dividend income. Any return on investment in our Common Stock would only come from an increase in the market price of our stock, which is uncertain and unpredictable.

Our Chair of the Board of Directors, Chief Executive Officer and significant shareholder may have certain personal interests that may affect the Company.

Due to the securities held by Sudbury Capital Fund, LP ("Sudbury") and Dayton Judd, the Company’s Chair of the Board and Chief Executive Officer, Mr. Judd may be deemed to be the beneficial owner of a majority of the Company’s outstanding voting securities. Consequently, Mr. Judd individually, and together with Sudbury, as stockholders acting together, can significantly influence all matters requiring approval by our stockholders, including the election of directors and significant corporate transactions, such as mergers or other business transactions requiring shareholder approval. This concentration of ownership may have effects such as delaying or preventing a change in control of the Company that may be favored by other shareholders or preventing transactions in which shareholders might otherwise recover a premium for their shares over current market prices. In addition, as a result of Mr. Judd’s position as Chair of the Board and Chief Executive Officer, he and/or Sudbury may have the ability to exert influence over both the actions of the Board of Directors, as well as the execution of management’s plans.

SHOULD ONE OR MORE OF THE FOREGOING RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD THE UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, EXPECTED, INTENDED OR PLANNED.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

None.

ITEM 2.    PROPERTIES

The Company, including its subsidiaries, leases its headquarters in Omaha, Nebraska.   Management believes that the Company's site is adequate to support the business and suitable for present purposes, and the property and equipment have been well maintained.

ITEM 3.    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’ directors or officers in their capacities as such, in which an adverse decision could have a material adverse effect.

ITEM 4.    MINE SAFETY DISCLOSURES

None.

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PART II

ITEM 5.    MARKET FOR REGISTRANT’S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUERS PURCHASES OF EQUITY SECURITIES

Our Common Stock is traded in the over-the-counter market, and quoted on the OTC: PINK market under the symbol “FTLF”.

As of December 31, 2020, there were 1,060,818 shares of Common Stock outstanding, and there were 34 shareholders of record of the Company’s Common Stock in addition to an undetermined number of holders whose shares are held in “street name.”

The following table sets forth for the periods indicated the high and low closing prices for our Common Stock.

	High		Low
Fiscal Year 2020
First Quarter (January - March 2020)	$	14.75	$	7.70
Second Quarter (April - June 2020)	$	12.25	$	9.00
Third Quarter (July - September 2020)	$	14.96	$	9.91
Fourth Quarter (October - December 2020)	$	21.60	$	14.00

	High		Low
Fiscal Year 2019
First Quarter (January - March 2019)	$	5.65	$	4.00
Second Quarter (April - June 2019)	$	10.00	$	5.40
Third Quarter (July - September 2019)	$	11.05	$	8.50
Fourth Quarter (October - December 2019)	$	14.10	$	9.69

On March 25, 2021, the closing price of our Common Stock was $24.04 per share.

Recent Sales of Unregistered Securities

No unregistered securities were issued during the fiscal year that were not previously reported in a Quarterly Report on Form 10-Q or Current Report on Form 8-K.

During the year ended December 31, 2020, the Company repurchased 11,900 shares of Common Stock under the Share Repurchase Program, or approximately 1% of the issued and outstanding shares of the Company’s Common Stock, through private transactions. As of December 31, 2020, we were authorized to repurchase up to $2.5 million, of which approximately $1.1 million remained available.

Subsequent to the end of the fiscal year, on February 1, 2021, the Board approved an additional amendment to the previously authorized Share Repurchase Program. Under the terms of the amendment, the Company is authorized to repurchase up to $5.0 million of securities issued by the Company. Common Stock repurchase activity under our publicly announced Share Repurchase Program during each quarter of 2020 was as follows:

	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
First quarter ended March 31, 2020		11,900	$	14.35		11,900	$	1,110,917
Second quarter ended June 30, 2020		-		-		-		1,110,917
Third quarter ended September 30, 2020		-		-		-		1,110,917
Fourth quarter ended December 31, 2020		-		-		-		1,110,917
Subtotal		11,900	$	14.35		11,900

Transfer Agent

Our transfer agent and registrar for the Common Stock is Colonial Stock Transfer located in Salt Lake City, Utah.

Securities Authorized for Issuance under Equity Compensation Plans

For a discussion of our equity compensation plans, please see Item 12 of this Comprehensive Annual Report.

ITEM 6.    SELECTED FINANCIAL DATA

Not a required disclosure for Smaller Reporting Companies.

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ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The following is management’s discussion and analysis of certain significant factors that have affected our financial position and operating results during the periods included in the accompanying consolidated financial statements, as well as information relating to the plans of our current management. This report includes forward-looking statements. Generally, the words “believes”, “anticipates”, “may”, “will”, “should”, “expect”, “intend”, “estimate”, “continue”, and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this Comprehensive Annual Report or other reports or documents we file with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes thereto and other financial information contained elsewhere in this Comprehensive Annual Report.

Restatement of Previously Issued Consolidated Financial Statements

We have restated our previously issued consolidated Financial Statements contained in this Comprehensive Annual Report. Refer to the section entitled “Explanatory Note” preceding Item 1 hereof for background on the restatement, the fiscal periods impacted, control considerations, and other information.

In addition, we have restated certain previously reported financial information at December 31, 2019, and for the fiscal year ended December 31, 2019 in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), including but not limited to information within this MD&A in the sections entitled “Consolidated Results of Operations”, and “Non-GAAP Financial Measures”. We have also included certain restated quarterly information in the section within this MD&A entitled “Supplemental Quarterly Financial Information”. See Note 2 to the notes to the audited consolidated financial statements in this Comprehensive Annual Report for additional information related to the restatement, including descriptions of the misstatements and the impacts on our consolidated financial statements.

Within this MD&A, we have restated our previously issued unaudited condensed consolidated statements of operations for the three months ended March 31, 2020, for the three and six months ended June 30, 2020 and for the three and nine months ended September 30, 2020; and condensed consolidated statements of cash flows for the three months ended March 31, 2020, for the six months ended June 30, 2020 and for the nine months ended September 30, 2020 (the “Prior Quarterly Financial Statements”), to reflect the restatement more fully described in Note 11 to the notes to the audited consolidated financial statements in this Comprehensive Annual Report. Within this MD&A, we revised our Prior Quarterly Financial Statements. The financial information that has been previously filed or otherwise reported for the Prior Quarterly Financial Statements is superseded by the information in this Comprehensive Annual Report. See Note 11 in the notes to the audited consolidated financial statements in this Comprehensive Annual Report for additional information on the restatement and the related financial statement impact

Critical Accounting Policies

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“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.

Those estimates and assumptions include estimates for reserves of uncollectible accounts receivable, allowance for product returns, sales returns and incentive programs, allowance for inventory obsolescence, depreciable lives of property and equipment, analysis of impairment of goodwill, realization of deferred tax assets, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.

Accounts Receivable and Allowance for Doubtful Accounts

The Company’s accounts receivable balance is related to trade receivables and are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company will maintain allowances for doubtful accounts, estimating losses resulting from the inability of its customers to make required payments for products. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped in categories by the amount of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged off against the allowance when it is probable the receivable will not be recovered.

The determination of collectability of the Company’s accounts receivable requires management to make frequent judgments and estimates in order to determine the appropriate amount of allowance needed for doubtful accounts. The Company’s allowance for doubtful accounts is estimated to cover the risk of loss related to accounts receivable. This allowance is maintained at a level we consider appropriate based on historical and other factors that affect collectability. These factors include historical trends of write-offs, recoveries and credit losses; the careful monitoring of customer credit quality; and projected economic and market conditions. Different assumptions or changes in economic circumstances could result in changes to the allowance.  

Total allowance for doubtful accounts as of December 31, 2020 and 2019 amounted to $51,000 and $27,000, respectively.

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Product Returns, Sales Incentives and Other Forms of Variable Consideration

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.

We currently have a 30-day product return policy for NDS Products, which allows for a 100% sales price refund for the return of unopened and undamaged products purchased from us online through one of our websites or e-commerce platforms. Product sold to GNC may be returned from store shelves or the distribution center in the event product is damaged, short dated, expired or recalled.

GNC maintains a customer satisfaction program which allows customers to return product to the store for credit or refund. Subject to certain terms and restrictions, GNC may require reimbursement from vendors for unsaleable returned product through either direct payment or credit against a future invoice. We also support a product return policy for iSatori Products, whereby customers can return product for credit or refund. Product returns can and do occur from time to time and can be material.

For the sale of goods with a right of return, the Company estimates variable consideration using the most likely amount method and recognizes revenue for the consideration it expects to be entitled to when control of the related product is transferred to the customers and records a product returns liability for the amount it expects to credit back its customers. Under this method, certain forms of variable consideration are based on expected sell-through results, which requires subjective estimates. These estimates are supported by historical results as well as specific facts and circumstances related to the current period. In addition, the Company recognizes an asset included in Inventories, net and a corresponding adjustment to Cost of Goods Sold for the right to recover goods from customers associated with the estimated returns. The product returns liability and corresponding asset include estimates that directly impact reported revenue. These estimates are calculated based on a history of actual returns, estimated future returns and information provided by customers regarding their inventory levels. Consideration of these factors results in an estimate for anticipated sales returns that reflects increases or decreases related to seasonal fluctuations. In addition, as necessary, product returns liability and the related assets may be established for significant future known or anticipated events. The types of known or anticipated events that are considered, and will continue to be considered, include, but are not limited to, changes in the retail environment and the Company's decision to continue to support new and existing products.

Information for product returns is received on regular basis and adjusted for accordingly. Adjustments for returns are based on factual information and historical trends for both NDS products and iSatori products and are specific to each distribution channel. We monitor, among other things, remaining shelf life and sell-through data on a weekly basis. If we determine there are any risks or issues with any specific products, we accrue sales return allowances based on management’s assessment of the overall risk and likelihood of returns in light of all information available.

Regarding incentives, the Company accrues an estimate of 3% for promotional expense it calls “vendor funded discounts” at the time of sale. The expense is recorded as a contra-revenue account, and the expected incentive costs are never included in accounts receivable. As such, an allowance account for incentives is not required or necessary. Actual incentive costs are reconciled to the estimate on a regular basis.

Total allowance for product returns, sales returns and incentive programs as of December 31, 2020 and 2019 amounted to $345,000 and $231,000, respectively.

Inventory

The Company’s inventory is carried at the lower of cost or net realizable value using the first-in, first-out (“FIFO”) method. The Company evaluates the need to record adjustments for inventory on a regular basis. Company policy is to evaluate all inventories including components and finished goods for all of its product offerings across all of the Company’s operating subsidiaries.

Total allowance for expiring, excess and slow-moving inventory items as of December 31, 2020 and 2019 amounted to $56,000 and $130,000, respectively.

Goodwill

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment (“ASU 2017-04”). 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.

There were no impairment charges incurred during the year ended December 31, 2020.

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Revenue Recognition

The Company’s revenue is comprised of sales of nutritional supplements, primarily to GNC. 

The Company accounts for revenues in accordance with FASB’s Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). 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 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 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.

Control of products we sell transfers to customers upon shipment from our facilities or delivery to our customers, 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 a promised service 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.

Stock-Based Compensation.

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services rendered. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the FASB where the value of the award is measured on the date of grant and recognized as compensation on the straight-line basis over the vesting period.

From prior periods until December 31, 2018, the Company accounted for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date.

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). The guidance was issued to simplify the accounting for share-based transactions by expanding the scope of ASU 2018-07 from only being applicable to share-based payments to employees to also include share-based payment transactions for acquiring goods and services from nonemployees. As a result, nonemployee share-based transactions are measured by estimating the fair value of the equity instruments at the grant date, taking into consideration the probability of satisfying performance conditions. We adopted ASU 2018-07 on January 1, 2019. The adoption of the standard did not have a material impact on our financial statements for the year ended December 31, 2019 or the previously reported financial statements.

The fair value of the Company’s stock option and warrant grants are estimated using the Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model and based on actual experience. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.

Recent Accounting Pronouncements

See Note 2 of the Notes to the Consolidated Financial Statements included in this Comprehensive Annual Report for a description of recent accounting pronouncements believed by management to have a material impact on our present or future financial statements.

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Results of Operations

	As Restated			As Restated
	December 31, 2020			December 31, 2019			Change			%
Revenue	$	22,111,000		$	19,136,000		$	2,975,000		16	%
Cost of goods sold		(12,574,000	)		(11,155,000	)		(1,419,000	)	13	%
Gross profit		9,537,000			7,981,000			1,556,000		19	%
General and administrative expense		(3,047,000	)		(3,049,000	)		2,000		0	%
Selling and marketing expense		(2,106,000	)		(2,387,000	)		281,000		-12	%
Depreciation and amortization		(38,000	)		(52,000	)		14,000		-27	%
Total operating expenses		(5,191,000	)		(5,488,000	)		297,000		-5	%
Income from operations		4,346,000			2,493,000			1,853,000		74	%
Other income (expense)		64,000			124,000			(60,000	)	-48	%
Provision for income tax		4,415,000			(7,000	)		4,422,000		n/m
Net income	$	8,825,000		$	2,610,000		$	6,215,000		238	%

See Note 2 to the notes to the audited consolidated financial statements in this Comprehensive Annual Report for additional information.

Fiscal Year Ended December 31, 2020 Compared to Fiscal Year Ended December 31, 2019

Net Sales. Revenue for the year ended December 31, 2020 increased 16% to $22,111,000 as compared to $19,136,000 for the year ended December 31, 2019. Revenue for the year ended December 31, 2020 compared to the prior year reflects improvements in our wholesale business and growth in our online direct-to-consumer offering.  The Company believes that a portion of the revenue growth during the fourth quarter represents an acceleration of purchasing by certain wholesale customers that would typically occur in the first quarter.

Online revenue during the year ended December 31, 2020 was approximately 20% of total revenue, compared to roughly 13% of total revenue during the same twelve-month period in 2019. Due to the ongoing shift to online purchasing by consumers, including additional growth arising from the effects of the COVID-19 pandemic as a result of the shutdown of various retail outlets, e-commerce sales have accounted for a growing percentage of our domestic revenue. We expect this trend to continue at least through most of 2021. Although no assurances can be given, management believes that online revenue will continue to increase in subsequent periods relative to prior comparable periods given management’s focus on higher margin online sales.

The Company continually reformulates and introduces new products, as well as seeks to increase both the number of stores and number of approved products that can be sold within the GNC franchise system that comprise its domestic and international distribution footprint. Management also believes that its focus on developing its e-commerce capabilities will drive additional incremental sales in the short-term, while yielding substantial benefits in the longer-term. 

Cost of Goods Sold. Cost of goods sold for the year ended December 31, 2020 increased 13% to $12,574,000 as compared to $11,155,000 for the year ended December 31, 2019. This increase is principally attributable to higher revenue.

Gross Profit Margin. Gross profit for the year ended December 31, 2020 increased to $9,537,000 as compared to $7,981,000 for the year ended December 31, 2019. Gross margin for the year ended December 31, 2020 increased to 43.1% from 41.7% for the comparable period last year. The increase in gross profit during the year ended December 31, 2020 is principally attributable to higher revenue and a larger percentage of higher-margin direct-to-consumer sales.

General and Administrative Expense. General and administrative expense for the year ended December 31, 2020 decreased by $2,000 to $3,047,000 as compared to $3,049,000 for the year ended December 31, 2019.

Selling and Marketing Expense. Selling and marketing expense for the year ended December 31, 2020 decreased to $2,106,000 as compared to $2,387,000 for the year ended December 31, 2019. This decrease primarily reflects lower sales-related travel expenses due to COVID-19.

Depreciation and Amortization. Depreciation and amortization for the year ended December 31, 2020 decreased to $38,000 from $52,000 during the same period in 2019. The decrease is principally attributable to a reduction in depreciation expense due to certain assets becoming fully depreciated. 

Net Income. We generated a net income of $8,825,000 for the year ended December 31, 2020, as compared to a net income of $2,610,000 for the year ended December 31, 2019. The increase in net income for the year ended December 31, 2020 compared to the same period in 2019 was primarily attributable to a combination of higher revenue, higher gross margins, lower operating expense, and an income tax benefit resulting from removing a substantial portion of the reserve against our deferred tax assets. 

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Non-GAAP Measures

The financial presentation below contains certain financial measures defined as “non-GAAP financial measures” by the SEC, including non-GAAP EBITDA and adjusted non-GAAP EBITDA. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in this Comprehensive Annual Report in accordance with GAAP.

As presented below, non-GAAP EBITDA excludes interest, income taxes, and depreciation and amortization. Adjusted non-GAAP EBITDA excludes, in addition to interest, taxes, depreciation and amortization, equity-based compensation and impairment charges. The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expense and other items that may not be indicative of its core operating results and business outlook. The Company believes that the inclusion of non-GAAP measures in the financial presentation below allows investors to compare the Company’s financial results with the Company’s historical financial results and is an important measure of the Company’s comparative financial performance.

	Year Ended December 31,
	2020			2019
	As Restated			As Restated
	(Unaudited)			(Unaudited)
Net income	$	8,825,000		$	2,610,000
Interest expense (net)		6,000			47,000
Provision for income taxes		(4,415,000	)		7,000
Depreciation and amortization		38,000			52,000
EBITDA		4,454,000			2,716,000
Non-cash and non-recurring adjustments
Stock compensation expense		78,000			182,000
Non-recurring gains		(70,000	)		(171,000	)
Adjusted EBITDA	$	4,462,000		$	2,727,000

Liquidity and Capital Resources

As of December 31, 2020, the Company had working capital of $7,615,000, compared to working capital of $2,654,000 at December 31, 2019. Our principal sources of liquidity at December 31, 2020 consisted of $6,336,000 of cash and $1,797,000 of accounts receivable. The increase in working capital is principally attributable to a higher cash balance driven by cash flows from operating activities during fiscal 2020. 

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 Chair of the Board and Chief Executive Officer, in the principal amount of $600,000, with an initial advance to the Company in the amount of $300,000. 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 on the Notes including accrued but unpaid interest thereon, of $615,000.

On September 24, 2019, the Company entered into entered into a Line of Credit Agreement with the Lender providing the Company with a $2.5 million revolving 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 the Maturity Date, or unless renewed at maturity upon approval by the Company’s Board 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 and in anticipation of an expected negative impact on sales to GNC and our other wholesale customers resulting from the COVID-19 outbreak.

On August 4, 2020, the Company and the Lender amended the Line of Credit Agreement to extend the Maturity Date to September 23, 2021. The amendment also added a LIBOR floor of 75 bps to the Line of Credit Agreement. All other terms of the Line of Credit remain unchanged.

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On April 27, 2020, the Company received proceeds from a loan in the amount of $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 1.0% 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.  The Company did not provide any collateral or guarantees for the PPP Loan, nor did the Company pay any fees to obtain the PPP Loan. Through December 31, 2020, the Company had deferred interest payments of $3,000, which amount had been expensed and included in accrued liabilities.

Subsequent to the end of the fiscal year, the Company was informed by the PPP Lender and the SBA that the full amount balance of the PPP Loan, including accrued interest, was forgiven on January 15, 2021.

The Company has historically financed its operations primarily through cash flow from operations and equity and debt financings. The Company has also provided for its cash needs by issuing Common Stock, options and warrants for certain operating costs, including consulting and professional fees. The Company currently anticipates that cash derived from operations and existing cash resources, along with available borrowings under the new Line of Credit, will be sufficient to provide for the Company’s liquidity for the next twelve months.

The Company is dependent on cash flow from operations and amounts available under the Line of Credit to satisfy its working capital requirements. No assurances can be given that cash flow from operations and/or the Line of Credit will be sufficient to provide for the Company’s liquidity for the next twelve months. Should the Company be unable to generate sufficient revenue in the future to achieve positive cash flow from operations, and/or should capital be unavailable under the terms of the Line of Credit, additional working capital will be required. Management currently has no intention to raise additional working capital through the sale of equity or debt securities and believes that the cash flow from operations and available borrowings under the Line of Credit will provide sufficient capital necessary to operate the business over the next twelve months. In the event the Company fails to achieve positive cash flow from operations, additional capital is unavailable under the terms of the Line of Credit, and management is otherwise unable to secure additional working capital through the issuance of equity or debt securities, the Company’s business would be materially and adversely harmed. 

Cash Provided by Operating Activities

Net cash provided by operating activities was $5,721,000 during the fiscal year ended December 31, 2020, compared to net cash provided by operating activities of $2,261,000 for the year ended December 31, 2019. The increase in cash provided by operating activities is primarily attributable to higher revenue and gross margins driven particularly by the Company’s growing direct-to-consumer business.

Cash Provided by Investing Activities

Cash provided by investing activities for the fiscal year ended December 31, 2020 was $0 as compared to $0 provided by investing activities during the year ended December 31, 2019.

Cash Used in Financing Activities

Cash provided by financing activities for the year ended December 31, 2020 was $350,000 as compared to cash used in financing of ($2,255,000) during the year ended December 31, 2019. Debt repayments and stock repurchases during 2019 that did not recur in 2020 account for the primary difference.

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Supplemental Unaudited Quarterly Financial Information

The following unaudited quarterly financial information is presented to illustrate the effects of the corrections of misstatements to previously reported quarterly financial information as a result of the restatement. Such corrections of misstatements are described in more detail in Note 2, Restatement of Previously Issued Consolidated Financial Statements, in Item 8, Financial Statements and Supplementary Data. The following unaudited quarterly financial information for the fiscal quarters ended September 30, 2020, June 30, 2020, March 31, 2020, September 30, 2019, June 30, 2019, and March 31, 2019 is derived from our restated audited consolidated financial statements for the year ended December 31, 2020 and our restated audited consolidated financial statements for the year ended December 30, 2019. This unaudited quarterly financial information should be read in conjunction with the other sections of this Comprehensive Annual Report, including the consolidated financial statements and related notes contained in Item 8, Financial Statements and Supplementary Data.

Management's Discussion and Analysis of Financial Condition and Results of Operations - September 30, 2020

Restated

Comparison of the three and nine months ended September 30, 2020 to the three and nine months ended September 30, 2019

	Three months ended												Nine months ended
	As Restated			As Restated									As Restated			As Restated
	September 30, 2020 (Unaudited)			September 30, 2019 (Unaudited)			Change			%			September 30, 2020 (Unaudited)			September 30, 2019 (Unaudited)			Change			%
Revenue	$	6,345,000		$	5,726,000		$	619,000			11	%	$	15,877,000		$	15,517,000		$	360,000			2	%
Cost of goods sold		(3,748,000	)		(3,262,000	)		(486,000	)		15	%		(8,934,000	)		(9,002,000	)		68,000			-1	%
Gross profit		2,597,000			2,464,000			133,000			5	%		6,943,000			6,515,000			428,000			7	%
Operating expenses		(1,202,000	)		(1,377,000	)		175,000			-13	%		(4,064,000	)		(4,141,000	)		(77,000			-2	%
Income from operations		1,395,000			1,087,000			308,000			28	%		2,879,000			2,374,000			505,000			21	%
Other income (expense)		2,000			15,000			(13,000	)					63,000			124,000			(61,000	)
Provision for income tax		(17,000	)		-			(17,000	)					64,000			(6,000	)		70,000
Net income	$	1,380,000		$	1,102,000		$	278,000			25	%	$	3,006,000		$	2,492,000		$	514,000			21	%

Net Sales.  Revenue for the three months ended September 30, 2020 increased 11% to $6,345,000 as compared to $5,726,000 for the three months ended September 30, 2019. Revenue for the nine months ended September 30, 2020 increased 2% to $15,877,000 as compared to $15,517,000 for the nine months ended September 30, 2019.

The increase in revenue for the three-month period ended September 30, 2020 compared to the prior three-month period is principally due to higher wholesale revenue driven by a restocking of our products with GNC subsequent to its bankruptcy filing as well as continued growth in our direct-to-consumer online sales.

Online revenue during the three and nine months ended September 30, 2020 was approximately 19% and 20% of total revenue, respectively, compared to approximately 11% of total revenue during both the three and nine months ended September 30, 2019.

The recent COVID-19 outbreak has created significant economic uncertainty and volatility, which has impacted our business and operations early in the pandemic, including those of our third-party suppliers and our wholesale partners. Although the early impact of the pandemic has largely been offset by revenue attributable to online distribution channels and the lifting of stay-at-home orders during the recent quarter, a resurgence of COVID-19 may result in additional stay-at-home orders, which may affect our operating results and financing condition, the duration of which cannot be determined at this time.

Cost of Goods Sold.  Cost of goods sold for the three months ended September 30, 2020 increased to $3,748,000 as compared to $3,262,000 for the three months ended September 30, 2019. Cost of goods sold for the nine months ended September 30, 2020 decreased to $8,934,000 as compared to $9,002,000 for the nine months ended September 30, 2019.  The increase in cost of goods sold during the three-month period ended September 30, 2020 is primarily attributable to higher revenue. The decrease in cost of goods sold during the nine-month period ended September 30, 2020 is due to a greater mix of revenue coming from our higher-margin direct-to-consumer business, as well as lower revenues for the second quarter of 2020 when compared to the same period of 2019 due to the impact of COVID-19.

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Gross Profit.  Gross profit for the three months ended September 30, 2020 increased to $2,597,000 as compared to $2,464,000 for the three months ended September 30, 2019. Gross profit for the nine months ended September 30, 2020 increased to $6,943,000 as compared to $6,515,000 for the nine months ended September 30, 2019. The increase during the three- and nine-month periods is principally attributable to a combination of higher revenue and a greater mix of direct-to-consumer sales.

Gross margin for the three months ended September 30, 2020 decreased to 40.9% compared to 43.0% during the same period last year. Gross margin for the nine months ended September 30, 2020 was 43.7% compared to 42.0% for the same period last year.

General and Administrative Expense. General and administrative expense for the three months ended September 30, 2020 decreased to $684,000 as compared to $782,000 for the three months ended September 30, 2019. For the nine-month period ended September 30, 2020, general and administrative expense increased to $2,418,000 from $2,352,000 during the same period in the prior year. The increase in the nine-month period ended September 30, 2020 reflects a write-off of approximately $354,000 for bad debt expense related to the GNC bankruptcy, as more particularly discussed below. Excluding the one-time write-off of bad debt, the decline in general and administrative expense reflects the Company’s continuing focus on cost control.

Selling and Marketing Expense.  Selling and marketing expense for the three months ended September 30, 2020 decreased to $509,000 as compared to $583,000 for the three months ended September 30, 2019. Selling and marketing expense for the nine months ended September 30, 2020 decreased to $1,615,000 as compared to $1,749,000 for the nine months ended September 30, 2019. The decreases in both the three- and nine-month periods ended September 30, 2019 reflect continuing efforts to optimize our sales and marketing expense.

Depreciation and Amortization Expense.  Depreciation and amortization expense for the three months ended September 30, 2020 decreased to $9,000 as compared to $12,000 for the three months ended September 30, 2019. Depreciation and amortization for the nine months ended September 30, 2020 decreased to $31,000 as compared to $40,000 for the nine months ended September 30, 2019. The decrease in both periods was primarily attributable to a reduction in depreciation expense due to certain assets becoming fully depreciated.

Net Income (Loss).  We generated net income of $1,380,000 for the three-month period ended September 30, 2020 as compared to $1,102,000 for the three months ended September 30, 2019. We generated net income of $3,006,000 for the nine-month period ended September 30, 2020 as compared to net income of $2,492,000 for the nine months ended September 30, 2019. The increase in net income for both the three- and nine-month periods ended September 30, 2020 is primarily due to a combination of higher revenue, increasing direct-to-consumer sales, and cost reduction.

Liquidity and Capital Resources  

At September 30, 2020, we had positive working capital of approximately $6,120,000, compared to $2,654,000 at December 31, 2019. Our principal sources of liquidity at September 30, 2020 consisted of $4,090,000 of cash and $2,010,000 of accounts receivable.

The Company’s largest customer, GNC, filed for Chapter 11 bankruptcy protection on June 23, 2020. At the time of the filing, GNC owed the Company approximately $1.2 million.

Under US bankruptcy law, payment for product received by a customer in the 20 days preceding a bankruptcy filing is eligible for a priority administrative claim under Section 503(b)(9) of the US Bankruptcy Code. Generally, as long as the debtor company successfully emerges from Chapter 11, those claims are paid in full at the time the debtor emerges from bankruptcy. Claims associated with product received more than 20 days pre-petition are typically considered general unsecured claims and are subject to impairment through the bankruptcy process.

At the time of the filing, the majority of the Company’s receivables from GNC related to product that was delivered in the 20 days leading up to the bankruptcy filing. Subsequent to the end of the quarter, the Company was paid $829,000 in full settlement of its priority administrative claim.

Approximately $354,000 of the Company’s receivables related to product delivered to GNC more than 20 days pre-petition and is therefore subject to impairment. This claim remains unsettled. While a partial recovery on such receivables is possible, the Company elected to write off the full amount of those receivables during the second quarter of 2020.

Subsequent to the GNC bankruptcy filing, the Company made the decision to continue to sell product to GNC on terms more favorable to the Company. Payment for all post-petition orders is paid in the ordinary course of business and is not subject to the bankruptcy process.

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The Company has historically financed its operations primarily through cash flow from operations and equity and debt financings. The Company has also provided for its cash needs by issuing Common Stock, options and warrants for certain operating costs, including consulting and professional fees. The Company currently anticipates that cash derived from operations and existing cash resources, along with available borrowings under the Line of Credit, will be sufficient to provide for the Company’s liquidity for the next twelve months.

The Company is dependent on cash flow from operations and, to a lesser extent, amounts available under the Line of Credit to satisfy its working capital requirements. While management currently believes it has adequate cash and cash flow from operations to satisfy its working capital requirements during the next twelve months, no assurances can be given. Should the Company suffer extended losses and exhaust its current cash reserves, and/or be unable to generate sufficient revenue in the future to achieve positive cash flow from operations, and/or should capital be unavailable under the terms of the Line of Credit, additional working capital will be required. Management currently has no intention to raise additional working capital through the sale of equity or debt securities and believes that its available cash and the cash flow from operations and available borrowings under the Line of Credit will provide sufficient capital necessary to operate the business over the next twelve months.

On December 26, 2018, the Company issued a line of credit promissory note to Sudbury Capital Fund, LP ("Sudbury") in the principal amount of $600,000 (the “Sudbury Note”), with an initial advance to the Company in the amount of $300,000. In addition, on December 26, 2018, the Company also issued a promissory note to Dayton Judd, the Company’s Chair of the Board and Chief Executive Officer, in the principal amount of $200,000 (the “Judd Note”) (together with the Sudbury Note, the “Notes”). On September 24, 2019, the Company repaid all outstanding balances due on the Notes including accrued but unpaid interest thereon, of $615,000.

On September 24, 2019, the Company entered into a Revolving Line of Credit Agreement (the "Line of Credit Agreement") with Mutual of Omaha Bank, subsequently acquired by CIT 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 amounts were 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 and in anticipation of an expected negative impact on sales to GNC and our other wholesale customers resulting from the COVID-19 outbreak.

On April 27, 2020, the Company received proceeds from the PPP Loan pursuant to the Loan Agreement in the amount of $449,700 from the PPP Lender, pursuant to approval by the SBA for the PPP Lender to fund the Company’s request for a loan under the SBA’s Paycheck Protection Program created as part of the recently enacted CARES Act administered by the SBA. 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 1.0% 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.

Cash Provided by Operations.  Our cash provided by operating activities for the nine months ended September 30, 2020 was $3,475,000, as compared to cash provided by operations of $1,724,000 for the nine months ended September 30, 2019.

Cash Provided by Investing Activities. There was no cash provided by or used in investing activities for the nine-month periods ended September 30, 2020 and 2019.

Cash Provided by (Used in) Financing Activities. Cash provided by financing activities for the nine months ended September 30, 2020 was $350,000 as compared to cash used in financing activities of $(1,426,000) during the nine months ended September 30, 2019.

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Management's Discussion and Analysis of Financial Condition and Results of Operations - June 30, 2020

Restated

Comparison of the three and six months ended June 30, 2020 to the three and six months ended June 30, 2019

	Three months ended												Six months ended
	(As Restated)			(As Restated)									(As Restated)			(As Restated)
	June 30, 2020 (Unaudited)			June 30, 2019 (Unaudited)			Change			%			June 30, 2020 (Unaudited)			June 30, 2019 (Unaudited)			Change			%
Revenue	$	2,990,000		$	4,302,000		$	(1,312,000	)		(30	)%	$	9,532,000		$	9,791,000		$	(259,000	)		(3	)%
Cost of goods sold		(1,554,000	)		(2,619,000	)		1,065,000			(41	)%		(5,186,000	)		(5,740,000	)		554,000			(10	)%
Gross profit		1,436,000			1,683,000			(247,000	)		(15	)%		4,346,000			4,051,000			295,000			7	%
Operating expenses		(1,446,000	)		(1,425,000	)		(21,000	)		1	%		(2,862,000	)		(2,764,000	)		(98,000	)		4	%
Income (loss) from operations		(10,000	)		258,000			(268,000	)		n/a			1,484,000			1,287,000			197,000			15	%
Other income (expense)		(5,000	)		124,000			(129,000	)		n/a			61,000			109,000			(48,000	)		(44	)%
Benefit (Provision) for income tax		40,000			(6,000	)		46,000			n/a			81,000			(6,000	)		87,000			n/a
Net income (loss)	$	25,000		$	376,000		$	(351,000	)		n/a		$	1,626,000		$	1,390,000		$	236,000			17	%

Net Sales.  Revenue for the three months ended June 30, 2020 decreased 30% to $2,990,000 as compared to $4,302,000 for the three months ended June 30, 2019. Revenue for the six months ended June 30, 2020 decreased 3% to $9,532,000 as compared to $9,791,000 for the six months ended June 30, 2019. The decrease in revenue for the three- and six-month periods ended June 30, 2020 compared to the prior three- and six-month period is principally due to the closure of some of our retail partners’ store locations and the stay-at-home orders caused by the COVID-19 pandemic. While these conditions are anticipated to persist as long as many of the states continue with stay-at-home orders, and non-essential businesses remain closed due to COVID-19, although no assurances can be given, management believes that the negative material impact on our sales experienced during the prior three- and six-month period will abate during the quarter ended September 30, 2020, resulting in a return to growth in subsequent periods.

The decrease in revenue attributable to our retail partners was partially offset by increased revenue from online channels. Online revenue during the three and six months ended June 30, 2020 was approximately 38% and 21% of total revenue, respectively, compared to approximately 14% and 12% of total revenue during the three and six months ended June 30, 2019.

The recent COVID-19 outbreak has created significant economic uncertainty and volatility, which has materially and negatively impacted our business and operations, including those of our third-party suppliers and our wholesale partners. In this regard, the duration and continued impact of the outbreak on our operating results and financial condition cannot be determined at this time, although management currently anticipates that stay-at-home restrictions and the impact of those restrictions on our retail and wholesale partners, including effects on their liquidity and ability to maintain current store counts, will continue to affect our results from operations, although management currently does not anticipate that the negative material impact on our sales experienced during the prior three- and six-month period will continue in at least the current quarter ended September 30, 2020.

Cost of Goods Sold.  Cost of goods sold for the three months ended June 30, 2020 decreased to $1,554,000 as compared to $2,619,000 for the three months ended June 30, 2019. Cost of goods sold for the six months ended June 30, 2020 decreased to $5,186,000 as compared to $5,740,000 for the six months ended June 30, 2019.  The decrease during the three- and six-month period is principally attributable to lower revenue reported during the quarter ended June 30, 2020.

Gross Profit.  Gross profit for the three months ended June 30, 2020 decreased to $1,436,000 as compared to $1,683,000 for the three months ended June 30, 2019. The decrease for the three-month period was primarily attributable to lower revenue.  Gross profit for the six months ended June 30, 2020 increased to $4,346,000 as compared to $4,051,000 for the six months ended June 30, 2019. The increase for the six- month period is attributable to expanding margins driven by increased growth in the Company’s online direct-to-consumer offering. 

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Gross margin for the three months ended June 30, 2020 increased to 48.0% compared to 39.1% during the same period last year. Gross margin for the six months ended June 30, 2020 was 45.6% compared to 41.4% for the same period last year. The increase was primarily attributable to a greater proportion of higher margin online revenue relative to wholesale revenue.

General and Administrative Expense. General and administrative expense for the three months ended June 30, 2020 increased to $1,001,000 as compared to $796,000 for the three months ended June 30, 2019. For the six-month period ended June 30, 2020, general and administrative expense increased to $ 1,734,000 from $1,570,000 during the same period in the prior year. The increases in both the three- and six- month periods ended June 30, 2020 reflect a write-off of approximately $354,000 for bad debt expense related to the GNC bankruptcy, as more particularly discussed below.

Selling and Marketing Expense.  Selling and marketing expense for the three months ended June 30, 2020 decreased to $435,000 as compared to $616,000 for the three months ended June 30, 2019. Selling and marketing expense for the six months ended June 30, 2020 decreased to $1,106,000 as compared to $1,166,000 for the six months ended June 30, 2019. The decreases in both the three- and six-month periods ended June 30, 2019 reflect efforts to optimize our sales and marketing expense.

Depreciation and Amortization Expense.  Depreciation and amortization expense for the three months ended June 30, 2020 decreased to $10,000 as compared to $13,000 for the three months ended June 30, 2019. Depreciation and amortization for the six months ended June 30, 2020 decreased to $22,000 as compared to $28,000 for the six months ended June 30, 2019. The decrease in both periods was primarily attributable to a reduction in depreciation expense due to certain assets becoming fully depreciated.

Net Income.  We generated net income of 25,000 for the three-month period ended June 30, 2020 as compared to $376,000 for the three months ended June 30, 2019. We generated net income of $1,626,000 for the six-month period ended June 30, 2020 as compared to a net income of $1,390,000 for the six months ended June 30, 2019. The decrease in net income for the three months ended June 30, 2020 was primarily due to lower revenue resulting from the impact of COVID-19. The increase in net income for the six months ended June 30, 2020 as compared to the same period of 2019 was primarily due to stronger revenues for the first quarter of 2020 compared to 2019, partially offset by lower net income, primarily due to lower revenues for the second quarter of 2020 when compared to the same period of 2019 due to the impact of COVID-19.

Liquidity and Capital Resources  

At June 30, 2020, we had positive working capital of approximately $4,713,000, compared to $2,654 ,000 at December 31, 2019. Our principal sources of liquidity at June 30, 2020 consisted of $2,218,000 of cash and $1,354,000 of accounts receivable.

The Company’s largest customer, GNC, filed for Chapter 11 bankruptcy protection on June 23, 2020. At the time of the filing, GNC owed the Company approximately $1,158,000.

Under US bankruptcy law, payment for product received by a customer in the 20 days preceding a bankruptcy filing is eligible for a priority administrative claim under Section 503(b)(9) of the US Bankruptcy Code. Generally, as long as the debtor company successfully emerges from Chapter 11, those claims are paid in full at the time the debtor emerges from bankruptcy. Claims associated with product received more than 20 days pre-petition are typically considered general unsecured claims and are subject to impairment through the bankruptcy process.

The majority of the Company’s receivables from GNC relate to product that was delivered in the 20 days leading up to the bankruptcy filing. As a result, the Company expects to be paid in full for those claims at such time as GNC emerges from bankruptcy, which is currently estimated to occur within the next two months.

Approximately $354,000 of the Company’s receivables relate to product delivered to GNC more than 20 days pre-petition and is therefore subject to impairment. While a partial recovery on such receivables is possible, the Company elected to write off the full amount of those receivables.

Subsequent to the GNC bankruptcy filing, the Company made the decision to continue to sell product to GNC on terms more favorable to the Company. Payment for all post-petition orders is paid in the ordinary course of business and is not subject to the bankruptcy process.

The Company has historically financed its operations primarily through cash flow from operations and equity and debt financings. The Company has also provided for its cash needs by issuing Common Stock, options and warrants for certain operating costs, including consulting and professional fees. The Company currently anticipates that cash derived from operations and existing cash resources, along with available borrowings under the Line of Credit, will be sufficient to provide for the Company’s liquidity for the next twelve months.

-24-

The Company is dependent on cash flow from operations and amounts available under the Line of Credit to satisfy its working capital requirements. No assurances can be given that cash flow from operations and/or the Line of Credit will be sufficient to provide for the Company’s liquidity for the next twelve months. Should the Company be unable to generate sufficient revenue in the future to achieve positive cash flow from operations, and/or should capital be unavailable under the terms of the Line of Credit, additional working capital will be required. Management currently has no intention to raise additional working capital through the sale of equity or debt securities and believes that the cash flow from operations and available borrowings under the Line of Credit will provide sufficient capital necessary to operate the business over the next twelve months. In the event the Company fails to achieve positive cash flow from operations, additional capital is unavailable under the terms of the Line of Credit, and management is otherwise unable to secure additional working capital through the issuance of equity or debt securities, the Company’s business would be materially and adversely harmed. 

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 Chair of the Board and Chief Executive Officer, in the principal amount of $600,000, with an initial advance to the Company in the amount of $300,000. 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 on the Notes including accrued but unpaid interest thereon, of $615,000.

On September 24, 2019, the Company entered into a Revolving Line of Credit Agreement (the "Line of Credit Agreement") with Mutual of Omaha Bank, subsequently acquired by CIT 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 amounts were 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 and in anticipation of an expected negative impact on sales to GNC and our other wholesale customers resulting from the COVID-19 outbreak.

On April 27, 2020, the Company received proceeds from a loan in the amount of $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 1.0% 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.

Cash Provided by Operations.  Our cash provided by operating activities for the six months ended June 30, 2020 was $1,603,000, as compared to cash provided by operations of $988,000 for the six months ended June 30, 2019.

Cash Provided by Investing Activities. There was no cash provided by or used in investing activities for the six-month periods ended June 30, 2020 and 2019.

Cash Provided by (Used in) Financing Activities. Cash provided by financing activities for the six months ended June 30, 2020 was $350,000 as compared to cash used in financing activities of $(330,000) during the six months ended June 30, 2019.

-25-

Management's Discussion and Analysis of Financial Condition and Results of Operations – March 31, 2020

Restated

Comparison of the three months ended March 31, 2020 to the three months ended March 31, 2019:

	Three months ended
	As Restated				As Restated
	March 31, 2020				March 31, 2019			Change			%
	(unaudited)			(unaudited)
Revenue	$	6,542,000			$	5,489,000		$	1,053,000		19	%
Cost of goods sold		(3,632,000	)			(3,121,000	)		(511,000	)	16	%
Gross profit		2,910,000				2,368,000			542,000		23	%
Operating expenses		(1,416,000	)			(1,339,000	)		(77,000	)	6	%
Income from operations		1,494,000				1,029,000			465,000		45	%
Other income (expense)		66,000				(15,000	)		81,000		n/a
Provision for income tax		41,000				-			41,000		n/a
Net income	$	1,601,000			$	1,014,000		$	587,000		58	%

Net Sales.  Revenue for the three months ended March 31, 2020 increased 19% to $6,542,000 as compared to $5,489,000 for the three months ended March 31, 2019. Revenue for the three-month period ended March 31, 2020 compared to the prior three-month period, in part, reflects improvements in our wholesale business and growth in our online direct-to-consumer offering. 

Online revenue during the three months ended March 31, 2020 was approximately 13% of total revenue, compared to roughly 10% of total revenue during the same three-month period in 2019. Although no assurances can be given, management believes that online revenue will continue to increase in subsequent periods relative to prior comparable periods given management’s focus on higher margin online sales.

The recent COVID-19 outbreak has created significant economic uncertainty and volatility, which has impacted our business and operations, including those of our third-party suppliers and our wholesale partners. In this regard, the duration and impact of such outbreak on our operating results and financial condition cannot be determined at this time, although management currently anticipates that shelter in place restrictions and the impact of those restrictions on our retail and wholesale partners, including effects on their liquidity and ability to maintain current store counts, will have a material adverse effect on our results from operations beginning in the quarter ending June 30, 2020.

Cost of Goods Sold.  Cost of goods sold for the three months ended March 31, 2020 increased to $3,632,000 as compared to $3,121,000 for the three months ended March 31, 2019. The increase during the three-month period is principally attributable to higher revenue.

Gross Profit.  Gross profit for the three months ended March 31, 2020 increased to $2,910,000 as compared to $2,368,000 for the three months ended March 31, 2019. The increase during the three-month period is principally attributable to higher revenue.

Gross margin for the three months ended March 31, 2020 increased to 44.5% compared to 43.1% during the same period last year. The increase was primarily attributable to product mix and higher online sales volumes.

General and Administrative Expense. General and administrative expense for the three months ended March 31, 2020 decreased to $733,000 as compared to $774,000 for the three months ended March 31, 2019. The decrease in the three-month period ended March 31, 2020 reflects initiatives the Company put in place during 2019 to reduce operating expense.

Selling and Marketing Expense.  Selling and marketing expense for the three months ended March 31, 2020 increased to $671,000 as compared to $550,000 for the three months ended March 31, 2019. The change in the three-month period ended March 31, 2020 reflects management's efforts to make calculated investments in marketing activities in an effort to drive incremental revenue.

Depreciation and Amortization Expense.  Depreciation and amortization expense for the three months ended March 31, 2020 decreased to $12,000 as compared to $15,000 for the three months ended March 31, 2019.  The decrease was primarily attributable to a reduction in depreciation expense due to certain assets becoming fully depreciated.

Net Income.  We generated net income of $1,601,000 for the three-month period ended March 31, 2020 as compared to net income of $1,014,000 for the three months ended March 31, 2019. The increase in net income for the three-month period ended March 31, 2020 compared to the same period in 2019 was primarily attributable to a combination of higher revenue and a higher percentage of online sales which provide a higher margin.

-26-

Liquidity and Capital Resources  

At March 31, 2020, we had positive working capital of approximately $4,198,000, compared to $2,654,000 at December 31, 2019. Our principal sources of liquidity at March 31, 2020 consisted of $2,666,000 of cash and $4,435,000 of accounts receivable.

The Company has historically financed its operations primarily through cash flow from operations and equity and debt financings. The Company has also provided for its cash needs by issuing Common Stock, options and warrants for certain operating costs, including consulting and professional fees. The Company currently anticipates that cash derived from operations and existing cash resources, along with available borrowings under the new Line of Credit, will be sufficient to provide for the Company’s liquidity for the next twelve months.

The Company is dependent on cash flow from operations and amounts available under the Line of Credit to satisfy its working capital requirements. No assurances can be given that cash flow from operations and/or the Line of Credit will be sufficient to provide for the Company’s liquidity for the next twelve months. Should the Company be unable to generate sufficient revenue in the future to achieve positive cash flow from operations, and/or should capital be unavailable under the terms of the Line of Credit, additional working capital will be required. Management currently has no intention to raise additional working capital through the sale of equity or debt securities and believes that the cash flow from operations and available borrowings under the Line of Credit will provide sufficient capital necessary to operate the business over the next twelve months. In the event the Company fails to achieve positive cash flow from operations, additional capital is unavailable under the terms of the Line of Credit, and management is otherwise unable to secure additional working capital through the issuance of equity or debt securities, the Company’s business would be materially and adversely harmed. 

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 Chair of the Board and Chief Executive Officer, in the principal amount of $600,000, with an initial advance to the Company in the amount of $300,000. 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 on the Notes including accrued but unpaid interest thereon, of $615,000.

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, our Lender advanced the Company $2.5 million under the Line of Credit, which amounts were 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, most of which have 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.

Cash Provided by (Used in) Operations.  Our cash provided by operating activities for the three months ended March 31, 2020 was $1,000, as compared to cash used in operations of $121,000 for the three months ended March 31, 2019.

Cash Provided by Investing Activities. There was no cash provided by or used in investing activities for the three-month periods ended March 31, 2020 and 2019.

Cash Provided by Financing Activities. Cash provided by financing activities for the three months ended March 31, 2020 was $2,400,000 as compared to cash provided by financing activities of $300,000 during the three months ended March 31, 2019.

Off-Balance Sheet Arrangements

Other than contractual obligations incurred in the normal course of business, we do not have any off-balance sheet financing arrangements or liabilities, retained or contingent interests in transferred assets or any obligation arising out of a material variable interest in an unconsolidated entity.

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ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our business is currently conducted principally in the United States. As a result, our financial results are not materially affected by factors such as changes in foreign currency exchange rates or economic conditions in foreign markets. We do not engage in hedging transactions to reduce our exposure to changes in currency exchange rates, although as the geographical scope of our business broadens, we may do so in the future.

Our exposure to risk for changes in interest rates related primarily to any borrowings under our existing Line of Credit, and our investments in short-term financial instruments. As of December 31, 2020, the Company had a zero balance under its existing Line of Credit.

Investments of our existing cash balances in both fixed-rate and floating-rate interest-earning instruments carry some interest rate risk. The fair value of fixed-rate securities may fall due to a rise in interest rates, while floating-rate securities may produce less income than expected if interest rates fall. Partly as a result of this, our future interest income will vary due to changes in interest rates and we may suffer losses in principal if we are forced to sell securities that have fallen in estimated fair value due to changes in interest rates. However, as substantially all of our cash equivalents consist of bank deposits and short-term money market instruments, we do not expect any material change with respect to our net income as a result of an interest rate change.

We do not hold any derivative instruments and do not engage in any hedging activities.

ITEM 8.  FINANCIAL STATEMENTS

The information required hereunder in this Comprehensive Annual Report is set forth in the financial statements and the notes thereto beginning on Page F-1.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On September 11, 2019, the Audit Committee of the Board of the Company (the “Audit Committee”) concluded a review process of independent registered public accounting firms. As a result of this process and following careful deliberation, the Audit Committee recommended, and the Board approved, the dismissal of Weinberg & Company (“Weinberg”) as the Company’s independent registered public accounting firm for the year ending December 31, 2019.

The reports of Weinberg regarding the Company’s financial statements for the fiscal years ended December 31, 2017 and 2018 did not contain an adverse opinion or disclaimer of opinion and were not modified as to uncertainty, scope, or accounting principles. During the Company’s fiscal years ended December 31, 2017 and 2018, and the subsequent interim period through June 30, 2019, there were (i) no disagreements with Weinberg on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Weinberg would have caused Weinberg to make reference to the subject matter of disagreements in connection with its report; and (ii) no “reportable events” as such term is defined in Item 304(a)(1)(v) on Regulation S-K.

The Company provided Weinberg with a copy of the foregoing disclosures and requested that Weinberg furnish the Company with a letter addressed to the Securities and Exchange Commission indicating whether Weinberg agrees with such disclosures. Weinberg's letter, and the announcement of the change in auditors, was included in the Form 8-K filed on September 17, 2019.

Effective September 13, 2019, the Company engaged Weaver and Tidwell, L.L.P. (“Weaver”) as its independent registered public accounting firm for the fiscal year ended December 31, 2019.

During the years ended December 31, 2017 and 2018 through to the effective date of Weaver’s appointment on September 13, 2019, the Company did not consult Weaver with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s Consolidated Financial Statements, or any other matters or reportable events as defined in Item 304(a)(2)(i) and (ii) of Regulation S-K.

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ITEM 9A.  CONTROLS AND PROCEDURES

(a)   Evaluation of Disclosure Controls and Procedures.

In connection with the filing of this Comprehensive Form 10-K/A for the period ended December 31, 2020, our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  As a result of this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were not effective due to the material weaknesses described below, which resulted in reporting errors requiring a restatement of our financial statements for the years ended December 31, 2020 and 2019 and our interim financial information for the quarterly periods ended September 30, 2020, June 30, 2020, March 31, 2020, September 30, 2019, June 30, 2019 and March 31, 2019.

Notwithstanding the material weaknesses described in Management's Report on Internal Control Over Financial Reporting, our management has concluded that our consolidated financial statements for the periods covered by and included in this Annual Report are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and fairly present, in all material respects, our financial position, results of operations and cash flows for each of the periods presented herein.

(b)   Management’s Annual Report on Internal Control over Financial Reporting.

Our management, including our CEO and CFO, is responsible for establishing and maintaining adequate internal control over our financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.  Management’s establishing and maintaining adequate internal control over financial reporting is based upon the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Framework”).  A system of internal control over financial reporting should be designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

An effective internal control system, no matter how well designed, has inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud, and therefore can provide only reasonable assurance with respect to reliable financial reporting.  Because of its inherent limitations, our internal control over financial reporting may not prevent or detect all misstatements.

A material weakness is defined as a deficiency, or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.  Based on this definition, our management, with the participation of our CEO and CFO, evaluated the effectiveness and design of our internal control over financial reporting against the COSO Framework and concluded that our internal control over financial reporting was not effective as of December 31, 2019 and 2020 due to material weaknesses arising from flaws in our control environment, risk oversight measures, control activities, information processing and communication and our monitoring systems, each of which is described in more detail below.  The material weaknesses resulted in reporting errors requiring a restatement of our financial statements for Annual Reports on Form 10-K for the years ended December 31, 2019 and 2020, and each of the interim financial statements for the quarterly periods in 2019, 2020 and 2021 included in our Quarterly Reports on Form 10-Q for the periods ending March 31, 2019, June 30, 2019, September 30, 2019, March 31, 2020, June 30, 2020, September 30, 2020, March 31, 2021, and June 30, 2021 (collectively, the "Restated Periods").

Control environment.  We concluded that we did not maintain effective controls in the following areas: (i) managerial functions, procedures and oversight; (ii) organizational structure, delegation of authority and responsibilities; (iii) segregation of duties; (iv) adequacy of trained accounting and financial reporting personnel to ensure that internal control responsibilities were performed effectively and material accounting errors were detected; and (v) maintenance and enforcement of internal control responsibilities, including holding individuals accountable for their internal control responsibilities.

Risk oversight environment.  We did not maintain adequate risk oversight measures related to the (i) identification and assessment of risks that could impact achieving our objectives and (ii) identification and analysis of the potential changes that could affect our internal controls environment.

Control activities.  We concluded that we did not have effective control activities in the following areas: (i) selecting and developing control policies, procedures and activities to mitigate risks, including with respect to the methodologies used to calculate and report financial information and results; and (ii) selecting and implementing information technology and related systems supportive to our internal control over financial reporting.

Information processing and communication.  We identified deficiencies associated with information processing and communication within our internal control framework.  Specifically, we did not effectively communicate objectives and internal control responsibilities throughout the organization which contributed to inadequate documentation of processes and methodologies used to recognize revenue, costs of goods sold, inventory and accounts receivable, hindering clear communication with management, the Board of Directors and our independent auditor.

Monitoring activities.  We concluded that we did not design and implement effective monitoring activities related to (i) selecting, developing, and performing separate evaluations of our internal control over financial reporting; and (ii) evaluating and communicating internal control deficiencies in a timely manner to parties responsible for taking corrective actions.

The issues described above resulted in the following errors in our financial statements previously filed with the SEC: improper recognition of revenue, cost of sales, accounts receivable, inventory and the provision for income taxes.

Remediation Efforts to Address Material Weaknesses

Our management, including our CFO, has worked with expert accounting consultants and our Audit Committee to design and implement both a short-term and a long-term remediation plan to correct the material weaknesses in our disclosure controls and procedures and our internal control over financial reporting.  The following activities highlight our commitment to remediating our identified material weaknesses.

Since March 2022 and through the filing date of this Comprehensive Form 10-K, we have hired expert accounting consultants to assess our control environment and recommend improvements.  In addition, we hired a new highly qualified CFO in August 2022 with extensive public-company experience.

In addition to the items noted above, as we continue to evaluate, remediate, and improve our internal control over financial reporting, our management expects to continue to implement additional measures to address control deficiencies and further refine and improve the remediation efforts described above.  Specifically, we are developing a checklist of activities based on the criteria established in the COSO Framework against which we will assess the design of entity-level and activity-level controls, and the operational effectiveness of such controls.  Deficiencies identified in this process will be addressed by management, including our CEO and CFO.  This assessment, any deficiencies, and any remedial actions will be shared and discussed with our Audit Committee and our independent auditors on a quarterly basis.

(c)   Changes in Internal Controls over Financial Reporting.

We are still in the process of implementing our remedial actions throughout 2022.  Also, during August 2022, we hired a new CFO, a highly qualified individual with public company experience.  Management will continue to evaluate and monitor our internal controls as each of the affected areas evolves.

All of the changes above were implemented during 2022 outside the period covered by this report.

ITEM 9B.  OTHER INFORMATION

None.

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PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS

All information regarding directors, executive officers and corporate governance required by this item is incorporated herein by reference to the applicable information in the proxy statement for our 2021 Annual Meeting of Stockholders (“2021 Annual Meeting”), filed with the SEC on April 28, 2021 (the “2021 Proxy Statement”) and is set forth under “Nominees for Director,” “Corporate Governance Profile,” “Delinquent Section 16(a) Reports” and in other applicable sections in the 2021 Proxy Statement.

ITEM 11.  EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by reference to the applicable information in the 2021 Proxy Statement and is set forth under “Executive Compensation.”

The information in the 2021 Proxy Statement captioned “Compensation Committee Report” is incorporated by reference herein but shall be deemed furnished, not filed and shall not be deemed to be incorporated by reference into any filing we make under the Securities Act of 1933 or the Exchange Act.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is incorporated herein by reference to the applicable information in the 2021 Proxy Statement and is set forth under “Beneficial Ownership of Voting Securities” and “Equity Compensation Plan Information.”

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated herein by reference to the applicable information in the 2021 Proxy Statement and is set forth under “Certain Relationships and Related Transactions” and “Corporate Governance Profile.”

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated herein by reference to 2021 Proxy Statement and is set forth under “Auditor Fees.”

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PART IV

ITEM 15.  EXHIBITS AND REPORTS

Exhibits

2.1	Agreement and Plan of Merger, by and among the Company, iSatori, Inc., and ISFL Merger Sub, Inc., dated May 18, 2015 (incorporated by reference to Exhibit 2.1 filed with Form 8-K on May 18, 2015).
2.2	Voting and Standstill Agreement dated May 18, 2015 (incorporated by reference to Exhibit 4.1 of Schedule 13D (Commission File No. 005-47773) filed by the Company, Stephen Adelé Enterprises, Inc., Stephen Adelé, RENN Universal Growth Investment Trust, PLC, RENN Global Entrepreneurs Fund, Inc. and Russell Cleveland).
3.1	Articles of Incorporation (incorporated by reference to Exhibit 3.1 filed with Amendment No. 3 to the Company’s Registration Statement on Form SB2 (Commission File No. 333-137170)).
3.2	Amendments to Articles of Incorporation (incorporated by reference to Exhibit 3.2 filed with Amendment No. 3 to the Company’s Registration Statement on Form SB2 (Commission File No. 333-137170)).
3.3	Amended and Restated Bylaws of the Corporation (incorporated by reference to Exhibit 3.1 filed with Form 8-K on January 25, 2018).
3.4	Certificate of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 filed with Form 8-K on September 13, 2010).
3.5	Certificate of Amendment to Articles of Incorporation to change name to FitLife Brands, Inc.  (incorporated by reference to Exhibit 3.1 filed with Form 8-K on October 1, 2013).
3.6	Certificate of Amendment to Articles of Incorporation to effect 1-for-10 reverse split (incorporated by reference to Exhibit 3.1 filed with Form 8-K on October 1, 2013).
3.7	Certificate of Designations, Preferences and Rights of the Series A Convertible Preferred Stock, dated November 13, 2018 (incorporated by reference to Exhibit 3.2 filed with Form 10-Q on November 14, 2018).
3.8	Certificates of Change, dated April 11, 2019 (incorporated by reference to Exhibit 3.1 filed with Form 8-K filed on April 15, 2019).
3.9	Certificate of Designations, Preferences and Rights of the Series B Junior Preferred Stock, dated March 3, 2021 (incorporated by reference to Exhibit 3.1 filed with Form 8-K on March 4, 2021).
4.1	Form of Warrant, dated November 13, 2018 (incorporated by reference to Exhibit 4.1 filed with Form 10-Q on November 14, 2018).
4.2	Tax Benefit Preservation Plan, dated February 26, 2021 (incorporated by reference to Exhibit Form 8-K on March 4, 2021).
10.1	Second Amendment to Asset Purchase Agreement (incorporated by reference to Exhibit 10.3 filed with Form 8-K on October 6, 2009).
10.2	Assignment of Name (incorporated by reference to Exhibit 10.6 filed with Form 8-K on October 6, 2009).
10.3	Employment Agreement, dated December 31, 2009, between the Company and John Wilson (incorporated by reference to Exhibit 10.14 filed with Form 10-K on April 15, 2011).

-31-

10.4	Demand Promissory Note (incorporated by reference to Exhibit 10.1 filed with Form 8-K on September 11, 2015).
10.5	Security Agreement by and among the Company, Stephen Adele Enterprises, and Stephen Adele, dated September 11, 2015 (incorporated by reference to Exhibit 10.2 filed with Form 8-K on September 11, 2015).
10.6	Amendment No. 3 to Employment Agreement, dated July 14, 2014 between the Company and John Wilson (incorporated by reference to Exhibit 10.1 filed with Form 8-K on April 26, 2017).
10.7	Amendment No. 1 to Employment Agreement, dated May 1, 2013, by and between the Company and Michael Abrams (incorporated by reference to Exhibit 10.2 filed with Form 8-K on April 26, 2017).
10.8	Loan Modification Agreement, dated August 28, 2017, by and between the Company and U.S. National Bank Association Bank (incorporated by reference to Exhibit 10.1 filed with Form 8-K on August 31, 2017).
10.9	Merchant Agreement by and between NDS Nutrition, Inc., iSatori, Inc., and Compass Bank, d/b/a Commercial Billing Service (incorporated by reference to Exhibit 3.1 filed with Form 8-K on January 25, 2018).
10.10	Continuing Guarantee of FitLife Brands, Inc. (incorporated by reference to Exhibit 3.1 filed with Form 8-K on January 25, 2018).
10.11	Consulting Services Agreement, by and between the Company and Dayton Judd, dated March 13, 2018 (incorporated by reference to Exhibit 10.26 filed with Form 10-K on April 17, 2018).
10.12	Abrams Transition Agreement, dated August 15, 2018 (incorporated by reference to Exhibit 10.1 filed with Form 8-K on September 12, 2018).
10.13	Form of Subscription Agreement, dated November 13, 2018 (incorporated by reference to Exhibit 10.1 filed with Form 10-Q on November 14, 2018).
10.14	Promissory Note issued to Sudbury Capital Fund, LP dated December 26, 2018 (incorporated by reference to Exhibit 10.1 filed with Form 8-K on December 26, 2018).
10.15	Promissory Note issued to Dayton Judd dated December 26, 2018 (incorporated by reference to Exhibit 10.2 filed with Form 8-K on December 26, 2018).
10.16	Employment Agreement, by and between FitLife Brands, Inc. and Patrick Ryan, dated June 13, 2019 (incorporated by reference to Exhibit 10.1 filed with Form 8-K on June 18, 2019).
10.17	2019 Omnibus Incentive Plan (incorporated by reference to Appendix A to the Definitive Proxy Statement on Schedule 14A filed on July 12, 2019).
10.18	Revolving Line of Credit Agreement, dated as of September 24, 2019, between the Company and Mutual of Omaha Bank (incorporated by reference to Exhibit 10.1 filed with Form 8-K on September 26, 2019).
10.19	Note Payable Agreement by and between FitLife Brands, Inc. and CIT Bank, N.A. dated April 27, 2020 (incorporated by reference to Exhibit 10.1 filed with Form 8-K on May 1, 2020).
14.1	Code of Ethics (incorporated by reference to Exhibit 14.1 filed with Form 10-K on March 27, 2009).
16.1	Letter from Tarvaran, Askelson & Company, LLP, dated April 25, 2017 (incorporated by reference to Exhibit 16.1 filed with Form 8-K on April 26, 2017).
16.2	Letter from Weinberg & Company, P.A., dated September 17, 2019 (incorporated by reference to Exhibit 16.1 filed with Form 8-K on September 17, 2019).
21	List of Subsidiaries.
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.
31.2	Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.
32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.
32.2	Certification of Chief Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL Document and included in Exhibit 101)

ITEM 16.  FORM 10-K SUMMARY    

None.

-32-

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

Registrant Date: October 13, 2022	FitLife Brands, Inc. By: /s/ Dayton Judd
	Dayton Judd
	Chief Executive Officer (Principal Executive Officer)

Date: October 13, 2022	By: /s/ Jakob York
	Jakob York
	Chief Financial Officer (Principal Financial Officer)

In accordance with the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

Date: October 13, 2022	By: /s/ Dayton Judd
	Dayton Judd
	Chief Executive Officer and Chair of the Board

Date: October 13, 2022	By: /s/ Grant Dawson
	Grant Dawson
	Director

Date: October 13, 2022	By: /s/ Lewis Jaffe
	Lewis Jaffe
	Director

Date: October 13, 2022	By: /s/ Todd Ordal
	Todd Ordal
	Director

Date: October 13, 2022	By: /s/ Seth Yakatan
	Seth Yakatan
	Director

-33-

FITLIFE BRANDS, INC.

INDEX TO FINANCIAL STATEMENTS

	Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-2
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets at December 31, 2020 and 2019	F-4
Consolidated Statements of Operations for the years ended December 31, 2020 and 2019	F-5
Consolidated Statement of Stockholders’ Equity for the years ended December 31, 2020 and 2019	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019	F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

FitLife Brands, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of FitLife Brands, Inc. and Subsidiaries (the Company) as of December 31, 2020 and 2019, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Restatement to Correct Previously Issued Consolidated Financial Statements

As discussed in Note 2 to the financial statements, the 2020 and 2019 financial statements have been restated to correct misstatements discovered during the current year.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Product Returns – Management’s Estimate of Product Returns including Discontinued or Expired Product. Refer to Note 2 to the Financial Statements

F-2

Critical Accounting Matter Description

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 related elements of variable consideration, including, but not limited to, product returns.  The allowance for product returns is based on specific terms and conditions included in the customer agreements, historical experience and management’s expectation of future returns.

We identified management’s estimate of product returns, including discontinued or expired product as a critical audit matter because of the judgments necessary for management to estimate and monitor, among other things, remaining shelf life, sell-through data, history of actual and estimated future returns, and information provided by customers regarding their inventory levels. The types of arrangements and complexity of information required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to audit management’s estimates and evaluating the results of those procedures. 

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s estimate of product returns included the following:

● We obtained an understanding of the design and implementation of management’s controls and evaluated management’s review of the inputs used and assumptions applied in the product returns calculation.

● To assess the reasonableness of the product returns estimate, we performed procedures that included, among others, testing management’s historical return rate calculation and the completeness and accuracy of sales and product returns data used in the calculation. We evaluated the historical accuracy of management’s estimate, read contracts and performed direct inquiries with management to identify any terms or conditions not included in customer contracts that could impact the estimate. We performed revenue cutoff testing to assess if there were unusual patterns at period end not considered in the Company’s analyses, performed lookback analyses using actual historical data to evaluate the forecasted amounts, which included testing credits issued and payments made throughout year, assessed subsequent events to determine whether there was any new information that would require adjustment to the estimate, and evaluated overall trends in product returns based on preceding years.

Income taxes - Realizability of Deferred Tax Assets – Refer to Note 8 to the Financial Statements

Critical Accounting Matter Description

For the years ended December 31, 2020 and 2019, the Company recorded a provision (benefit) for income taxes of ($4,415,000) and $7,000, respectively, driven primarily in 2020 by an income tax benefit of ($4,339,000) resulting from the elimination of the valuation reserve against the Company’s net operating losses and other deferred tax assets. The carrying amount of deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that all or part of the deferred tax assets will be utilized, based on positive and negative evidence, including that sufficient future taxable income will be available.

Management’s analysis of the realizability of its deferred tax assets, including the recognition, measurement, and disclosure of deferred tax assets was significant to our audit because the amounts are material to the consolidated financial statements. Auditing management’s assessment is complex and involves significant judgment as the Company’s ability to generate taxable income sufficient to utilize the assets may be impacted by various economic and industry conditions.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s realizability of deferred tax assets included the following:

● We obtained an understanding of the design and implementation of management’s controls relating to the realizability of deferred tax assets, including projections of future taxable income and the future reversal of existing taxable temporary differences.

● Among other audit procedures performed, we evaluated the positive and negative evidence in assessing whether the deferred tax assets are more likely than not to be utilized, including evaluating the trends of both the historical financial results and the projected sources of taxable income. Our audit procedures also included testing the calculations of existing temporary book-tax differences, the scheduling of the reversal of existing temporary taxable differences and of the appropriate character of income. We evaluated the assumptions used by the Company to develop projections of future taxable income and tested the completeness and accuracy of the underlying data used in its projections. For example, we compared the projections of future taxable income with the actual results of prior periods as well as management’s consideration of current industry and economic trends.

WEAVER AND TIDWELL, L.L.P.

We have served as the Company’s auditor since 2019.

Fort Worth, Texas

October 13, 2022

F-3

FITLIFE BRANDS, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,			December 31,
	2020			2019
	As Restated			As Restated
ASSETS:
CURRENT ASSETS:
Cash	$	6,336,000		$	265,000
Accounts receivable, net of allowance of doubtful accounts, $51,000 and $27,000, respectively		1,797,000			1,718,000
Inventories, net of allowance for obsolescence of $56,000 and $130,000, respectively		3,529,000			3,358,000
Income tax receivable		40,000			-
Prepaid expenses and other current assets		52,000			72,000
Total current assets		11,754,000			5,413,000
Property and equipment, net		98,000			136,000
Right of use asset, net of amortization of $272,000 and $226,000, respectively		208,000			254,000
Goodwill		225,000			225,000
Deferred tax asset		4,339,000			-
Security deposits		-			10,000
TOTAL ASSETS	$	16,624,000		$	6,038,000
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable	$	3,246,000		$	2,018,000
Accrued expense and other liabilities		498,000			464,000
Product returns		345,000			231,000
Lease liability - current portion		50,000			46,000
Total current liabilities		4,139,000			2,759,000
Long-term lease liability, net of current portion		158,000			208,000
PPP loan		453,000			-
TOTAL LIABILITIES		4,750,000			2,967,000
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none outstanding as of December 31, 2020 and December 31, 2019
Common stock, $.01 par value, 15,000,000 shares authorized; 1,060,818 and 1,054,516 issued and outstanding as of December 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		32,204,000			32,055,000
Accumulated deficit		(18,552,000	)		(27,377,000	)
TOTAL STOCKHOLDERS' EQUITY		11,874,000			3,071,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	16,624,000		$	6,038,000

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

F-4

FITLIFE BRANDS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years ended
	December 31,
	2020			2019
	As Restated			As Restated
Revenue	$	22,111,000		$	19,136,000
Cost of goods sold		12,574,000			11,155,000
Gross profit		9,537,000			7,981,000
OPERATING EXPENSES:
General and administrative		3,047,000			3,049,000
Selling and marketing		2,106,000			2,387,000
Depreciation and amortization		38,000			52,000
Total operating expenses		5,191,000			5,488,000
OPERATING INCOME		4,346,000			2,493,000
OTHER EXPENSES (INCOME):
Interest expense		15,000			47,000
Interest income		(9,000	)		-
Gain on settlement		(70,000	)		(171,000	)
Total other expenses (income)		(64,000	)		(124,000	)
PRE-TAX NET INCOME		4,410,000			2,617,000
PROVISION (BENEFIT) FOR INCOME TAXES		(4,415,000	)		7,000
NET INCOME		8,825,000			2,610,000
PREFERRED STOCK DIVIDEND		-			(63,000	)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	8,825,000		$	2,547,000
NET INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS:
Basic	$	8.34		$	2.48
Diluted	$	7.76		$	2.33
Basic weighted average common shares		1,058,207			1,026,204
Diluted weighted average common shares		1,137,349			1,092,312

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

F-5

FITLIFE BRANDS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

	Series A Preferred					Common Stock					Treasury			Additional Paid-in			Accumulated
	Shares			Amount		Shares			Amount		Stock			Capital			Deficit			Total
YEAR ENDED DECEMBER 31, 2020 (As Restated)
DECEMBER 31, 2019 (As Restated)		-		$	-		1,054,516		$	12,000	$	(1,619,000	)	$	32,055,000		$	(27,377,000	)	$	3,071,000
Fair value of common stock issued for services		-			-		1,202			-		-			15,000			-			15,000
Repurchase of common stock		-			-		(11,900	)		-		(171,000	)		-			-			(171,000	)
Exercise of stock options		-			-		17,000			-		-			71,000			-			71,000
Stock-based compensation		-			-		-			-		-			63,000			-			63,000
Net income		-			-		-			-		-			-			8,825,000			8,825,000
DECEMBER 31, 2020 (As Restated)		-		$	-		1,060,818		$	12,000	$	(1,790,000	)	$	32,204,000		$	(18,552,000	)	$	11,874,000
YEAR ENDED DECEMBER 31, 2019 (As Restated)
DECEMBER 31, 2018		600		$	-		1,111,943		$	11,000	$	-		$	32,107,000		$	(29,987,000	)	$	2,131,000
Fair value of common stock issued for services		-			-		18,082			-		-			47,000			-			47,000
Repurchase of preferred and common stock		(50	)		-		(198,731	)		-		(1,619,000	)		(168,000	)		-			(1,787,000	)
Conversion of preferred stock to common stock		(550	)		-		123,222			1,000		-			(1,000	)		-			-
Dividend payments on preferred stock		-			-		-			-		-			(63,000	)		-			(63,000	)
Fair value of vested common shares and options issued for services		-			-		-			-		-			133,000			-			133,000
Net income		-			-		-			-		-			-			2,610,000			2,610,000
DECEMBER 31, 2019 (As Restated)		-		$	-		1,054,516		$	12,000	$	(1,619,000	)	$	32,055,000		$	(27,377,000	)	$	3,071,000

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

F-6

FITLIFE BRANDS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years ended December 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:		As Restated			As Restated
Net income	$	8,825,000		$	2,610,000
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		38,000			52,000
Allowance for doubtful accounts		25,000			17,000
Allowance for inventory obsolescence		(74,000	)		23,000
Common stock issued for services		49,000			71,000
Fair value of options issued for services		29,000			111,000
Right of use asset net of amortization and lease liability		-			(2,000	)
Changes in operating assets and liabilities:
Accounts receivable - trade		(104,000	)		(89,000	)
Inventories		(97,000	)		249,000
Deferred tax asset		(4,339,000	)		-
Prepaid expense		20,000			124,000
Income tax receivable		(40,000	)		-
Security deposit		10,000			-
Accounts payable		1,228,000			(610,000	)
Accrued liabilities and other liabilities		72,000			(81,000	)
Product returns		79,000			(214,000	)
Net cash provided by operating activities		5,721,000			2,261,000
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 Paycheck Protection Program		450,000			-
Dividend payments on preferred stock		-			(63,000	)
Repurchases of common stock		(171,000	)		(1,524,000	)
Repurchases of preferred stock		-			(168,000	)
Repayments of note payable		-			(800,000	)
Net cash provided by (used in) financing activities		350,000			(2,255,000	)
CHANGE IN CASH		6,071,000			6,000
CASH, BEGINNING OF PERIOD		265,000			259,000
CASH, END OF PERIOD	$	6,336,000		$	265,000
Supplemental disclosure operating activities
Cash paid for interest	$	12,000		$	47,000
Non-cash investing and financing activities
Recording of lease asset and liability upon adoption of ASU-2016-02	$	-		$	343,000
Conversion of Series A preferred stock into common stock	$	-		$	567,000

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

F-7

FITLIFE BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2020 AND 2019

NOTE 1.  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 following brand names: (i) NDS Nutrition, PMD Sports, SirenLabs, CoreActive, and Metis Nutrition (together, “NDS Products”); and (ii) iSatori, BioGenetic Laboratories, and Energize (together, the "iSatori Products").  The Company distributes the NDS Products 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 17,000 retail locations, which include specialty, mass, and online.

FitLife Brands is headquartered in Omaha, Nebraska. For more information on the Company, please go to www.fitlifebrands.com. The Company’s Common Stock currently trades under the symbol “FTLF” on the OTC: PINK market.

Recent Developments

Share Repurchase Plan 

On August 16, 2019, the Company's Board of Directors (the "Board") authorized management to repurchase up to $500,000 of the Company's 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. 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 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.

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.

Subsequent to the end of the fiscal year, on February 1, 2021, the Board approved an additional amendment to the previously authorized Share Repurchase Program. Under the terms of the amendment, the Company is authorized to repurchase up to $5.0 million of securities issued by the Company.

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 year ended December 31, 2020, the Company repurchased 11,900 shares of Common Stock under the Share Repurchase Program, or approximately 1% of the issued and outstanding shares of the Company’s Common Stock, through private transactions, as follows:

	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
First quarter ended March 31, 2020		11,900	$	14.35		11,900	$	1,110,917
Second quarter ended June 30, 2020		-		-		-		1,110,917
Third quarter ended September 30, 2020		-		-		-		1,110,917
Fourth quarter ended December 31, 2020		-		-		-		1,110,917
Subtotal		11,900	$	14.35		11,900

F- 8

 

COVID-19 Pandemic

The novel coronavirus ("COVID-19") pandemic has had an effect on the Company’s employees, business and operations during the fiscal year ended December 31, 2020, and those of its customers, vendors and business partners. In this respect, the temporary or permanent closure of some of our retail partners’ store locations and the stay-at-home orders that occurred early in the pandemic negatively affected our results from operations, although much of the impact has been offset by an increase in revenue attributable to online sales, and increased sales during the more recent quarters. Our future financial position and operating results could be materially and adversely affected in the event that a resurgence of COVID-19 cases leads to new stay-at-home orders and/or disruptions in both our supply chain and manufacturing lead-times, which could lower demand for the Company’s products and/or prevent the Company from producing and delivering its products in a timely manner, although the extent of these effects 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 business and operations accordingly.

CARES Act

The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted on March 27, 2020 in the United States. On April 27, 2020, the Company received proceeds from a loan in the amount of $449,700 from its lender, CIT Bank, N.A. (the “PPP Lender”), pursuant to approval by the U.S. Small Business Administration (the “SBA”) for the PPP Lender to fund the Company’s request for a loan under the SBA’s Paycheck Protection Program (“PPP Loan”) created as part of the CARES ACT administered by the SBA (the “Loan Agreement”). In accordance with the requirements of the CARES Act, the Company used 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 was scheduled to mature on April 27, 2022, had a 1.0% interest rate, and was 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. Subsequent to the end of the fiscal year, the Company was informed by the PPP Lender and the SBA that the full balance of the PPP Loan, including accrued interest, was forgiven on January 15, 2021.

The CARES Act permits employers to defer payment of the employer portion of payroll taxes owed on wages paid through December 31, 2020 for a period of up to two years. Through December 31, 2020, the Company has deferred payment of $77,000, which amount has been expensed and is included in accrued liabilities.

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"), subsequently acquired by CIT Bank, 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. See Note 6.

On March 20, 2020, the Company drew on the Line of Credit in an amount equal to $2.5 million (the "Advance"), which Advance was repaid on April 29, 2020. The Company elected to borrow such amounts to ensure it maintained ample financial flexibility in light of the spread of the novel coronavirus ("COVID-19"). The Advance was intended to provide the Company with additional liquidity given the uncertainty regarding the timing of collection of certain accounts receivable and in anticipation of an expected negative impact on sales to GNC and our other wholesale customers resulting from the COVID-19 outbreak.

On August 4, 2020, the Company and the Lender amended the Line of Credit Agreement to extend the Maturity Date to September 23, 2021. The amendment also added a LIBOR floor of 75 bps to the Line of Credit Agreement. All other terms of the Line of Credit remain unchanged.

F- 9

 

Note 2. Restatement of Previously Issued Consolidated Financial Statements

We have restated herein our audited consolidated financial statements at December 31, 2020 and 2019 and for the years ended December 31, 2020 and 2019. We have also restated impacted amounts within the accompanying footnotes to the consolidated financial statements.

Restatement Background

On August 24, 2022, the Audit Committee of the Board of Directors (the “Audit Committee”) of FitLife Brands, Inc. (the “Company”) was advised by Weaver and Tidwell, L.L.P. (“Weaver”), its registered independent public accounting firm, that the Company’s previously issued financial statements included in its Annual Reports on Form 10-K for the years ended December 31, 2019 and 2020, and each of the interim financial statements for the quarterly periods in 2019, 2020 and 2021 included in its Quarterly Reports on Form 10-Q for the periods ending March 31, 2019, June 30, 2019, September 30, 2019, March 31, 2020, June 30, 2020, September 30, 2020, March 31, 2021, and June 30, 2021 (collectively, the "Restated Periods") should be restated to correct historical errors related to the recognition of  revenue, expensing of costs of inventory, inventory, accounts receivable and the financial reporting and internal controls related to such arrangements, and should therefore no longer be relied upon (the "Restatement"). As a result, we determined that we would restate such financial statements to correct the accounting errors.

The intended Restatement follows the determination that the revenue associated for all customers with standard FOB destination terms, as reported in the Company’s prior period consolidated financial statements, was incorrectly recognized at the time of shipment instead of when the performance obligation was satisfied upon delivery. In addition, the accounting treatment related to the recognition of corresponding accounts receivables, inventory and expensing of costs of goods sold. The Company’s errors in the misapplication of revenue recognition resulted in certain errors recorded in various account balances in the Company’s consolidated balance sheets, statements of operations, statements of stockholders’ equity, statement of cash flows, and the related notes to the consolidated financial statements (collectively referred to as the consolidated financial statements) for the Restated Periods.

Accordingly, we have restated herein our consolidated financial statements at December 31, 2020 and 2019 and for the fiscal years ended December 31, 2020 and 2019, in accordance with ASC Topic 250, Accounting Changes and Error Corrections. In addition to the misstatements related to ASC 606, we corrected additional identified out-of-period and uncorrected misstatements that were not material, individually or in the aggregate, to our consolidated financial statements. These misstatements are noted in restatement reference (b) below.

The relevant unaudited interim financial information for the quarterly periods ended September 30, 2020, June 30, 2020, March 31, 2020, September 30, 2019, June 30, 2019, and March 31, 2019, has also been restated. Please refer to Note 11, Quarterly Financial Data (Unaudited).

Description of misstatements

(a) Timing of recognition of revenue

We recorded adjustments for the revenues that were incorrectly recognized at the time of shipment instead of the time the products were received by the customers. The correction changed the timing of the revenue recognition for these deliveries, which results in recognizing such revenue when the Company is entitled to receive such revenue upon satisfaction of performance obligations in accordance with the requirements of ASC 606. The correction in the timing of revenue recognition under ASC 606 resulted in adjustments to revenue, cost of sales, inventory and accounts receivable.

(b) Other adjustments

We recorded adjustments to correct other identified out-of-period and uncorrected misstatements that were not material, individually or in the aggregate, to our consolidated financial statements. These other misstatements were primarily related to sales returns reserve, income statement reclassification, and certain accrued liabilities. The impacts of the other misstatements on each period are discussed in restatement reference (b) throughout this note and in Note 11, Quarterly Financial Data (Unaudited).

(c) Adjustment to opening balance

We recorded an adjustment to the 2019 opening balance for accumulated deficit to account for the impact of the FOB destination shipments that were in transit as of December 31, 2018 and had not yet been received by customers.

Description of Restatement Tables

The following tables represent our restated consolidated balance sheets, consolidated statements of operations, consolidated statements of stockholders’ equity, and consolidated statements of cash flows for the years ended December 31, 2020 and December 31, 2019, as well as our restated consolidated balance sheet at December 31, 2020 and 2019. Following the restated consolidated financial statement tables, we have presented a reconciliation from our prior periods as previously reported to the restated values. The values as previously reported for fiscal years 2020 and 2019 were derived from our 2020 Annual Report, filed on March 26, 2021.

F- 10

 

FITLIFE BRANDS, INC.

CONSOLIDATED BALANCE SHEETS

	December 31, 2020
ASSETS:	As Previously Reported			Restatement Impacts			Restatement Reference	As Restated
CURRENT ASSETS:
Cash	$	6,336,000		$	-			$	6,336,000
Accounts receivable, net of allowance of doubtful accounts, $51,000		2,044,000			(247,000	)	(a)		1,797,000
Inventories, net of allowance for obsolescence of $56,000		3,401,000			128,000		(a)		3,529,000
Income tax receivable		40,000							40,000
Prepaid expenses and other current assets		52,000							52,000
Total current assets		11,873,000			(119,000	)			11,754,000
Property and equipment, net		98,000							98,000
Right of use asset, net of amortization of $272,000		208,000							208,000
Goodwill		225,000							225,000
Deferred tax asset		4,370,000			(31,000	)	(a)		4,339,000
Security deposits		-			-				-
TOTAL ASSETS	$	16,774,000		$	(150,000	)		$	16,624,000
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable	$	3,246,000		$	-			$	3,246,000
Accrued expense and other liabilities		498,000			-				498,000
Product returns		335,000			10,000		(b)		345,000
Lease liability - current portion		50,000			-				50,000
Total current liabilities		4,129,000			10,000				4,139,000
Long-term lease liability, net of current portion		158,000			-				158,000
PPP loan		453,000			-				453,000
TOTAL LIABILITIES		4,740,000			10,000				4,750,000
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none outstanding, as of December 31, 2020
Common stock, $.01 par value, 15,000,000 shares authorized; 1,060,818 issued and outstanding as of December 31, 2020		12,000			-				12,000
Treasury stock, 210,631 shares		(1,790,000	)		-				(1,790,000	)
Additional paid-in capital		32,204,000			-				32,204,000
Accumulated deficit		(18,392,000	)		(160,000	)	(a)(b)		(18,552,000	)
TOTAL STOCKHOLDERS’ EQUITY		12,034,000			(160,000	)			11,874,000
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	16,774,000		$	(150,000	)		$	16,624,000

(a) Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $247,000, an increase to inventory of $128,000, a reduction of deferred tax asset of $31,000, and an increase to accumulated deficit of $150,000

(b) Other adjustments – The correction of these misstatements resulted in an increase of $10,000 to product returns reserve and an increase to accumulated deficit of $10,000.

F-11

FITLIFE BRANDS, INC.

CONSOLIDATED BALANCE SHEETS

	December 31, 2019
ASSETS:	As Previously Reported			Restatement Impacts			Restatement Reference	As Restated
CURRENT ASSETS:
Cash	$	265,000		$	-			$	265,000
Accounts receivable, net of allowance of doubtful accounts, $27,000		2,366,000			(648,000	)	(a)		1,718,000
Inventories, net of allowance for obsolescence of $130,000		2,998,000			360,000		(a)		3,358,000
Prepaid expenses and other current assets		72,000							72,000
Total current assets		5,701,000			(288,000	)			5,413,000
Property and equipment, net		136,000			-				136,000
Right of use asset, net of amortization of $226,000		254,000			-				254,000
Goodwill		225,000			-				225,000
Security deposits		10,000			-				10,000
TOTAL ASSETS	$	6,326,000		$	(288,000	)		$	6,038,000
LIABILITIES AND STOCKHOLDERS’ EQUITY:
CURRENT LIABILITIES:
Accounts payable	$	2,010,000		$	8,000		(b)	$	2,018,000
Accrued expense and other liabilities		464,000			-				464,000
Product returns		256,000			(25,000	)	(b)		231,000
Lease liability – current portion		46,000			-				46,000
Total current liabilities		2,776,000			(17,000	)			2,759,000
Long-term lease liability, net of current portion		208,000			-				208,000
TOTAL LIABILITIES		2,984,000			(17,000	)			2,967,000
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none outstanding, as of December 31, 2019
Common stock, $.01 par value, 15,000,000 shares authorized; 1,054,516 issued and outstanding as of December 31, 2019		12,000			-				12,000
Treasury stock, 198,731 shares		(1,619,000	)		-				(1,619,000	)
Additional paid-in capital		32,055,000			-				32,055,000	)
Accumulated deficit		(27,106,000	)		(271,000	)	(a)(b)		(27,377,000	)
TOTAL STOCKHOLDERS' EQUITY		3,342,000			(271,000	)			3,071,000	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	6,326,000		$	(288,000	)		$	6,038,000

(a) Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $648,000, an increase to inventories of $353,000, and an increase of accumulated deficit of $295,000

(b) Other adjustments – The correction of these misstatements resulted in an increase to inventories of $7,000, an increase accounts payable of $8,000, a decrease in product returns liability of $25,000 and a decrease in accumulated deficit of $24,000.

F-12

FITLIFE BRANDS, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

		December 31, 2020
	As Previously Reported			Restatement Impacts		Restatement Reference	As Restated
Revenue	$	21,744,000		$	367,000	(a)(b)	$	22,111,000
Cost of goods sold		12,350,000			224,000	(a)(b)		12,574,000
Gross profit		9,394,000			143,000			9,537,000
OPERATING EXPENSES:
General and administrative		3,047,000						3,047,000
Selling and marketing		2,105,000			1,000	(b)		2,106,000
Depreciation and amortization		38,000						38,000
Total operating expenses		5,190,000			1,000			5,191,000
OPERATING INCOME		4,204,000			142,000		$	4,346,000
OTHER EXPENSES (INCOME):
Interest expense		15,000						15,000
Interest income		(9,000	)					(9,000	)
Gain on settlement		(70,000	)					(70,000	)
Total other expenses (income)		(64,000	)					(64,000	)
PRE-TAX NET INCOME		4,268,000			142,000			4,410,000
PROVISION (BENEFIT) FOR INCOME TAXES		(4,446,000	)		31 ,000	(a)		(4,415,000	)
NET INCOME		8,714,000			111,000			8,825,000
PREFERRED STOCK DIVIDEND		-			-			-
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	8,714,000		$	111,000		$	8,825,000
NET INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS:
Basic	$	8.23		$	0.11		$	8.34
Diluted	$	7.66		$	0.10		$	7.76
Basic weighted average common shares		1,058,207			-			1,058,207
Diluted weighted average common shares		1,137,349			-			1,137,349

(a) Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $401,000, an increase of cost of goods sold of $225,000, an increase in tax provision of $31,000, and an increase to net income of $145,000

(b) Other adjustments – The correction of these misstatements resulted in a decrease to revenue of $34,000, a decrease to cost of goods sold of $1,000, an increase in selling and marketing of $1,000, and a decrease to net income of $34,000.

F-13

FITLIFE BRANDS, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

	December 31, 2019
	As Previously Reported			Restatement Impacts			Restatement Reference	As Restated
Revenue	$	19,497,000		$	(361,000	)	(a)(b)	$	19,136,000
Cost of goods sold		11,436,000			(281,000	)	(a)(b)		11,155,000
Gross profit		8,061,000			(80,000	)			7,981,000
OPERATING EXPENSES:
General and administrative		3,049,000							3,049,000
Selling and marketing		2,379,000			8,000		(b)		2,387,000
Depreciation and amortization		52,000							52,000
Total operating expenses		5,480,000			8,000				5,488,000
OPERATING INCOME		2,581,000			(88,000	)		$	2,493,000
OTHER EXPENSES (INCOME)
Interest expense		47,000							47,000
Gain on settlement		(171,000	)						(171,000	)
Total other expenses (income)		(124,000	)						(124,000	)
PRE_TAX NET INCOME		2,705,000			(88,000	)			2,617,000
PROVISION (BENEFIT) FOR INCOME TAXES		7,000			-				7,000
NET INCOME		2,698,000			(88,000	)			2,610,000
PREFERRED STOCK DIVIDEND		(63,000	)		-				(63,000	)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	2,635,000		$	(88,000	)		$	2,547,000
NET INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS
Basic	$	2.57		$	(0.09	)		$	2.48
Diluted	$	2.41		$	(0.08	)		$	2.33
Basic weighted average common shares		1,026,204			-				1,026,204
Diluted weighted average common shares		1,092,312			-				1,092,312

(a) Revenue Recognition – The correction of these misstatements resulted in a decrease to revenue of $417,000, a decrease of cost of goods sold of $247,000, and a decrease to net income of $170,000

(b) Other adjustments – The correction of these misstatements resulted in an increase to revenue of $56,000, a decrease to cost of goods sold of $34,000, an increase in selling and marketing of $8,000, and an increase to net income of $82,000.

F-14

FITLIFE BRANDS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

	Restatement	Series A Preferred				Common Stock					Treasury			Additional Paid-in		Accumulated
	Reference	Shares		Amount		Shares			Amount		Stock			Capital		Deficit			Total
YEAR ENDED DECEMBER 31, 2020 (As Previously Reported)
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			-		-		1,202			-		-			15,000		-			15,000
Repurchase of common stock			-		-		(11,900	)		-		(171,000	)		-		-			(171,000	)
Exercise of stock options			-		-		17,000			-		-			71,000		-			71,000
Stock-based compensation			-		-		-			-		-			63,000		-			63,000
Net income			-		-		-			-		-			-		8,714,000			8,714,000
DECEMBER 31, 2020			-	$	-		1,060,818		$	12,000	$	(1,790,000	)	$	32,204,000	$	(18,392,000	)	$	12,034,000
YEAR ENDED DECEMBER 31, 2020 (Restatement Impact)
DECEMBER 31, 2019	(a)(b)		-	$	-		-		$	-	$	-		$	-	$	(271,000	)	$	(271,000	)
Fair value of common stock issued for services			-		-		-			-		-			-		-			-
Repurchase of common stock			-		-		-			-		-			-		-			-
Exercise of stock options			-		-		-			-		-			-		-			-
Stock-based compensation			-		-		-			-		-			-		-
Net income	(a)(b)		-		-		-			-		-			-		111,000			111,000
DECEMBER 31, 2020			-	$	-		-		$	-	$	-		$	-	$	(160,000	)	$	(160,000	)

YEAR ENDED DECEMBER 31, 2020 (As Restated)
DECEMBER 31, 2019 (a)(b)	-	$	-	1,054,516		$	12,000	$	(1,619,000	)	$	32,055,000	$	(27,377,000	)	$	3,071,000
Fair value of common stock issued for services	-		-	1,202			-		-			15,000		-			15,000
Repurchase of common stock	-		-	(11,900	)		-		(171,000	)		-		-			(171,000	)
Exercise of stock options	-		-	17,000			-		-			71,000		-			71,000
Stock-based compensation	-		-	-			-		-			63,000		-			63,000
Net income	-		-	-			-		-			-		8,825,000			8,825,000
DECEMBER 31, 2020	-	$	-	1,060,818		$	12,000	$	(1,790,000	)	$	32,204,000	$	(18,552,000	)	$	11,874,000

See descriptions of the net income impacts in the consolidated statement of operations for the year December 31, 2020 above.  See descriptions of the accumulated deficit impacts in the consolidated balance sheet as of December 31, 2020.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) and (b).

F-15

FITLIFE BRANDS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

	Restatement	Series A Preferred					Common Stock					Treasury			Additional Paid-in			Accumulated
	Reference	Shares			Amount		Shares			Amount		Stock			Capital			Deficit			Total
YEAR ENDED DECEMBER 31, 2019 (As Previously Reported)
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			-			-		18,082			-		-			47,000			-			47,000
Repurchase of preferred and common stock			(50	)		-		(198,731	)		-		(1,619,000	)		(168,000	)		-			(1,787,000	)
Conversion of preferred stock to common stock			(550	)				123,222			1,000					(1,000	)					-
Dividend payments on preferred stock			-			-		-			-		-			(63,000	)		-			(63,000	)
Fair value of vested common shares and options issued for services			-			-		-			-		-			133,000			-			133,000
Net income			-			-		-			-		-			-			2,698,000			2,698,000
DECEMBER 31, 2019			-		$	-		1,054,516		$	12,000	$	(1,619,000	)	$	32,055,000		$	(27,106,000	)	$	3,342,000
YEAR ENDED DECEMBER 31, 2019 (Restatement Impact)
DECEMBER 31, 2018	(a)(b)(c)		-		$	-		-		$	-	$	-		$	-		$	(183,000	)	$	(183,000	)
Fair value of common stock issued for services			-			-		-			-		-			-			-			-
Repurchase of preferred and common stock			-			-		-			-		-			-			-			-
Dividend payments on preferred stock			-			-		-			-		-			-			-			-
Fair value of vested common shares and options issued for services			-			-		-			-		-			-			-
Net income	(a)(b)		-			-		-			-		-			-			(88,000	)		(88,000	)
DECEMBER 31, 2019			-		$	-		-		$	-	$	-		$	-		$	(271,000	)	$	(271,000	)

YEAR ENDED DECEMBER 31, 2019 (As Restated)
DECEMBER 31, 2018	600		$	-	1,111,943		$	11,000	$	-		$	32,107,000		$	(29,987,000	)	$	2,131,000
Fair value of common stock issued for services	-			-	18,082			-		-			47,000			-			47,000
Repurchase of preferred and common stock	(50	)		-	(198,731	)		-		(1,619,000	)		(168,000	)		-			(1,787,000	)
Conversion of preferred stock to common stock	(550	)		-	123,222			1,000		-			(1,000	)		-			-
Dividend payments on preferred stock	-			-	-			-		-			(63,000	)		-			(63,000	)
Fair value of vested common shares and options issues for services	-			-	-			-		-			133,000			-			133,000
Net income	-			-	-			-		-			-			2,610,000			2,610,000
DECEMBER 31, 2019	-		$	-	1,054,516		$	12,000	$	(1,619,000	)	$	32,055,000		$	(27,377,000	)	$	3,071,000

See descriptions of the net income impacts in the consolidated statement of operations for the year December 31, 2019 above.  See descriptions of the accumulated deficit impacts in the consolidated balance sheet as of December 31, 2019.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) and (b).

F-16

FITLIFE BRANDS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year ended December 31, 2020
	As previously reported			Restatement Impacts			Restatement Reference	As Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	8,714,000		$	111,000		(a) (b)	$	8,825,000
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		38,000			-				38,000
Allowance for doubtful accounts		25,000			-				25,000
Allowance for inventory obsolescence		(74,000	)		-				(74,000	)
Common stock issued for services		49,000			-				49,000
Fair value of options issued for services		29,000			-				29,000
Changes in operating assets and liabilities:
Accounts receivable - trade		297,000			(401,000	)	(a)		(104,000	)
Inventories		(329,000	)		232,000		(a) (b)		(97,000	)
Deferred tax asset		(4,370,000	)		31,000		(a)		(4,339,000	)
Prepaid expense		20,000			-				20,000
Income tax receivable		(40,000	)		-				(40,000	)
Security deposit		10,000			-				10,000
Accounts payable		1,236,000			(8,000	)	(b)		1,228,000
Accrued liabilities and other liabilities		37,000			35,000		(b)		72,000
Product returns		79,000			-				79,000
Net cash provided by operating activities		5,721,000			-				5,721,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by investing activities		-			-				-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		71,000			-				71,000
Proceeds from Paycheck Protection Program		450,000			-				450,000
Repurchases of common stock		(171,000	)		-				(171,000	)
Net cash provided by (used in) financing activities		350,000			-				350,000
CHANGE IN CASH		6,071,000			-				6,071,000
CASH, BEGINNING OF PERIOD		265,000			-				265,000
CASH, END OF PERIOD	$	6,336,000		$	-			$	6,336,000

See description of the net income impacts in the Consolidated Statement of Operations for the year ended December 31, 2020 included above.

None of the misstatements impacted the classifications between net operating, net investing, or net financing cash flows.

F-17

FITLIFE BRANDS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year ended December 31, 2019
	As previously reported			Restatement Impacts			Restatement Reference	As Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,698,000		$	(88,000	)	(a) (b)	$	2,610,000
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		52,000			-				52,000
Allowance for doubtful accounts		17,000			-				17,000
Allowance for inventory obsolescence		23,000			-				23,000
Common stock issued for services		71,000			-				71,000
Fair value of options issued for services		111,000			-				111,000
Right of use asset net of amortization and lease liability		(2,000	)		-				(2,000	)
Changes in operating assets and liabilities:
Accounts receivable - trade		(505,000	)		416,000		(a) (b)		(89,000	)
Inventories		502,000			(253,000	)	(a) (b)		249,000
Prepaid expense		151,000			(27,000	)	(b)		124,000
Accounts payable		(618,000	)		8,000		(b)		(610,000	)
Accrued liabilities and other liabilities		(50,000	)		(31,000	)	(b)		(81,000	)
Product returns		(189,000	)		(25,000	)	(b)		(214,000	)
Net cash provided by operating activities		2,261,000			-				2,261,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by investing activities		-			-				-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable		300,000			-				300,000
Dividend payments on preferred stock		(63,000	)		-				(63,000	)
Repurchases of common stock		(1,524,000	)		-				(1,524,000	)
Repurchases of preferred stock		(168,000	)		-				(168,000	)
Repayments of note payable		(800,000	)		-				(800,000	)
Net cash provided by (used in) financing activities		(2,255,000	)		-				(2,255,000	)
CHANGE IN CASH		6,000			-				6,000
CASH, BEGINNING OF PERIOD		259,000			-				259,000
CASH, END OF PERIOD	$	265,000		$	-			$	265,000

See description of the net income impacts in the Consolidated Statement of Operations for the year ended December 31, 2019 included above.

None of the misstatements impacted the classifications between net operating, net investing, or net financing cash flows.

F-18

NOTE 3.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are as follows:

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and NDS Nutrition Products, Inc. Intercompany accounts and transactions have been eliminated in the consolidated financial statements.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“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.

Those estimates and assumptions include estimates for reserves of uncollectible accounts receivable, allowance for inventory obsolescence, depreciable lives of property and equipment, analysis of impairment of goodwill, realization of deferred tax assets, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.

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 ASC 606. 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 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.

F- 19

 

Customer Concentration

Total net sales to GNC during 2020 and 2019 were $15,833,000, and $14,386,000, respectively, representing 71% and 75% of total revenue, respectively. Accounts receivable attributable to GNC before adjusting for product return reserves as of December 31, 2020 and 2019 were $1,892,000 and $1,629,000, respectively, representing 89% and 85% of the Company’s total accounts receivable balance, respectively. The loss of this customer would have a material adverse effect on the Company’s business, financial condition, and results of operation.

Accounts Receivable and Allowance for Doubtful Accounts

All of the Company’s accounts receivable balance is related to trade receivables. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company will maintain allowances for doubtful accounts, estimating losses resulting from the inability of its customers to make required payments for products. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped into categories by the amount of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. We maintain an insurance policy for iSatori Products for international shipments, which protects the Company in the event the international distributor does not or cannot remit payment.

As of December 31, 2020 and 2019, the Company had provided a reserve for doubtful accounts of $51,000 and $27,000, respectively.

Product Returns, Sales Incentives and Other Forms of Variable Consideration 

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.

We currently have a 30-day product return policy for NDS Products, which allows for a 100% sales price refund for the return of unopened and undamaged products purchased from us online through one of our websites. Product sold to GNC may be returned from store shelves or the distribution center in the event product is damaged, short dated, expired or recalled. Information for product returns is received on regular basis and adjusted for accordingly. Adjustments for returns are based on factual information and historical trends for both NDS products and iSatori products and are specific to each distribution channel. We monitor, among other things, remaining shelf life and sell through data on a weekly basis. If we determine there are any risks or issues with any specific products, we accrue sales return allowances based on management’s assessment of the overall risk and likelihood of returns in light of all information available.

GNC maintains a customer satisfaction program that allows customers to return product to the store for credit or refund. Subject to certain terms and restrictions, GNC may require reimbursement from vendors for unsaleable returned product through either direct payment or credit against a future invoice. We also support a product return policy for iSatori Products, whereby customers can return product for credit or refund. Product returns can and do occur from time to time and can be material.

For the sale of goods with a right of return, the Company estimates variable consideration using the most likely amount method and recognizes revenue for the consideration it expects to be entitled to when control of the related product is transferred to the customers and records a product returns liability for the amount it expects to credit back its customers. Under this method, certain forms of variable consideration are based on expected sell-through results, which requires subjective estimates. These estimates are supported by historical results as well as specific facts and circumstances related to the current period. In addition, the Company recognizes an asset included in Inventories, net and a corresponding adjustment to Cost of Goods Sold for the right to recover goods from customers associated with the estimated returns. The product returns liability and corresponding asset include estimates that directly impact reported revenue. These estimates are calculated based on a history of actual returns, estimated future returns and information provided by customers regarding their inventory levels. Consideration of these factors results in an estimate for anticipated sales returns that reflects increases or decreases related to seasonal fluctuations. In addition, as necessary, product returns liability and the related assets may be established for significant future known or anticipated events. The types of known or anticipated events that are considered, and will continue to be considered, include, but are not limited to, changes in the retail environment and the Company's decision to continue to support new and existing products.

F- 20

 

Information for product returns is received on regular basis and adjusted for accordingly. Adjustments for returns are based on factual information and historical trends for both NDS products and iSatori products and are specific to each distribution channel. We monitor, among other things, remaining shelf life and sell-through data on a weekly basis. If we determine there are any risks or issues with any specific products, we accrue sales return allowances based on management’s assessment of the overall risk and likelihood of returns in light of all information available.

Regarding incentives, the Company accrues an estimate of 3% for promotional expense it calls “vendor funded discounts” at the time of sale. The expense is recorded as a contra-revenue account, and the expected incentive costs are never included in accounts receivable. As such, an allowance account for incentives is not required or necessary. Actual incentive costs are reconciled to the estimate on a regular basis.

Total allowance for product returns, sales returns and incentive programs as of December 31, 2020 and 2019 amounted to $345,000 and $231,000, respectively.

Cost of Goods Sold

Cost of goods sold is comprised of the costs of products, repacking fees, in-bound freight charges, as well as certain internal transfer costs. Expense not related to the production of our products is classified as operating expense.

Delivery and Handling Expense

Shipping and handling costs are comprised of purchasing and receiving costs, inspection costs, warehousing costs, transfer freight costs, and other costs associated with product distribution and are included as part of operating expense.

Cash and Cash Equivalents

The Company’s cash balances on deposit with banks are guaranteed by the Federal Deposit Insurance Corporation up to $250,000 at December 31, 2020. The Company may be exposed to risk for the amounts of funds held in bank accounts more than the insurance limit. In assessing the risk, the Company’s policy is to maintain cash balances with high-quality financial institutions. The Company had cash balances more than the guarantee during the years ended December 31, 2020 and 2019. 

Inventory

Inventory is stated at the lower of cost to purchase and/or manufacture the inventory or the current estimated market value of the inventory. We regularly review our inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated forecast of product demand and/or our ability to sell the product(s) concerned and production requirements. Demand for our products can fluctuate significantly. Factors that could affect demand for our products include unanticipated changes in consumer preferences, general market conditions or other factors, which may result in cancellations of advance orders or a reduction in the rate of reorders placed by customers. Additionally, our management’s estimates of future product demand may be inaccurate, which could result in an understated or overstated provision required for excess and obsolete inventory. 

As of December 31, 2020 and 2019, the aggregate allowance for expiring, slow moving and excess inventory amounted to $56,000 and $130,000, respectively.

F- 21

 

Property and Equipment

Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using the straight-line method. The Company amortizes leasehold improvements over the estimated life of these assets or the term of the lease, whichever is shorter. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized.

The range of estimated useful lives used to calculate depreciation for principal items of property and equipment are as follows:

Asset Category	Depreciation / Amortization Period (years)
Furniture and fixtures	3
Office equipment	3
Leasehold improvements	5

Management regularly reviews property, equipment and other long-lived assets for possible impairment. This review occurs annually or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Based upon management’s annual assessment, there were no indicators of impairment of the Company’s property and equipment and other long-lived assets as of December 31, 2020 and 2019.

Goodwill and Intangible Assets

In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment (“ASU 2017-04”). 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.

Identifiable intangible assets are stated at cost and accounted for based on whether the useful life of the asset is finite or indefinite. Identified intangible assets with finite useful lives are amortized using the straight-line methods over their estimated useful lives, which was originally ten years. Intangible assets with indefinite lives are not amortized to operations, but instead are reviewed for impairment at least annually, or more frequently if there is an indicator of impairment. The Company does not own any indefinite lived intangible assets.

There were no impairment charges incurred during the years ended December 31, 2020 and 2019.

Income Taxes

The Company accounts for income taxes under FASB ASC Topic 740, Income Taxes (“ASC 740”). Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred tax assets of the Company relate primarily to operating loss carryforwards for federal income tax purposes.

As discussed in more detail in Note 9, during the fourth quarter of fiscal 2020, management determined that it is more likely than not that the Company will be able to utilize the majority of its net operating loss carryforwards. The release of a substantial portion of the reserve against the Company’s deferred tax assets resulted in an income tax benefit of $4,339,000 for 2020, and a corresponding increase in net income of the same amount.

F- 22

 

The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. FASB ASC Topic 820, Fair Value Measurement (“ASC 820”), establishes a three-level valuation hierarchy for the use of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date:

Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing the net income available to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period.

The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive:

	December 31,
	2020		2019
Series A Preferred Stock		-		-
Warrants		-		-
Options		5,575		34,075
Total		5,575		34,075

Fair Value Measurements

The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. ASC 820 establishes a three-level valuation hierarchy for the use of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date:

● Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

● Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

● Level 3 - Inputs that are both significant to the fair value measurement and unobservable. These inputs rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. The unobservable inputs are developed based on the best information available in the circumstances and may include the Company’s own data.

The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments. The carrying values of the line of credit, notes payable and long-term financing obligations approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates.

F- 23

 

Stock Compensation Expense

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services rendered. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the FASB where the value of the award is measured on the date of grant and recognized as compensation on the straight-line basis over the vesting period.

From prior periods until December 31, 2018 the Company accounted for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date.

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). The guidance was issued to simplify the accounting for share-based transactions by expanding the scope of ASU 2018-07 from only being applicable to share-based payments to employees to also include share-based payment transactions for acquiring goods and services from nonemployees. As a result, nonemployee share-based transactions will be measured by estimating the fair value of the equity instruments at the grant date, taking into consideration the probability of satisfying performance conditions. We adopted ASU 2018-07 on January 1, 2019. The adoption of ASU 2018-07 did not have a material impact on our financial statements for the year ended December 31, 2019 or the previously reported financial statements.

The fair value of the Company’s stock option and warrant grants are estimated using the Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model and based on actual experience. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.

Segments

The Company operates in one segment for the distribution of our products.  In accordance with the “Segment Reporting” Topic of ASC 280, the Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company.  Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue.  All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes.  Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated financial statements.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). This update requires the recognition of a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, for all leases with terms longer than 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2019.

In January 2017, the FASB issued ASU 2017-04. 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. ASU 2017-04 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.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The amendments included in ASU 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Although the new standard, known as the current expected credit loss (“CECL”) model, has a greater impact on financial institutions, most other organizations with financial instruments or other assets (trade receivables, contract assets, lease receivables, financial guarantees, loans and loan commitments, and held-to-maturity debt securities) are subject to the CECL model and will need to use forward-looking information to better evaluate their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 was originally effective for public companies for fiscal years beginning after December 15, 2019. In November of 2019, the FASB issued ASU 2019-10, which delayed the implementation of ASU 2016-13 to fiscal years beginning after December 15, 2022 for smaller reporting companies. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

F- 24

 

NOTE 4.  INVENTORIES

At December 31, 2020, the value of the Company’s inventory was $3,529,000. At December 31, 2019, the value of the Company’s inventory was $3,358,000.

	As Restated
	December 31,			December 31,
	2020			2019
Finished goods	$	2,917,000		$	3,048,000
Components		668,000			440,000
Allowance for obsolescence		(56,000	)		(130,000	)
Total	$	3,529,000		$	3,358,000

NOTE 5.  PROPERTY AND EQUIPMENT

The Company had fixed assets as of December 31, 2020 and 2019 as follows:

	December 31,			December 31,
	2020			2019
Equipment	$	902,000		$	902,000
Accumulated depreciation		(804,000	)		(766,000	)
Total	$	98,000		$	136,000

Depreciation expense was $38,000 for the year ended December 31, 2020 compared to $52,000 for the year ended December 31, 2019.

NOTE 6.  NOTES PAYABLES

Notes Payable – Related Parties

On December 26, 2018, the Company issued a line of credit promissory note to Sudbury Capital Fund, LP (“Sudbury”) to Sudbury, an entity controlled by Dayton Judd, the Company’s Chief Executive Officer and Chair of the Board, in the principal amount of $600,000 (the “Sudbury Note”), 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 under the Sudbury Note, resulting in aggregate borrowings of $600,000. In addition, on December 26, 2018, the Company also issued a promissory note to Dayton Judd, the Company’s Chair of the Board and Chief Executive Officer, in the principal amount of $200,000 (the “Judd Note”) (together with the Sudbury Note, 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.

Line of Credit – CIT Bank

On September 24, 2019, the Company entered into entered into a Line of Credit Agreement with the Lender providing the Company with a $2.5 million revolving 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 the Maturity Date, or unless renewed at maturity upon approval by the Company’s Board 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 and in anticipation of an expected negative impact on sales to GNC and our other wholesale customers resulting from the COVID-19 outbreak.

On August 4, 2020, the Company and the Lender amended the Line of Credit Agreement to extend the Maturity Date to September 23, 2021. The amendment also added a LIBOR floor of 75 bps to the Line of Credit Agreement. All other terms of the Line of Credit remain unchanged.

Paycheck Protection Program Loan

On April 27, 2020, the Company received proceeds from a loan in the amount of $449,700 from the PPP Lender, pursuant to approval by the SBA for the Lender to fund the Company’s request for the PPP Loan created as part of the recently enacted CARES Act administered by the SBA. In accordance with the requirements of the CARES Act, the Company used 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 was scheduled to mature on April 27, 2022, had a 1.0% interest rate, and was 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. The Company did not provide any collateral or guarantees for the PPP Loan, nor did the Company pay any fees to obtain the PPP Loan.

Subsequent to the end of the fiscal year, the Company was informed by the PPP Lender and the SBA that the full amount balance of the PPP Loan, including accrued interest, was forgiven on January 15, 2021.

F-25

NOTE 7 - 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 Topic 842, 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 year ended December 31, 2020, the Company made payments resulting in a $46,000 reduction in the lease liability. As of December 31, 2020, lease liability amounted to $208,000. Topic 842 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 year ended December 31, 2020 was $67,000. The right-of-use asset at December 31, 2020 was $208,000, net of amortization of $272,000.

	Year ended
	December 31, 2020
Lease Cost
Operating lease cost	$	67,000
Other information
Cash paid for amounts included in the measurement of lease liabilities for 2021		-
Weighted average remaining lease term - operating leases (in years)		3.8
Average discount rate - operating leases		9	%

The supplemental balance sheet information related to leases for the period is as follows:

Operating leases	At December 31, 2020
Long-term right-of-use assets	$	208,000
Short-term operating lease liabilities		50,000
Long-term operating lease liabilities		158,000
Total operating lease liabilities	$	208,000

Maturities of the Company's lease liabilities are as follows (in thousands):

Year ending	Operating leases
2021	$	67,000
2022		67,000
2023		61,000
2024		51,000
Less: Imputed interest/present value discount		(38,000	)
Present value of lease liabilities	$	208,000

F-26

NOTE 8.  EQUITY

The Company is authorized to issue 15.0 million shares of Common Stock, $0.01 par value per share, of which 1,060,818 and 1,054,516 shares of Common Stock were issued and outstanding as of December 31, 2020 and 2019, respectively.

Reverse/Forward Split

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. 

Common Stock

During the year ended December 31, 2020, the Company issued 1,202 shares of Common Stock with a fair value of $15,000 to directors for services rendered. The shares were valued at the respective date of issuance. Total stock-based compensation, related to previously issued option and restricted stock grants, was $63,000 for the year ended December 31, 2020. As of December 31, 2020, there was unearned compensation of $3,000 to be amortized as a compensation cost on a straight-line basis through 2021.

During the year ended December 31, 2019, the Company issued 18,082 shares of Common Stock with a fair value of $47,000 to employees and directors for services rendered. The shares were valued at the respective date of issuance. As of December 31, 2019, there was unearned compensation of $36,800 to be amortized as a compensation cost on a straight-line basis through 2020.

F- 27

 

Series A Preferred Stock 

The Company is authorized to issue up to 10 million shares of preferred stock, par value $0.01 per share.

During November 2019, the Company repurchased and retired 50 shares of Series A Convertible Preferred Stock. During December 2019, the remaining 550 shares of Series A Convertible Preferred Stock were converted into Common Stock in accordance with the terms of the Certificate of Designations. As a result, no shares of Series A Preferred Stock were outstanding as of December 31, 2020 and 2019.

During 2019, the Company paid $63,000 for preferred dividends.

Options

The following table summarizes option activity: 

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Life (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		(39,500	)		19.04
Outstanding, December 31, 2020		92,785		$	10.05		5.9

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
$	2.8	-	23.00		87,210		6.2	$	4.93		87,210	$	4.93
$	23.10	-	144.34		5,575		2.8	$	90.20		5,575	$	90.20
					92,785		5.9	$	10.05		92,785	$	10.05

The closing stock price for the Company’s stock on December 31, 2020 was $21.60. As such, there was an intrinsic value of outstanding options of $1,454,000. 

During the year ended December 31, 2020, the Company did not grant any stock options.  

During the year ended December 31, 2020, the Company recognized compensation expense of $29,000 based upon the vesting of outstanding options. As of December 31, 2020, there was $0 of unvested stock compensation that will be recognized as an expense in future periods as the options vest.

During the year ended December 31, 2019, the Company granted stock options to employees for services rendered to purchase 8,000 shares of Company Common Stock. The stock options are exercisable at a price of $6.85 per share, expire in five years and vest as follows: one-third vested immediate upon issuance, and the remainder vest equally in equal annual installments over a period of two years from grant date.

The total fair value of these options at grant date was approximately $38,000, which was determined using the Black-Scholes option pricing model with the following average assumption: stock price of $6.85 per share, expected term of three years, volatility of 108%, dividend rate of 0% and risk-free interest rate of 2.18%. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the expected term of the share option award; the expected term represents the weighted-average period of time that share option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s Common Stock; and the expected dividend yield is based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future.

F- 28

 

During the year ended December 31, 2019, the Company recognized compensation expense of $111,000 based upon the vesting of outstanding options. As of December 31, 2019, there was $54,000 of unvested stock compensation to be recognized as an expense in future periods as the options vest.

Warrants

The following table summarizes warrant activity:

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Life (Years)
Outstanding, December 31, 2018		39,130		$	4.60
Issued		-			-
Repurchased/retired		(3,260	)		-
Forfeited		-			-
Outstanding, December 31, 2019		35,870		$	4.60
Issued		-			-
Exercised		-			-
Forfeited		-			-
Outstanding, December 31, 2020		35,870		$	4.60		2.9

The total intrinsic value of the outstanding warrants as of December 31, 2020 amounted to $610,000.

NOTE 9.  INCOME TAXES

The Company had available federal net operating loss (“NOL”) carryforwards of approximately $21.6 million and $25.9 million as of December 31, 2020 and 2019, respectively, to reduce future taxable income. The federal NOL carryforward expires between 2029 through 2037. Due to the restrictions imposed by Internal Revenue Code Section 382 regarding substantial changes in ownership of companies with NOL carryforwards, the utilization of the Company’s NOL carryforwards may be limited to statutory limits as a result of change in stock ownership. NOL carryforwards incurred subsequent to the latest change in control are not subject to the limitations.

Given the Company’s improving profitability over the past three fiscal years, management has concluded that it is more likely than not that the Company will be able to utilize the majority of its NOL carryforwards. The Company projects that roughly $2,557,000 of iSatori NOL carryforwards will not be able to be utilized prior to their expiration due to the ownership change limitations, which amount remains fully reserved.

For the year ended December 31, 2020, the Company recorded a provision (benefit) for income taxes of ($4,415,000), driven primarily by an income tax benefit of ($4,339,000) resulting from the elimination of a substantial portion of the reserve against the Company’s NOL carryforwards and other deferred tax assets. For the year ended December 31, 2019, the Company recorded a provision for income taxes of $7,000 pertaining to various state income taxes.

The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As of December 31, 2020 and December 31, 2019, the Company did not have a liability for unrecognized tax benefits.

The Company recognizes, as income tax expense, interest and penalties on uncertain tax provisions. As of December 31, 2020, and 2019, the Company has not accrued interest or penalties related to uncertain tax positions. Tax years 2017 through 2020 remain open to examination by the major taxing jurisdictions to which the Company is subject. 

F- 29

 

Significant components of the Company’s deferred income tax assets are as follows:

	As Restated
	December 31, 2020			December 31, 2019
Net operating loss carryforward	$	4,526,000		$	5,579,000
Allowances for sales returns, bad debt and inventory		92,000			87,000
Share based compensation		80,000			94,000
Other		178,000			202,000
Total deferred asset		4,876,000			5,962,000
Valuation allowance		(537,000	)		(5,962,000	)
Net deferred tax asset	$	4,339,000		$	-

Reconciliation of the effective income tax rate to the U.S. statutory rate is as follows:

	As restated
	December 31, 2020			December 31, 2019
Federal statutory tax rate		21	%		21	%
State tax, net of federal benefit		-	%		4	%
		21	%		25	%
Valuation allowance		(121	%)		(25	%)
Effective tax rate		(100	%)		-	%

NOTE 10. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

We are currently not involved in any litigation except noted above 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.

Lease Commitments

The Company is headquartered in Omaha, Nebraska and maintains a lease at a cost of approximately $8,000 per month, which lease is currently set to expire in May 2024. The Omaha facility is a total of 11,088 square feet inclusive of approximately 6,179 square feet of on-site warehouse space. 

Rent expense for the year ended December 31, 2020 was $67,000, of which $41,000 is included in cost of goods sold and $26,000 is included in operating expense in the accompanying consolidated statement of operations. Rent expense for the year ended December 31, 2019 was $84,000 of which $50,000 was included in cost of goods sold and $34,000 was included in operating expenses.

Minimum annual rental commitments under non-cancelable leases are as follows:

	Lease
Years ending December 31,	Commitment
2021	$	67,000
2022		67,000
2023		61,000
2024		51,000
Less: Imputed interest/present value discount		(38,000	)
Present value of lease liabilities	$	208,000

F- 30

 

NOTE 11. QUARTERly Financial Data (Unaudited)

Our quarterly financial data for 2020 and 2019 is summarized as follows:

	2020 Quarters
	As Restated (Unaudited)
	Third		Second		First
Net sales	$	6,345,000	$	2,990,000	$	6,542,000
Gross profit		2,597,000		1,436,000		2,910,000
Net income		1,380,000		25,000		1,601,000
Per share data applicable to common shareholders
Basic earnings	$	1.30	$	0.02	$	1.52
Diluted earnings	$	1.22	$	0.02	$	1.42

	2019 Quarters
	As Restated (Unaudited)
	Third		Second		First
Net sales	$	5,726,000	$	4,302,000	$	5,489,000
Gross profit		2,464,000		1,683,000		2,368,000
Net income		1,102,000		376,000		1,014,000
Net income attributable to common shareholders		1,083,000		358,000		1,014,000
Per share data applicable to common shareholders
Basic earnings	$	1.08	$	0.34	$	0.91
Diluted earnings	$	0.90	$	0.29	$	0.80

Restatement of Previously Issued Unaudited Condensed Consolidated Financial Statements

We have restated herein our previously issued  consolidated financial statements for each  of the fiscal years ended December 31, 2020 and 2019. See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for additional information.

The following tables represent our restated unaudited condensed consolidated financial statements for each quarter-to-date and year-to-date interim period of the years ended December 31, 2020 and 2019 and at each interim period therein.  The values as previously reported for the fiscal quarters ended September 30, 2020, June 30, 2020, and March 31, 2020 were derived from our Quarterly Reports on Form 10-Q filed on November 12,2020, August 13, 2020, and May 15, 2020, respectively. The values as previously reported for the fiscal quarters ended September 30, 2019, June 30, 2019, and March 31, 2019 were derived from our Quarterly Reports on Form 10-Q, which were filed on November 12, 2019, August 9, 2019 and May 15, 2019, respectively. See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) and (b).

F- 31

 

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	As Restated
ASSETS:	September 30, 2020			June 30, 2020			March 31, 2020
CURRENT ASSETS:
Cash	$	4,090,000		$	2,218,000		$	2,666,000
Accounts receivable, net of allowance of doubtful accounts, $402,000, $387,000 and $33,000, respectively		2,010,000			1,354,000			4,435,000
Inventories, net of allowance for obsolescence of $67,000, $75,000 and $130,000, respectively		2,580,000			3,478,000			3,166,000
Income tax receivable		40,000			40,000			-
Prepaid expenses and other current assets		56,000			59,000			25,000
Total current assets		8,776,000			7,149,000			10,292,000
Property and equipment, net		105,000			113,000			124,000
Right of use asset, net of amortization of $261,000, $251,000 and $241,000, respectively		219,000			229,000			239,000
Goodwill		225,000			225,000			225,000
Security deposits		-			-			10,000
TOTAL ASSETS	$	9,325,000		$	7,716,000		$	10,890,000
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable	$	1,829,000		$	1,643,000		$	2,755,000
Accrued expense and other liabilities		502,000			471,000			519,000
Product returns		276,000			276,000			276,000
Lease liability - current portion		49,000			46,000			44,000
Line of credit		-			-			2,500,000
Total current liabilities		2,656,000			2,436,000			6,094,000
Long-term lease liability, net of current portion		171,000			183,000			196,000
PPP loan		452,000			450,000			-
TOTAL LIABILITIES		3,279,000			3,069,000			6,290,000
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none outstanding, as of September 30, 2020, June 30, 2020, and March 31, 2020
Common stock, $.01 par value, 15,000,000 shares authorized; 1,060,644, 1,060,033, and 1.060,033 issued and outstanding as of September 30, 2020, June 30, 2020 and March 31, 2020, respectively		12,000			12,000			12,000
Treasury stock, 210,631 shares as of September 30, 2020, June 30, 2020, and March 31, 2020		(1,790,000	)		(1,790,000	)		(1,790,000	)
Additional paid-in capital		32,195,000			32,176,000			32,154,000
Accumulated deficit		(24,371,000	)		(25,751,000	)		(25,776,000	)
TOTAL STOCKHOLDERS' EQUITY		6,046,000			4,647,000			4,600,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,325,000		$	7,716,000		$	10,890,000

F-32

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	As Restated
ASSETS:	September 30, 2019			June 30, 2019			March 31, 2019
CURRENT ASSETS:
Cash	$	557,000		$	917,000		$	438,000
Accounts receivable, net of allowance of doubtful accounts, $290,000, $294,000 and $315,000, respectively		2,642,000			2,282,000			3,195,000
Inventories, net of allowance for obsolescence of $143,000, $131,000 and $119,000, respectively		2,750,000			3,180,000			2,661,000
Prepaid expenses and other current assets		36,000			69,000			86,000
Total current assets		5,985,000			6,448,000			6,380,000
Property and equipment, net		148,000			161,000			174,000
Right of use asset, net of amortization of $203,000, $187,000 and $0 respectively		277,000			293,000			320,000
Goodwill		225,000			225,000			225,000
Security deposits		10,000			10,000			10,000
TOTAL ASSETS	$	6,645,000		$	7,137,000		$	7,109,000
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable	$	2,033,000		$	2,625,000		$	2,307,000
Accrued expense and other liabilities		986,000			475,000			470,000
Lease liability - current portion		58,000			70,000			83,000
Notes payable		-			693,000			815,000
Total current liabilities		3,077,000			3,863,000			3,675,000
Long-term lease liability, net of current portion		219,000			227,000			240,000
TOTAL LIABILITIES		3,296,000			4,090,000			3,915,000
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none outstanding, as of September 30, 2019, June 30, 2019, and March 31, 2019
Preferred stock Series A Preferred, $0.01par value 1,000 shares authorized; 600 shares outstanding as of September 30, 2019, June 30, 2019, and March 31, 2019
Common stock, $.01 par value, 15,000,000 shares authorized; 933,305, 1,015,120, and 1,113,952 issued and outstanding as of September 30, 2019, June 30, 2019 and March 31, 2019, respectively		11,000			11,000			11,000
Treasury stock, 181,454, 99,238, and 0 shares as of September 30, 2019, June 30, 2019, and March 31, 2019, respectively		(1,385,000	)		(566,000	)		-
Additional paid-in capital		32,218,000			32,199,000			32,156,000
Accumulated deficit		(27,495,000	)		(28,597,000	)		(28,973,000	)
TOTAL STOCKHOLDERS' EQUITY		3,349,000			3,047,000			3,194,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	6,645,000		$	7,137,000		$	7,109,000

F-33

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	As Restated
	September 30, 2020						June 30, 2020						March 31, 2020
	Three Months Ended			Nine Months Ended			Three Months Ended			Six Months Ended			Three Months Ended
Revenue	$	6,345,000		$	15,877,000		$	2,990,000		$	9,532,000		$	6,542,000
Cost of goods sold		3,748,000			8,934,000			1,554,000			5,186,000			3,632,000
Gross profit		2,597,000			6,943,000			1,436,000			4,346,000			2,910,000
OPERATING EXPENSES:
General and administrative		684,000			2,418,000			1,001,000			1,734,000			733,000
Selling and marketing		509,000			1,615,000			435,000			1,106,000			671,000
Depreciation and amortization		9,000			31,000			10,000			22,000			12,000
Total operating expenses		1,202,000			4,064,000			1,446,000			2,862,000			1,416,000
OPERATING INCOME		1,395,000			2,879,000			(10,000	)		1,484,000		$	1,494,000
OTHER EXPENSES (INCOME)
Interest expense		1,000			13,000			8,000			12,000		$	4,000
Interest income		(3,000	)		(6,000	)		(3,000	)		(3,000	)
Gain on settlement		-			(70,000	)		-			(70,000	)		(70,000	)
Total other expenses (income)		(2,000	)		(63,000	)		5,000			(61,000	)		(66,000	)
PRE-TAX NET INCOME		1,397,000			2,942,000			(15,000	)		1,545,000			1,560,000
PROVISION (BENEFIT) FOR INCOME TAXES		17,000			(64,000	)		(40,000	)		(81,000	)		(41,000	)
NET INCOME		1,380,000			3,006,000		$	25,000		$	1,626,000		$	1,601,000
NET INCOME PER SHARE
Basic	$	1.30		$	2.84		$	0.02		$	1.54		$	1.52
Diluted	$	1.22		$	2.65		$	0.02		$	1.44		$	1.42
Basic weighted average common shares		1,060,350			1,057,389			1,060,033			1,055,893			1,051,752
Diluted weighted average common shares		1,134,379			1,132,764			1,125,999			1,126,631			1,126,303

F-34

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	As Restated
	September 30, 2019						June 30, 2019						March 31, 2019
	Three Months Ended			Nine Months Ended			Three Months Ended			Six Months Ended			Three Months Ended
Revenue	$	5,726,000		$	15,517,000		$	4,302,000		$	9,791,000		$	5,489,000
Cost of goods sold		3,262,000			9,002,000			2,619,000			5,740,000			3,121,000
Gross profit		2,464,000			6,515,000			1,683,000			4,051,000			2,368,000
OPERATING EXPENSES:
General and administrative		782,000			2,352,000			796,000			1,570,000			774,000
Selling and marketing		583,000			1,749,000			616,000			1,166,000			550,000
Depreciation and amortization		12,000			40,000			13,000			28,000			15,000
Total operating expenses		1,377,000			4,141,000			1,425,000			2,764,000			1,339,000
OPERATING INCOME		1,087,000			2,374,000			258,000			1,287,000		$	1,029,000
OTHER EXPENSES (INCOME):
Interest expense		14,000			47,000			18,000			33,000		$	15,000
Gain on settlement		(29,000	)		(171,000	)		(142,000	)		(142,000	)		-
Total other expenses (income)		(15,000	)		(124,000	)		(124,000	)		(109,000	)		15,000
PRE-TAX NET INCOME		1,102,000			2,498,000			382,000			1,396,000			1,014,000
PROVISION (BENEFIT) FOR INCOME TAXES		-			6,000			6,000			6,000			-
NET INCOME		1,102,000			2,492,000		$	376,000		$	1,390,000		$	1,014,000
PREFERRED STOCK DIVIDEND		(19,000	)		(37,000	)		(18,000	)		(18,000	)		-
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	1,083,000			2,455,000		$	358,000			1,372,000		$	1,014,000
NET INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS
Basic	$	1.08		$	2.33		$	0.34		$	1.27		$	0.91
Diluted	$	0.90		$	1.98		$	0.29		$	1.09		$	0.80
Basic weighted average common shares		1,001,715			1,053,292			1,047,447			1,079,517			1,111,943
Diluted weighted average common shares		1,207,024			1,241,875			1,239,875			1,258,520			1,268,526

F-35

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(UNAUDITED)

	As Restated
	For the Nine Months Ended September 30, 2020
													Additional
	Series A Preferred				Common Stock					Treasury			Paid-in		Accumulated
	Shares		Amount		Shares			Amount		Stock			Capital		Deficit			Total
Balance at December 31, 2019		-	$	-		1,054,516		$	12,000	$	(1,619,000	)	$	32,055,000	$	(27,377,000	)	$	3,071,000
Fair value of common stock issued for services		-		-		1,028			-		-			34,000		-			34,000
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		-		-		-			-		-			35,000		-			35,000
Net income		-		-		-			-		-			-		3,006,000			3,006,000
Balance at September 30, 2020		-	$	-		1,060,644		$	12,000		(1,790,000	)	$	32,195,000	$	(24,371,000	)	$	6,046,000

	As Restated
	For the Six Months Ended June 30, 2020
Balance at December 31, 2019		-	$	-	1,054,516		$	12,000	$	(1,619,000	)	$	32,055,000	$	(27,377,000	)	$	3,071,000
Fair value of common stock issued for services		-		-	417			-		-			26,000		-			26,000
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		-		-	-			-		-			24,000		-			24,000
Net income		-		-	-			-		-			-		1,626,000			1,626,000
Balance at June 30, 2020		-	$	-	1,060,033		$	12,000	$	(1,790,000	)	$	32,176,000	$	(25,751,000	)	$	4,647,000

	As Restated
	For the Three Months Ended March 31, 2020
Balance at December 31, 2019		-	$	-	1,054,516		$	12,000	$	(1,619,000	)	$	32,055,000	$	(27,377,000	)	$	3,071,000
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		-		-											1,601,000			1,601,000
Balance at March 31, 2020		-	$	-	1,060,033		$	12,000	$	(1,790,000	)	$	32,154,000	$	(25,776,000	)	$	4,600,000

F-36

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(UNAUDITED)

	As Restated
	For the Nine Months Ended September 30, 2019
													Additional
	Series A Preferred				Common Stock					Treasury			Paid-in			Accumulated
	Shares		Amount		Shares			Amount		Stock			Capital			Deficit			Total
Balance at December 31, 2018		600	$	-		1,111,943		$	11,000	$	-		$	32,107,000		$	(29,987,000	)	$	2,131,000
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		-		-		-			-		-			-			2,492,000			2,492,000
Balance at September 30, 2019		600	$	-		933,305		$	11,000		(1,385,000	)		32,218,000		$	(27,495,000		$	3,349,000

	As Restated
	For the Six Months Ended June 30, 2019
Balance at December 31, 2018		600	$	-	1,111,943		$	11,000	$	-		$	32,107,000		$	(29,987,000	)	$	2,131,000
Fair value of common stock issued for services		-		-	2,415			-		-			39,000			-			39,000
Repurchase of common stock		-		-	(99,238	)		-		(566,000	)		-			-			(566,000	)
Dividend payments on preferred stock		-		-	-			-		-			(18,000	)		-			(18,000	)
Fair value of vested common shares and options issued for services		-		-	-			-		-			71,000			-			71,000
Net income		-		-	-			-		-			-			1,390,000			1,390,000
Balance at June 30, 2019		600	$	-	1,015,120		$	11,000	$	(566,000	)	$	32,199,000		$	(28,597,000	)	$	3,047,000

	As Restated
	For the Three Months Ended March 31, 2019
Balance at December 31, 2018		600	$	-	1,111,943	$	11,000	$	-	$	32,107,000	$	(29,987,000	)	$	2,131,000
Fair value of common stock issued for services		-		-	2,009		-		-		23,000		-			23,000
Repurchase of common stock		-		-	-		-		-		-		-			-
Exercise of stock options		-		-	-		-		-		-		-			-
Fair value of vested common shares and options issued for services		-		-	-		-		-		26,000		-			26,000
Net income		-		-									1,014,000			1,014,000
Balance at March 31, 2019		600	$	-	1,113,952	$	11,000	$	-	$	32,156,000	$	(28,973,000	)	$	3,194,000

F-37

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	As Restated
	September 30, 2020			June 30, 2020			March 31, 2020
	Nine months ended			Six months ended			Three months ended
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	3,006,000		$	1,626,000		$	1,601,000
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		32,000			23,000			12,000
Allowance for doubtful accounts		375,000			360,000			6,000
Allowance for inventory obsolescence		(62,000	)		(55,000	)		-
Common stock issued for services		40,000			26,000			16,000
Fair value of options issued for services		29,000			24,000			12,000
Right of use asset net of amortization and lease liability		-			-			2,000
Changes in operating assets and liabilities:
Accounts receivable - trade		(667,000	)		3,000			(2,721,000	)
Inventories		844,000			(64,000	)		191,000
Prepaid expense		15,000			13,000			46,000
Income tax receivable		(40,000	)		(40,000	)		-
Security deposit		10,000			10,000			-
Accounts payable		(189,000	)		(375,000	)		737,000
Accrued liabilities and other liabilities		62,000			32,000			79,000
Product returns		20,000			20,000			20,000
Net cash provided by operating activities	$	3,475,000		$	1,603,000		$	1,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by investing activities		-			-			-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		71,000			71,000			71,000
Proceeds from Paycheck Protection Program		450,000			450,000			-
Proceeds from line of credit, net		-			-			2,500,000
Repurchases of common stock		(171,000	)		(171,000	)		(171,000	)
Net cash provided by (used in) financing activities	$	350,000		$	350,000		$	2,400,000
CHANGE IN CASH		3,825,000			1,953,000			2,401,000
CASH, BEGINNING OF PERIOD		265,000			265,000			265,000
CASH, END OF PERIOD	$	4,090,000		$	2,218,000		$	2,666,000

F-38

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	As Restated
	September 30, 2019			June 30, 2019			March 31, 2019
	Nine months ended			Six months ended			Three months ended
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,492,000		$	1,390,000		$	1,014,000
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		40,000			28,000			15,000
Allowance for doubtful accounts		(166,000	)		(161,000	)		(140,000	)
Allowance for inventory obsolescence		36,000			24,000			12,000
Common stock issued for services		55,000			39,000			23,000
Fair value of options issued for services		94,000			71,000			26,000
Right of use asset net of amortization and lease liability		1,000			4,000			3,000
Changes in operating assets and liabilities:
Accounts receivable - trade		(1,276,000	)		(920,000	)		(1,855,000	)
Inventories		844,000			425,000			957,000
Prepaid expense		160,000			127,000			109,000
Accounts payable		(595,000	)		(3,000	)		(320,000	)
Accrued liabilities and other liabilities		39,000			(36,000	)		35,000
Net cash provided by operating activities	$	1,724,000		$	988,000		$	(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			300,000			300,000
Dividend payments on preferred stock		(37,000	)		(18,000	)		-
Repurchases of common stock		(889,000	)		(472,000	)		-
Repayments of note payable		(800,000	)		(140,000	)		-
Net cash provided by (used in) financing activities	$	(1,426,000	)	$	(330,000	)	$	300,000
CHANGE IN CASH		298,000			658,000			179,000
CASH, BEGINNING OF PERIOD		259,000			259,000			259,000
CASH, END OF PERIOD	$	557,000		$	917,000		$	438,000

F-39

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(UNAUDITED)

	As of September 30, 2020
ASSETS:	As Previously Reported			Restatement Impacts			Restatement Reference	As Restated
CURRENT ASSETS:
Cash	$	4,090,000		$	-			$	4,090,000
Accounts receivable, net of allowance for doubtful accounts of $402,000		2,594,000			(584,000	)	(a)		2,010,000
Inventories, net of allowance for obsolescence of $67,000		2,255,000			325,000		(a)(b)		2,580,000
Income tax receivable		40,000							40,000
Prepaid expenses and other current assets		57,000			(1,000	)	(b)		56,000
Total current assets		9,036,000			(260,000	)			8,776,000
Property and equipment, net		105,000			-				105,000
Right of use asset, net of amortization of $261,000		219,000			-				219,000
Goodwill		225,000			-				225,000
TOTAL ASSETS	$	9,585,000		$	(260,000	)		$	9,325,000
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable	$	1,821,000		$	8,000		(b)	$	1,829,000
Accrued expense and other liabilities		524,000			(22,000	)	(b)		502,000
Product returns		276,000			-				276,000
Lease liability - current portion		49,000			-				49,000
Total current liabilities		2,670,000			(14,000	)			2,656,000
Long-term lease liability, net of current portion		171,000			-				171,000
PPP loan		452,000			-				452,000
TOTAL LIABILITIES		3,293,000			(14,000	)			3,279,000
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none outstanding, as of September 30, 2020
Common stock, $.01 par value, 15,000,000 shares authorized; 1,060,644 issued and outstanding as of September 30, 2020		12,000			-				12,000
Treasury stock, 210,631 shares		(1,790,000	)		-				(1,790,000	)
Additional paid-in capital		32,195,000			-				32,195,000
Accumulated deficit		(24,125,000	)		(246,000	)	(a)(b)		(24,371,000	)
TOTAL STOCKHOLDERS' EQUITY		6,292,000			(246,000	)			6,046,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,585,000		$	(260,000	)		$	9,325,000

(a) Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $584,000, an increase to inventory of $317,000, and an increase of accumulated deficit of $267,000

(b) Other adjustments – The correction of these misstatements resulted in an increase to inventory of $8,000, a decrease in prepaid expenses and other current assets of $1,000, an increase in accounts payable of $8,000, a decrease in accrued expense and other liabilities of $22,000 and a reduction in accumulated deficit of $21,000.

F-40

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(UNAUDITED)

	As of June 30, 2020
ASSETS:	As Previously Reported			Restatement Impacts			Restatement Reference	As Restated
CURRENT ASSETS:
Cash	$	2,218,000		$	-			$	2,218,000
Accounts receivable, net of allowance for doubtful accounts of $387,000		1,362,000			(8,000	)	(a)		1,354,000
Inventories, net of allowance for obsolescence of $75,000		3,467,000			11,000		(a)		3,478,000
Income tax receivable		40,000			-				40,000
Prepaid expenses and other current assets		59,000			-				59,000
Total current assets		7,146,000			3,000				7,149,000
Property and equipment, net		113,000			-				113,000
Right of use asset, net of amortization of $251,000		229,000			-				229,000
Goodwill		225,000			-				225,000
TOTAL ASSETS	$	7,713,000		$	3,000			$	7,716,000
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable	$	1,635,000		$	8,000		(b)	$	1,643,000
Accrued expense and other liabilities		495,000			(24,000	)	(b)		471,000
Product returns		276,000			-				276,000
Lease liability - current portion		46,000			-				46,000
Total current liabilities		2,452,000			(16,000	)			2,436,000
Long-term lease liability, net of current portion		183,000			-				183,000
PPP loan		450,000			-				450,000
TOTAL LIABILITIES		3,085,000			(16,000	)			3,069,000
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none outstanding
Common stock, $.01 par value, 15,000,000 shares authorized; 1,060,033 issued and outstanding		12,000			-				12,000
Treasury stock, 210,631 shares		(1,790,000	)		-				(1,790,000	)
Additional paid-in capital		32,176,000			-				32,176,000
Accumulated deficit		(25,770,000	)		19,000		(a)(b)		(25,751,000	)
TOTAL STOCKHOLDERS' EQUITY		4,628,000			19,000				4,647,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	7,713,000		$	3,000			$	7,716,000

(a) Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $8,000, an increase to inventory of $4,000, and an increase of accumulated deficit of $4,000

(b) Other adjustments – The correction of these misstatements resulted in an increase to inventories of $7,000, an increase in accounts payable of $8,000, a decrease in accrued expense and other liabilities of $24,000 and a decrease in accumulated deficit of $23,000.

F-41

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(UNAUDITED)

	As of March 31, 2020
ASSETS:	As Previously Reported			Restatement Impacts			Restatement Reference	As Restated
CURRENT ASSETS:
Cash	$	2,666,000		$	-			$	2,666,000
Accounts receivable, net of allowance for doubtful accounts of $33,000		4,692,000			(257,000	)	(a)		4,435,000
Inventories, net of allowance for obsolescence of $130,000		3,023,000			143,000		(a)		3,166,000
Prepaid expenses and other current assets		25,000			-				25,000
Total current assets		10,406,000			(114,000	)			10,292,000
Property and equipment, net		124,000			-				124,000
Right of use asset, net of amortization of $241,000		239,000			-				239,000
Goodwill		225,000			-				225,000
Security deposits		10,000			-				10,000
TOTAL ASSETS	$	11,004,000		$	(114,000	)		$	10,890,000
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable	$	2,747,000		$	8,000		(b)	$	2,755,000
Accrued expense and other liabilities		543,000			(24,000	)	(b)		519,000
Product returns		276,000			-				276,000
Lease liability - current portion		44,000			-				44,000
Line of credit		2,500,000			-				2,500,000
Total current liabilities		6,110,000			(16,000	)			6,094,000
Long-term lease liability, net of current portion		196,000			-				196,000
PPP loan		-			-				-
TOTAL LIABILITIES		6,306,000			(16,000	)			6,290,000
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none outstanding
Common stock, $.01 par value, 15,000,000 shares authorized; 1,060,033 issued and outstanding		12,000			-				12,000
Treasury stock, 210,631 shares		(1,790,000	)		-				(1,790,000	)
Additional paid-in capital		32,154,000			-				32,154,000
Accumulated deficit		(25,678,000	)		(98,000	)	(a)(b)		(25,776,000	)
TOTAL STOCKHOLDERS' EQUITY		4,698,000			(98,000	)			4,600,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	11,004,000		$	(114,000	)		$	10,890,000

(a) Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $257,000, an increase to inventory of $136,000, and an increase of accumulated deficit of $121,000

(b) Other adjustments – The correction of these misstatements resulted in an increase to inventory of $7,000, an increase in accounts payable of $8,000, a decrease in accrued expenses and other current liabilities of $24,000, and a reduction of accumulated deficit of $23,000.

F-42

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(UNAUDITED)

	As of September 30, 2019
ASSETS:	As Previously			Restatement			Restatement	As
	Reported			Impacts			Reference	Restated
CURRENT ASSETS
Cash	$	557,000		$	-			$	557,000
Accounts receivable, net of allowance of doubtful accounts of $290,000		3,170,000			(528,000	)	(a)		2,642,000
Inventories, net of allowance for obsolescence of $143,000		2,482,000			268,000		(a)		2,750,000
Prepaid expenses and other current assets		63,000			(27,000	)	(b)		36,000
Total current assets		6,272,000			(287,000	)			5,985,000
Property and equipment, net		148,000			-				148,000
Right of use asset, net of amortization $203,000		277,000			-				277,000
Goodwill		225,000			-				225,000
Security deposits		10,000			-				10,000
TOTAL ASSETS	$	6,932,000		$	(287,000	)		$	6,645,000
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable	$	2,033,000		$	-			$	2,033,000
Accrued expense and other liabilities		957,000			29,000		(b)		986,000
Lease liability - current portion		58,000			-				58,000
Total current liabilities		3,048,000			29,000				3,077,000
Long-term lease liability, net of current portion		219,000			-				219,000
TOTAL LIABILITIES		3,267,000			29,000				3,296,000
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; none outstanding
Preferred stock Series A Preferred, $0.01 par value 1,000 shares authorized; 600 shares issued and outstanding		-			-				-
Common stock, $.01 par value, 15,000,000 shares authorized; 933,305 issued and outstanding		11,000			-				11,000
Treasury Stock, 181,454 shares		(1,385,000	)		-				(1,385,000	)
Additional paid-in capital		32,218,000			-				32,218,000
Accumulated deficit		(27,179,000	)		(316,000	)	(a)(b)		(27,495,000	)
Total stockholders' equity		3,665,000			(316,000	)			3,349,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	6,932,000		$	(316,000	)		$	6,645,000

(a) Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $528,000, an increase to inventory of $268,000, and an increase to accumulated deficit of $260,000

(b) Other Reclasses – A decrease of $27,000 in prepaid expenses and other current assets and an increase of accrued expenses and other liabilities of $29,000, and an increase in accumulated deficit of $56,000

F-43

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(UNAUDITED)

	As of June 30, 2019
ASSETS:	As Previously			Restatement			Restatement	As
	Reported			Impacts			Reference	Restated
CURRENT ASSETS:
Cash	$	917,000		$	-			$	917,000
Accounts receivable, net of allowance of doubtful accounts of $294,000		3,220,000			(938,000	)	(a)		2,282,000
Inventories, net of allowance for obsolescence of $131,000		2,712,000			468,000		(a)		3,180,000
Prepaid expenses and other current assets		96,000			(27,000	)	(b)		69,000
Total current assets		6,945,000			(497,000	)			6,448,000
Property and equipment, net		161,000			-				161,000
Right of use asset, net of amortization, $251,000		293,000			-				293,000
Goodwill		225,000			-				225,000
Security deposits		10,000			-				10,000
TOTAL ASSETS	$	7,634,000		$	(497,000	)		$	7,137,000
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable	$	2,625,000		$	-			$	2,625,000
Accrued expense and other liabilities		445,000			30,000		(b)		475,000
Lease liability - current portion		70,000			-				70,000
Notes payable		693,000			-				693,000
Total current liabilities		3,833,000			30,000				3,863,000
Long-term lease liability, net of current portion		227,000			-				227,000
TOTAL LIABILITIES		4,060,000			30,000				4,090,000
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; none outstanding
Preferred stock Series A Preferred, $0.01 par value 1,000 shares authorized; 600 shares issued and outstanding		-			-				-
Common stock, $.01 par value, 15,000,000 shares authorized; 1,015,120 issued and outstanding		11,000			-				11,000
Treasury Stock, 99,238 shares		(566,000	)		-				(566,000	)
Additional paid-in capital		32,199,000			-				32,199,000
Accumulated deficit		(28,070,000	)		(527,000	)	(a)(b)		(28,597,000	)
Total stockholders' equity		3,574,000			(527,000	)			3,047,000
	$	7,634,000		$	(497,000	)		$	7,137,000

(a) Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $938,000, an increase to inventory of $468,000, and an increase in accumulated deficit of $470,000

(b) Other Reclasses – A decrease of $27,000 in prepaid expenses and other current assets and an increase of accrued expenses and other liabilities of $30,000, and an increase in accumulated deficit of $57,000

F-44

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(UNAUDITED)

	As of March 31, 2019
ASSETS:	As Previously			Restatement			Restatement	As
	Reported			Impacts			Reference	Restated
CURRENT ASSETS:
Cash	$	438,000		$	-			$	438,000
Accounts receivable, net of allowance of doubtful accounts of $315,000		3,817,000			(622,000	)	(a)		3,195,000
Inventories, net of allowance for obsolescence of $119,000		2,338,000			323,000		(a)		2,661,000
Prepaid expenses and other current assets		113,000			(27,000	)	(b)		86,000
Total current assets		6,706,000			(326,000	)			6,380,000
Property and equipment, net		174,000			-				174,000
Right of use asset		320,000			-				320,000
Goodwill		225,000			-				225,000
Security deposits		10,000			-				10,000
TOTAL ASSETS	$	7,435,000		$	(326,000	)		$	7,109,000
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable	$	2,307,000		$	-			$	2,307,000
Accrued expense and other liabilities		440,000			30,000		(b)		470,000
Lease liability - current portion		83,000			-				83,000
Notes payable - related parties		815,000			-				815,000
Total current liabilities		3,645,000			30,000				3,675,000
Long-term lease liability, net of current portion		240,000			-				240,000
TOTAL LIABILITIES		3,885,000			30,000				3,915,000
STOCKHOLDERS' EQUITY:
Preferred Stock, $0.01 par value, 10,000,000 shares authorized, none outstanding
Preferred Stock Series A Preferred, $0.01 par value 1,000 shares authorized; 600 shares issued and outstanding		-			-				-
Common stock, $0.01 par value, 15,000,000 shares authorized; 1,113,952 issued and outstanding		11,000			-				11,000
Additional paid-in capital		32,156,000			-				32,156,000
Accumulated deficit		(28,617,000	)		(356,000	)	(a)(b)		(28,973,000	)
TOTAL STOCKHOLDERS' EQUITY		3,550,000			(356,000	)			3,194,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	7,435,000		$	(356,000	)		$	7,109,000

(a) Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $622,000, an increase to inventory of $323,000, and an increase of accumulated deficit of $299,000

(b) Other Reclasses – A decrease of $27,000 in prepaid expenses and other current assets and an increase of accrued expenses and other liabilities of $30,000, and an increase in accumulated deficit of $57,000

F-45

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended September 30, 2020
	As Previously Reported			Restatement Impacts			Restatement Reference	As Restated
Revenue	$	6,923,000		$	(578,000	)	(a)	$	6,345,000
Cost of goods sold		4,061,000			(313,000	)	(a)		3,748,000
Gross profit		2,862,000			(265,000	)			2,597,000
OPERATING EXPENSES:
General and administrative		684,000			-				684,000
Selling and marketing		509,000			-				509,000
Depreciation and amortization		9,000			-				9,000
Total operating expenses		1,202,000			-				1,202,000
OPERATING INCOME		1,660,000			(265,000	)			1,395,000
OTHER EXPENSES (INCOME):
Interest expense		1,000			-				1,000
Interest income		(3,000	)		-				(3,000	)
Gain on settlement		-			-				-
Total other expenses (income)		(2,000	)		-				(2,000	)
PRE-TAX NET INCOME		1,662,000			(265,000	)			1,397,000
PROVISION (BENEFIT) FOR INCOME TAXES		17,000			-				17,000
NET INCOME	$	1,645,000		$	(265,000	)		$	1,380,000
NET INCOME PER SHARE
Basic	$	1.55		$	(0.25	)		$	1.30
Diluted	$	1.45		$	(0.23	)		$	1.22
Basic weighted average common shares		1,060,350			-				1,060,350
Diluted weighted average common shares		1,134,379			-				1,134,379

(a) Revenue Recognition – The correction of these misstatements resulted in a decrease to revenue of $578,000, a decrease of cost of goods sold of $313,000, and a decrease to net income of $265,000

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

F-46

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	For the Nine Months Ended September 30, 2020
	As Previously Reported			Restatement Impacts			Restatement Reference	As Restated
Revenue	$	15,814,000		$	63,000		(a)	$	15,877,000
Cost of goods sold		8,896,000			38,000		(a)		8,934,000
Gross profit		6,918,000			25,000				6,943,000
OPERATING EXPENSES:
General and administrative		2,419,000			(1,000	)	(b)		2,418,000
Selling and marketing		1,614,000			1,000		(b)		1,615,000
Depreciation and amortization		31,000			-				31,000
Total operating expenses		4,064,000			-				4,064,000
OPERATING INCOME		2,854,000			25,000				2,879,000
OTHER EXPENSES (INCOME):
Interest expense		14,000			-				14,000
Interest income		(7,000	)		-				(7,000	)
Gain on settlement		(70,000	)		-				(70,000	)
Total other expenses (income)		(63,000	)		-				(63,000	)
PRE-TAX NET INCOME		2,917,000			25,000				2,942,000
PROVISION (BENEFIT) FOR INCOME TAXES		(64,000	)		-				(64,000	)
NET INCOME	$	2,981,000		$	25,000			$	3,006,000
NET INCOME PER SHARE
Basic	$	2.82		$	0.02			$	2.84
Diluted	$	2.63		$	0.02			$	2.65
Basic weighted average common shares		1,057,389			-				1,057,389
Diluted weighted average common shares		1,132,764			-				1,132,764

(a) Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $63,000, an increase of cost of goods sold of $38,000, and an increase to net income of $25,000.

(b) Other adjustments – The correction of these misstatements resulted in a decrease to general and administrative expenses of $1,000 and an increase to selling and marketing of $1,000.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

F-47

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended June 30, 2020
	As Previously Reported			Restatement Impacts		Restatement Reference	As Restated
Revenue	$	2,740,000		$	250,000	(a)	$	2,990,000
Cost of goods sold		1,421,000			133,000	(a)		1,554,000
Gross profit		1,319,000			117,000			1,436,000
OPERATING EXPENSES:
General and administrative		1,001,000			-			1,001,000
Selling and marketing		435,000			-			435,000
Depreciation and amortization		10,000			-			10,000
Total operating expenses		1,446,000			-			1,446,000
OPERATING INCOME (LOSS)		(127,000	)		117,000			(10,000	)
OTHER EXPENSES (INCOME):
Interest expense		8,000			-			8,000
Interest income		(3,000	)		-			(3,000	)
Total other expenses (income)		5,000			-			5,000
PRE-TAX NET INCOME (LOSS)		(132,000	)		117,000			(15,000	)
PROVISION (BENEFIT) FOR INCOME TAXES		(40,000	)		-			(40,000	)
NET INCOME (LOSS)	$	(92,000	)	$	117,000		$	25,000
NET INCOME (LOSS) PER SHARE
Basic	$	(0.09	)	$	0.11		$	0.02
Diluted	$	(0.09	)	$	0.11		$	0.02
Basic weighted average common shares		1,060,033			-			1,060,033
Diluted weighted average common shares		1,060,033			-			1,125,999

(a) Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $250,000, an increase to cost of goods sold of $133,000, and an increase to net income of $117,000

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

F-48

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	For the Six Months Ended June 30, 2020
	As Previously Reported			Restatement Impacts			Restatement Reference	As Restated
Revenue	$	8,891,000		$	641,000		(a)	$	9,532,000
Cost of goods sold		4,835,000			351,000		(a)		5,186,000
Gross profit		4,056,000			290,000				4,346,000
OPERATING EXPENSES:
General and administrative		1,734,000			-				1,734,000
Selling and marketing		1,106,000			-				1,106,000
Depreciation and amortization		23,000			(1,000	)	(b)		22,000
Total operating expenses		2,863,000			(1,000	)			2,862,000
OPERATING INCOME		1,193,000			291,000				1,484,000
OTHER EXPENSES (INCOME):
Interest expense		12,000			-				12,000
Interest income		(4,000	)		(1,000	)	(b)		(3,000	)
Gain on settlement		(70,000	)		-				(70,000	)
Total other expenses (income)		(62,000	)		(1,000	)			(61,000	)
PRE-TAX NET INCOME		1,255,000			290,000				1,545,000
PROVISION (BENEFIT) FOR INCOME TAXES		(81,000	)		-				(81,000	)
NET INCOME	$	1,336,000		$	290,000			$	1,626,000
NET INCOME PER SHARE
Basic	$	1.27		$	0.27			$	1.54
Diluted	$	1.19		$	0.25			$	1.44
Basic weighted average common shares		1,055,893			-				1,055,893
Diluted weighted average common shares		1,126,631			-				1,126,631

(a) Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $641,000, an increase of cost of goods sold of $351,000, and an increase to net income of $290,000

(b) Other adjustments – The correction of these misstatements resulted in a decrease to depreciation and amortization of $1,000 and an increase to interest income of $1,000, and no impact to net income.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

F-49

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended March 31, 2020
	As Previously Reported			Restatement Impacts		Restatement Reference	As Restated
Revenue	$	6,151,000		$	391,000	(a)	$	6,542,000
Cost of goods sold		3,414,000			218,000	(a)		3,632,000
Gross profit		2,737,000			173,000			2,910,000
OPERATING EXPENSES:
General and administrative		733,000			-			733,000
Selling and marketing		671,000			-			671,000
Depreciation and amortization		12,000			-			12,000
Total operating expenses		1,416,000			-			1,416,000
OPERATING INCOME		1,321,000			173,000			1,494,000
OTHER EXPENSES (INCOME):
Interest expense		4,000			-			4,000
Gain on settlement		(70,000	)		-			(70,000	)
Total other expenses (income)		(66,000	)		-			(66,000	)
PRE-TAX NET INCOME		1,387,000			173,000			1,560,000
PROVISION (BENEFIT) FOR INCOME TAXES		(41,000	)		-			(41,000	)
NET INCOME	$	1,428,000		$	173,000		$	1,601,000
NET INCOME PER SHARE
Basic	$	1.36		$	0.16		$	1.52
Diluted	$	1.27		$	0.15		$	1.42
Basic weighted average common shares		1,051,752			-			1,051,752
Diluted weighted average common shares		1,126,303			-			1,126,303

(a) Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $391,000, an increase of cost of goods sold of $218,000, and an increase to net income of $173,000.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

F-50

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended September 30, 2019
	As Previously Reported			Restatement Impacts		Restatement Reference	As Restated
Revenue	$	5,316,000		$	410,000	(a)	$	5,726,000
Cost of goods sold		3,063,000			199,000	(a)		3,262,000
Gross profit		2,253,000			211,000			2,464,000
OPERATING EXPENSES:
General and administrative		782,000			-			782,000
Selling and marketing		583,000			-			583,000
Depreciation and amortization		12,000			-			12,000
Total operating expenses		1,377,000			-			1,377,000
OPERATING INCOME		876,000			211,000			1,087,000
OTHER EXPENSES (INCOME):
Interest expense		14,000			-			14,000
Gain on settlement		(29,000	)		-			(29,000	)
Total other expenses (income)		(15,000	)		-			(15,000	)
PRE-TAX NET INCOME		891,000			211,000			1,102,000
PROVISION (BENEFIT) FOR INCOME TAXES		-			-			-
NET INCOME		891,000			211,000			1,102,000
PREFERRED STOCK DIVIDEND		(19,000	)		-			(19,000	)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	872,000		$	211,000		$	1,083,000
NET INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS
Basic	$	0.87		$	0.21		$	1.08
Diluted	$	0.72		$	0.18		$	0.90
Basic weighted average common shares		1,001,715			-			1,001,715
Diluted weighted average common shares		1,207,024			-			1,207,024

(a) Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $410,000, an increase of cost of goods sold of $199,000, and an increase to net income of $211,000

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

F-51

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	For the Nine Months Ended September 30, 2019
	As Previously Reported			Restatement Impacts			Restatement Reference	As Restated
Revenue	$	15,812,000		$	(295,000	)	(a)	$	15,517,000
Cost of goods sold		9,163,000			(161,000	)	(a)		9,002,000
Gross profit		6,649,000			(134,000	)			6,515,000
OPERATING EXPENSES:
General and administrative		2,352,000			-				2,352,000
Selling and marketing		1,749,000			-				1,749,000
Depreciation and amortization		40,000			-				40,000
Total operating expenses		4,141,000			-				4,141,000
OPERATING INCOME		2,508,000			(134,000	)			2,374,000
OTHER EXPENSES (INCOME):
Interest expense		47,000			-				47,000
Gain on settlement		(171,000	)		-				(171,000	)
Total other expenses (income)		(124,000	)		-				(124,000	)
PRE-TAX NET INCOME		2,632,000			(134,000	)			2,498,000
PROVISION (BENEFIT) FOR INCOME TAXES		7,000			(1,000	)	(b)		6,000
NET INCOME		2,625,000			(133,000	)			2,492,000
PREFERRED STOCK DIVIDEND		(37,000	)		-				(37,000	)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	2,588,000		$	(133,000	)		$	2,455,000
NET INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS
Basic	$	2.46		$	(0.13	)		$	2.33
Diluted	$	2.08		$	(0.10	)		$	1.98
Basic weighted average common shares		1,053,292			-				1,053,292
Diluted weighted average common shares		1,241,875			-				1,241,875

(a) Revenue Recognition – The correction of these misstatements resulted in a decrease to revenue of $295,000, a decrease of cost of goods sold of $161,000, and a decrease to net income of $134,000

(b) Other adjustments – The correction of these misstatements resulted in a decrease to provision for income taxes of $1,000 and an increase to net income of $1,000.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

F-52

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended June 30, 2019
	As Previously Reported			Restatement Impacts			Restatement Reference	As Restated
Revenue	$	4,618,000		$	(316,000	)	(a)	$	4,302,000
Cost of goods sold		2,764,000			(145,000	)	(a)		2,619,000
Gross profit		1,854,000			(171,000	)			1,683,000
OPERATING EXPENSES:
General and administrative		796,000			-				796,000
Selling and marketing		616,000			-				616,000
Depreciation and amortization		13,000			-				13,000
Total operating expenses		1,425,000			-				1,425,000
OPERATING INCOME		429,000			(171,000	)			258,000
OTHER EXPENSES (INCOME):
Interest expense		18,000			-				18,000
Gain on settlement		(142,000	)		-				(142,000	)
Total other expenses (income)		(124,000	)		-				(124,000	)
PRE-TAX NET INCOME		553,000			(171,000	)			382,000
PROVISION (BENEFIT) FOR INCOME TAXES		6,000			-				6,000
NET INCOME		547,000			(171,000	)			376,000
PREFERRED STOCK DIVIDEND		(18,000	)		-				(18,000	)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	529,000		$	(171,000	)		$	358,000
NET INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS
Basic	$	0.51		$	(0.17	)		$	0.34
Diluted	$	0.43		$	(0.14	)		$	0.29
Basic weighted average common shares		1,047,447			-				1,047,447
Diluted weighted average common shares		1,239,875			-				1,239,875

(a) Revenue Recognition – The correction of these misstatements resulted in a decrease to revenue of $316,000, a decrease of cost of goods sold of $145,000, and a decrease to net income of $171,000

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

F-53

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	For the Six Months Ended June 30, 2019
	As Previously Reported			Restatement Impacts			Restatement Reference	As Restated
Revenue	$	10,496,000		$	(705,000	)	(a)	$	9,791,000
Cost of goods sold		6,101,000			(361,000	)	(a)		5,740,000
Gross profit		4,395,000			(344,000	)			4,051,000
OPERATING EXPENSES:
General and administrative		1,570,000			-				1,570,000
Selling and marketing		1,166,000			-				1,166,000
Depreciation and amortization		28,000			-				28,000
Total operating expenses		2,764,000			-				2,764,000
OPERATING INCOME		1,631,000			(344,000	)			1,287,000
OTHER EXPENSES (INCOME):
Interest expense		33,000			-				33,000
Gain on settlement		(142,000	)		-				(142,000	)
Total other expenses (income)		(109,000	)		-				(109,000	)
PRE-TAX NET INCOME		1,740,000			(344,000	)			1,396,000
PROVISION (BENEFIT) FOR INCOME TAXES		6,000			-				6,000
NET INCOME		1,734,000			(344,000	)			1,390,000
PREFERRED STOCK DIVIDEND		(18,000	)		-				(18,000	)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	1,716,000		$	(344,000	)		$	1,372,000
NET INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS
Basic	$	1.59		$	(0.32	)		$	1.27
Diluted	$	1.36		$	(0.27	)		$	1.09
Basic weighted average common shares		1,079,517			-				1,079,517
Diluted weighted average common shares		1,258,520			-				1,258,520

(a) Revenue Recognition – The correction of these misstatements resulted in a decrease to revenue of $705,000, a decrease of cost of goods sold of $361,000, and a decrease to net income of $344,000

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

F-54

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended March 31, 2019
	As Previously Reported		Restatement Impacts			Restatement Reference	As Restated
Revenue	$	5,878,000	$	(389,000	)	(a)	$	5,489,000
Cost of goods sold		3,337,000		(216,000	)	(a)		3,121,000
Gross profit		2,541,000		(173,000	)			2,368,000
OPERATING EXPENSES:
General and administrative		774,000		-				774,000
Selling and marketing		550,000		-				550,000
Depreciation and amortization		15,000		-				15,000
Total operating expenses		1,339,000		-				1,339,000
OPERATING INCOME		1,202,000		(173,000	)			1,029,000
OTHER EXPENSES (INCOME):
Interest expense		15,000		-				15,000
Total other expenses (income)		15,000		-				15,000
PRE-TAX NET INCOME		1,187,000		(173,000	)			1,014,000
PROVISION (BENEFIT) FOR INCOME TAXES		-		-				-
NET INCOME		1,187,000		(173,000	)			1,014,000
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	1,187,000	$	(173,000	)		$	1,014,000
NET INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS
Basic	$	1.07	$	(0.16	)		$	0.91
Diluted	$	0.94	$	(0.14	)		$	0.80
Basic weighted average common shares		1,111,943		-				1,111,943
Diluted weighted average common shares		1,268,526		-				1,268,526

(a) Revenue Recognition – The correction of these misstatements resulted in a decrease to revenue of $389,000, a decrease of cost of goods sold of $216,000, and a decrease to net income of $173,000

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

F-55

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT- OF STOCKHOLDERS' EQUITY

										Additional
	Restatement	Common Stock					Treasury			Paid-in		Accumulated
	Reference	Shares			Amount		Stock			Capital		Deficit			Total
NINE MONTHS ENDED SEPTEMBER 30, 2020
		As Previously Reported
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			1,028			-		-			34,000		-			34,000
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			-			-		-			35,000		-			35,000
Net income			-			-		-			-		2,981,000			2,981,000
SEPTEMBER 30, 2020			1,060,644		$	12,000	$	(1,790,000	)	$	32,195,000	$	(24,125,000	)	$	6,292,000
NINE MONTHS ENDED SEPTEMBER 30, 2020		Restatement Impacts
DECEMBER 31, 2019	(a)(b)											$	(271,000	)	$	(271,000	)
Fair value of common stock issued for services			-			-		-			-		-			-
Repurchase of common stock			-			-		-			-		-			-
Exercise of stock options			-			-		-			-		-			-
Fair value of vested common shares and options issued for services			-			-		-			-		-			-
Net income	(a)(b)		-			-		-			-		25,000			25,000
SEPTEMBER 30, 2020			-		$	-	$	-		$	-	$	(246,000	)	$	(246,000	)
NINE MONTHS ENDED SEPTEMBER 30, 2020		As Restated
DECEMBER 31, 2019			1,054,516		$	12,000	$	(1,619,000	)	$	32,055,000	$	(27,377,000	)	$	3,071,000
Fair value of common stock issued for services			1,028			-		-			34,000		-			34,000
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			-			-		-			35,000		-			35,000
Net income			-			-		-			-		3,006,000			3,006,000
SEPTEMBER 30, 2020			1,060,644		$	12,000	$	(1,790,000	)	$	32,195,000	$	(24,371,000	)	$	6,046,000

See descriptions of the net income impacts in the condensed consolidated statement of operations for the nine months ended September 30, 2020 section above.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

F-56

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)

											Additional
	Restatement		Common Stock					Treasury			Paid-in		Accumulated
	Reference		Shares			Amount		Stock			Capital		Deficit			Total
SIX MONTHS ENDED JUNE 30, 2020
		As Previously Reported
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			-		-			26,000		-			26,000
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				-			-		-			24,000		-			24,000
Net income				-			-		-			-		1,336,000			1,336,000
Balance at June 30, 2020				1,060,033		$	12,000	$	(1,790,000	)	$	32,176,000	$	(25,770,000	)	$	4,628,000
SIX MONTHS ENDED JUNE 30, 2020		Restatement Impacts
DECEMBER 31, 2019	(a)(b)												$	(271,000	)	$	(271,000	)
Fair value of common stock issued for services				-			-		-			-		-			-
Repurchase of common stock				-			-		-			-		-			-
Exercise of stock options				-			-		-			-		-			-
Fair value of vested common shares and options issued for services				-			-		-			-		-			-
Net income	(a)(b)			-			-		-			-		290,000			290,000
Balance at June 30, 2020				-		$	-	$	-		$	-	$	19,000		$	19,000
SIX MONTHS ENDED JUNE 30, 2020		As Restated
DECEMBER 31, 2019				1,054,516		$	12,000	$	(1,619,000	)	$	32,055,000	$	(27,377,000	)	$	3,071,000
Fair value of common stock issued for services				417			-		-			26,000		-			26,000
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				-			-		-			24,000		-			24,000
Net income				-			-		-			-		1,626,000			1,626,000
Balance at June 30, 2020				1,060,033		$	12,000	$	(1,790,000	)	$	32,176,000	$	(25,751,000	)	$	4,647,000

See descriptions of the net income impacts in the condensed consolidated statement of operations for the six months ended June 30, 2020 section above. See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

F-57

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)

											Additional
	Restatement		Common Stock					Treasury			Paid-in		Accumulated
	Reference		Shares			Amount		Stock			Capital		Deficit			Total
THREE MONTHS ENDED MARCH 31, 2020
		As Previously Reported
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
Balance at 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, 2020		Restatement Impacts
DECEMBER 31, 2019	(a)(b)												$	(271,000	)	$	(271,000	)
Fair value of common stock issued for services				-			-		-			-		-			-
Repurchase of common stock				-			-		-			-		-			-
Exercise of stock options				-			-		-			-		-			-
Fair value of vested common shares and options issued for services				-			-		-			-		-			-
Net income	(a)(b)			-			-		-			-		173,000			173,000
Balance at March 31, 2020				-		$	-	$	-		$	-	$	(98,000	)	$	(98,000	)
THREE MONTHS ENDED MARCH 31, 2020		As Restated
DECEMBER 31, 2019				1,054,516		$	12,000	$	(1,619,000	)	$	32,055,000	$	(27,377,000	)	$	3,071,000
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				-			-		-			-		1,601,000			1,601,000
Balance at March 31, 2020				1,060,033		$	12,000	$	(1,790,000	)	$	32,154,000	$	(25,776,000	)	$	4,600,000

See descriptions of the net income impacts in the condensed consolidated statement of operations for the three months ended March 31, 2020 section above. See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

F-58

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)

														Additional
	Restatement	Series A Preferred				Common Stock					Treasury			Paid-in			Accumulated
	Reference	Shares		Amount		Shares			Amount		Stock			Capital			Deficit			Total
NINE MONTHS ENDED SEPTEMBER 30, 2019
		As Previously Reported
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, 2019		Restatement Impacts
DECEMBER 31, 2018	(a)(b)(c)																$	(183,000	)	$	(83,000	)
Fair value of common stock issued for services			-		-		-			-		-			-			-			-
Repurchase of common stock			-		-		-			-		-			-			-			-
Dividends payments on preferred stock			-		-		-			-		-			-			-			-
Fair value of vested common shares and options issued for services			-		-		-			-		-			-			-			-
Net income	(a)(b)		-		-		-			-		-			-			(133,000	)		(133,000	)
SEPTEMBER 30, 2019			-	$	-		-		$	-	$	-		$	-		$	(316,000	)	$	(316,000	)
NINE MONTHS ENDED SEPTEMBER 30, 2019		As Restated
DECEMBER 31, 2018			600	$	-		1,111,943		$	11,000	$	-		$	32,107,000		$	(29,987,000	)	$	2,131,000
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			-		-		-			-		-			-			2,492,000			2,492,000
SEPTEMBER 30, 2019			600	$	-		933,305		$	11,000	$	(1,385,000	)	$	32,218,000		$	(27,495,000	)	$	3,349,000

See descriptions of the net income impacts in the condensed consolidated statement of operations for the nine months ended September 30, 2019 section above. See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

F-59

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)

														Additional
	Restatement	Series A Preferred				Common Stock					Treasury			Paid-in			Accumulated
	Reference	Shares		Amount		Shares			Amount		Stock			Capital			Deficit			Total
SIX MONTHS ENDED JUNE 30, 2019
		As Previously Reported
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			-		-		2,415			-		-			39,000			-			39,000
Repurchase of common stock			-		-		(99,238	)		-		(566,000	)		-			-			(566,000	)
Dividends payments on preferred stock			-		-		-			-		-			(18,000	)					(18,000	)
Fair value of vested common shares and options issued for services			-		-		-			-		-			71,000			-			71,000
Net income			-		-		-			-		-			-			1,734,000			1,734,000
Balance at June 30, 2019			600	$	-		1,015,120		$	11,000	$	(566,000	)	$	32,199,000		$	(28,070,000	)	$	3,574,000
SIX MONTHS ENDED JUNE 30, 2019		Restatement Impacts
DECEMBER 31, 2018	(a)(b)(c)																$	(183,000	)	$	(183,000	)
Fair value of common stock issued for services			-		-		-			-		-			-			-			-
Repurchase of common stock			-		-		-			-		-			-			-			-
Dividends payments on preferred stock			-		-		-			-		-			-			-			-
Fair value of vested common shares and options issued for services			-		-		-			-		-			-			-			-
Net income	(a)(b)		-		-		-			-		-			-			(344,000	)		(344,000	)
Balance at June 30, 2019			-	$	-		-		$	-	$	-		$	-		$	(527,000	)	$	(527,000	)
SIX MONTHS ENDED JUNE 30, 2019		As Restated
DECEMBER 31, 2018			600	$	-		1,111,943		$	11,000	$	-		$	32,107,000		$	(29,987,000	)	$	2,131,000
Fair value of common stock issued for services			-		-		2,415			-		-			39,000			-			39,000
Repurchase of common stock			-		-		(99,238	)		-		(566,000	)		-			-			(566,000	)
Dividends payments on preferred stock			-		-		-			-		-			(18,000	)		-			(18,000	)
Fair value of vested common shares and options issued for services			-		-		-			-		-			71,000			-			71,000
Net income			-		-		-			-		-			-			1,391,000			1,391,000
Balance at June 30, 2019			600	$	-		1,015,120		$	11,000	$	(566,000	)	$	32,199,000		$	(28,597,000	)	$	3,047,000

See descriptions of the net income impacts in the condensed consolidated statement of operations for the six months ended June 30, 2019 section above. See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

Reclassification of amounts between common stock and additional paid-in capital have been made to conform to current presentation.

F-60

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)

												Additional
	Restatement	Series A Preferred				Common Stock				Treasury		Paid-in		Accumulated
	Reference	Shares		Amount		Shares		Amount		Stock		Capital		Deficit			Total
THREE MONTHS ENDED MARCH 31, 2019
		As Previously Reported
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			-		-		2,415		-		-		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
Balance at March 31, 2019			600	$	-		1,113,952	$	11,000	$	-	$	32,156,000	$	(28,617,000	)	$	3,550,000
THREE MONTHS ENDED MARCH 31, 2019		Restatement Impacts
DECEMBER 31, 2018	(a)(b)(c)													$	(183,000	)	$	(183,000	)
Fair value of common stock issued for services			-		-		-		-		-		-		-			-
Fair value of vested common shares and options issued for services			-		-		-		-		-		-		-			-
Net income	(a)(b)		-		-		-		-		-		-		(173,000	)		(173,000	)
Balance at March 31, 2019			-	$	-		-	$	-	$	-	$	-	$	(356,000	)	$	(356,000	)
THREE MONTHS ENDED MARCH 31, 2019		As Restated
DECEMBER 31, 2018			600	$	-		1,111,943	$	11,000	$	-	$	32,107,000	$	(29,987,000	)	$	2,131,000
Fair value of common stock issued for services			-		-		2,415		-		-		23,000		-			23,000
Fair value of vested common shares and options issued for services			-		-		-		-		-		26,000		-			26,000
Net income			-		-		-		-		-		-		1,014,000			1,014,000
Balance at March 31, 2019			600	$	-		1,113,952	$	11,000	$	-	$	32,156,000	$	(28,973,000	)	$	3,194,000

See descriptions of the net income impacts in the condensed consolidated statement of operations for the three months ended March 31, 2019 section above. See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

Reclassification of amounts between common stock and additional paid-in capital have been made to conform to current presentation.

F-61

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	Nine months ended September 30, 2020
	As Previously Reported			Restatement Impact			Restatement Reference	As Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,981,000		$	25,000		(a)	$	3,006,000
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		32,000			-				32,000
Allowance for doubtful accounts		375,000			-				375,000
Allowance for inventory obsolescence		(62,000	)		-				(62,000	)
Common stock issued for services		40,000			-				40,000
Fair value of options issued for services		29,000			-				29,000
Changes in operating assets and liabilities:
Accounts receivable - trade		(603,000	)		(64,000	)	(a)		(667,000	)
Inventories		805,000			39,000		(a)		844,000
Prepaid expense		15,000			-				15,000
Income tax receivable		(40,000	)		-				(40,000	)
Security deposit		10,000			-				10,000
Accounts payable		(189,000	)		-				(189,000	)
Accrued liabilities and other liabilities		62,000			-				62,000
Product returns		20,000			-				20,000
Net cash provided by operating activities	$	3,475,000		$	-			$	3,475,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by investing activities		-			-				-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		71,000			-				71,000
Proceeds from Paycheck Protection Program		450,000			-				450,000
Repurchases of common stock		(171,000	)		-				(171,000	)
Net cash provided by (used in) financing activities	$	350,000			-			$	350,000
CHANGE IN CASH		3,825,000			-				3,825,000
CASH, BEGINNING OF PERIOD		265,000			-				265,000
CASH, END OF PERIOD	$	4,090,000			-			$	4,090,000

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

See description of the net income impacts in the Consolidated Statement of Operations for the nine months ended September 30, 2020 included above.

None of the misstatements impacted the classifications between net operating, net investing, or net financing cash flows.

F-62

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	Six months ended June 30, 2020
	As Previously Reported			Restatement Impact			Restatement Reference	As Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,336,000		$	290,000		(a)	$	1,626,000
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		23,000			-				23,000
Allowance for doubtful accounts		360,000			-				360,000
Allowance for inventory obsolescence		(55,000	)		-				(55,000	)
Common stock issued for services		26,000			-				26,000
Fair value of options issued for services		24,000			-				24,000
Changes in operating assets and liabilities:
Accounts receivable - trade		643,000			(640,000	)	(a)		3,000
Inventories		(414,000	)		350,000		(a)		(64,000	)
Prepaid expense		13,000			-				13,000
Income tax receivable		(40,000	)		-				(40,000	)
Security deposit		10,000			-				10,000
Accounts payable		(375,000	)		-				(375,000	)
Accrued liabilities and other liabilities		32,000			-				32,000
Product returns		20,000			-				20,000
Net cash provided by operating activities	$	1,603,000		$	-			$	1,603,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by investing activities		-			-				-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		71,000			-				71,000
Proceeds from Paycheck Protection Program		450,000			-				450,000
Repurchases of common stock		(171,000	)		-				(171,000	)
Net cash provided by (used in) financing activities	$	350,000			-			$	350,000
CHANGE IN CASH		1,953,000			-				1,953,000
CASH, BEGINNING OF PERIOD		265,000			-				265,000
CASH, END OF PERIOD	$	2,218,000			-			$	2,218,000

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

See description of the net income impacts in the Consolidated Statement of Operations for the six months ended June 30, 2020 included above.

None of the misstatements impacted the classifications between net operating, net investing, or net financing cash flows.

F-63

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	Three months ended March 31, 2020
	As Previously Reported			Restatement Impact			Restatement Reference	As Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,428,000		$	173,000		(a)	$	1,601,000
Adjustments to reconcile net income to net cash used in operating activities:									-
Depreciation and amortization		12,000			-				12,000
Allowance for doubtful accounts		6,000			-				6,000
Common stock issued for services		16,000			-				16,000
Fair value of options issued for services		12,000			-				12,000
Right of use asset net of amortization and lease liability		2,000			-				2,000
Changes in operating assets and liabilities:
Accounts receivable - trade		(2,332,000	)		(389,000	)	(a)		(2,721,000	)
Inventories		(25,000	)		216,000		(a)		191,000
Prepaid expense		46,000			-				46,000
Accounts payable		737,000			-				737,000
Accrued interest		4,000			-				4,000
Accrued liabilities and other liabilities		75,000			-				75,000
Product returns		20,000			-				20,000
Net cash provided by (used in) operating activities		1,000			-				1,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by investing activities		-			-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		71,000			-				71,000
Proceeds from line of credit		2,500,000			-				2,500,000
Repurchases of common stock		(171,000	)		-				(171,000	)
Net cash provided financing activities		2,400,000			-				2,400,000
CHANGE IN CASH		2,401,000			-				2,401,000
CASH, BEGINNING OF PERIOD		265,000			-				265,000
CASH, END OF PERIOD	$	2,666,000		$	-			$	2,666,000

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

See description of the net income impacts in the Consolidated Statement of Operations for the three months ended March 31, 2020 included above.

None of the misstatements impacted the classifications between net operating, net investing, or net financing cash flows.

F-64

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	Nine months ended September 30, 2019
	As Previously Reported			Restatement Impact			Restatement Reference	As Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,625,000		$	(133,000	)	(a)	$	2,492,000
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		40,000			-				40,000
Allowance for doubtful accounts		(166,000	)		-				(166,000	)
Allowance for inventory obsolescence		36,000			-				36,000
Common stock issued for services		55,000			-				55,000
Fair value of options issued for services		94,000			-				94,000
Right of use asset net of amortization and lease liability		1,000			-				1,000
Changes in operating assets and liabilities:
Accounts receivable - trade		(1,572,000	)		296,000		(a)		(1,276,000	)
Inventories		1,005,000			(161,000	)	(a)		844,000
Prepaid expense		160,000			-				160,000
Accounts payable		(595,000	)		-				(595,000	)
Accrued liabilities and other liabilities		41,000			(2,000	)	(b)		39,000
Net cash provided by operating activities		1,724,000			-				1,724,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by investing activities		-			-				-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable		300,000			-				300,000
Dividend payments on preferred stock		(37,000	)		-				(37,000	)
Repurchases of common stock		(889,000	)		-				(889,000	)
Repayments of note payable		(800,000	)		-				(800,000	)
Net cash provided by (used in) financing activities		(1,426,000	)		-				(1,426,000	)
CHANGE IN CASH		298,000			-				298,000
CASH, BEGINNING OF PERIOD		259,000			-				259,000
CASH, END OF PERIOD	$	557,000		$	-			$	557,000

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

See description of the net income impacts in the Consolidated Statement of Operations for the nine months ended September 30, 2019 included above.

None of the misstatements impacted the classifications between net operating, net investing, or net financing cash flows.

F-65

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	Six months ended June 30, 2019
	As Previously Reported			Restatement Impact			Restatement Reference	Restatement Reference
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,734,000		$	(344,000	)	(a)	$	1,390,000
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		28,000			-				28,000
Allowance for doubtful accounts		(161,000	)		-				(161,000	)
Allowance for inventory obsolescence		24,000			-				24,000
Common stock issued for services		39,000			-				39,000
Fair value of options issued for services		71,000			-				71,000
Right of use asset net of amortization and lease liability		50,000			-				50,000
Changes in operating assets and liabilities:
Accounts receivable - trade		(1,626,000	)		706,000		(a)		(920,000	)
Inventories		787,000			(362,000	)	(a)		425,000
Prepaid expense		127,000			-				127,000
Accounts payable		(3,000	)		-				(3,000	)
Accrued interest		33,000			-				33,000
Accrued liabilities and other liabilities		(69,000	)		-				(69,000	)
Right of use asset - Lease Liability		(46,000	)		-				(46,000	)
Net cash provided by operating activities		988,000			-				988,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by investing activities		-			-				-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable		300,000			-				300,000
Dividend payments on preferred stock		(18,000	)		-				(18,000	)
Repurchases of common stock		(472,000	)		-				(472,000	)
Repayments of note payable		(140,000	)		-				(140,000	)
Net cash provided by (used in) financing activities		(330,000	)		-				(330,000	)
CHANGE IN CASH		658,000			-				658,000
CASH, BEGINNING OF PERIOD		259,000			-				259,000
CASH, END OF PERIOD	$	917,000		$	-			$	917,000

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

See description of the net income impacts in the Consolidated Statement of Operations for the six months ended June 30, 2019 included above.

None of the misstatements impacted the classifications between net operating, net investing, or net financing cash flows.

F-66

FITLIFE BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	Three Months Ended March 31, 2019
	As Previously Reported			Restatement Impact			Restatement Reference	As Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,187,000		$	(173,000	)	(a)	$	1,014,000
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		15,000			-				15,000
Allowance for doubtful accounts		(140,000	)		-				(140,000	)
Allowance for inventory obsolescence		12,000			-				12,000
Common stock issued for services		23,000			-				23,000
Fair value of options issued for services		26,000			-				26,000
Right of use asset net of amortization and lease liability		3,000			-				3,000
Changes in operating assets and liabilities:
Accounts receivable - trade		(2,244,000	)		389,000		(a)		(1,855,000	)
Inventories		1,173,000			(216,000	)	(a)		957,000
Prepaid expenses		109,000			-				109,000
Accounts payable		(320,000	)		-				(320,000	)
Accrued liabilities and other liabilities		35,000			-				35,000
Net cash provided by (used in) operating activities		(121,000	)		-				(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			-				300,000
Net cash provided by (used in) financing activities		300,000							300,000
CHANGE IN CASH		179,000			-				179,000
CASH, BEGINNING OF PERIOD		259,000			-				259,000
CASH, END OF PERIOD	$	438,000		$	-			$	438,000

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (b).

See description of the net income impacts in the Consolidated Statement of Operations for the three months ended March 31, 2019 included above.

None of the misstatements impacted the classifications between net operating, net investing, or net financing cash flows.

NOTE 12.  SUBSEQUENT EVENTS

Subsequent to the end of the fiscal year, the Company was informed by the PPP Lender and the SBA that the full amount of principal and accrued interest of the PPP Loan was forgiven on January 15, 2021.

On February 1, 2021, the Board approved an additional amendment to the previously authorized Share Repurchase Program. Under the terms of the amendment, the Company is authorized to repurchase up to $5.0 million of the Company's Common Stock, warrants to purchase shares of the Company's Common Stock ("Warrants"), and other securities issued by the Company ("Securities") 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 Warrants and Securities, at a purchase price determined by management, with the exact date and amount of such purchases to be determined by management.

On February 26, 2021, the Board of the Company declared a dividend distribution of one right (a “Right”) for each outstanding share of Common Stock per share to stockholders of record at the close of business on February 26, 2021 (the “Record Date”). Each Right entitles its holder, under the circumstances described below, to purchase from the Company one one-thousandth of a share of Series B Junior Participating Preferred Stock of the Company, par value $0.001 per share (the “Series B Preferred”), at an exercise price of $100.00 per Right, subject to adjustment. The description and terms of the Rights are set forth in the tax benefits preservation plan (the “Tax Benefits Preservation Plan”), dated as of February 26, 2021, between the Company and Colonial Stock, as rights agent (and any successor rights agent, the “Rights Agent”).

The Company adopted the Tax Benefits Preservation Plan in order to protect shareholder value against a possible limitation on the Company’s ability to use its NOL carryforwards and certain other tax benefits to reduce potential future U.S. federal income tax obligations. The NOL carryforwards are a valuable asset to the Company, which may inure to the benefit of the Company and its stockholders. However, if the Company experiences an “ownership change,” as defined in Section 382 of the IRC, its ability to fully utilize the NOL carryforwards and certain other tax benefits will be substantially limited and the timing of the usage of the NOL carryforwards and such other benefits could be substantially delayed, which could significantly impair the value of those assets. Generally, an “ownership change” occurs if the percentage of the Company’s stock owned by one or more of its “five-percent shareholders” (as such term is defined in Section 382 of the IRC) increases by more than 50 percentage points over the lowest percentage of stock owned by such stockholder or stockholders at any time over a three-year period. The Tax Benefits Preservation Plan is intended to prevent against such an “ownership change” by deterring any person or group from acquiring beneficial ownership of 4.9% or more of the Company’s securities.  

EX-21.1

Exhibit 21

SUBSIDIARIES OF REGISTRANT

Significant Subsidiaries

Company	Jurisdiction of Incorporation	Percentage of Voting Securities Owned by Registrant	Number of US subsidiaries	Number of Non-US subsidiaries
NDS Nutrition Products, Inc.	Florida	100%	—	—
iSatori, Inc.	Delaware	100%	—	—

EX-31.1

Exhibit 31.1

Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and pursuant to Rule 13a-14(a) and Rule 15d-14 under the Securities Exchange Act of 1934

I, Dayton Judd, Chief Executive Officer of the Company, certify that:

1. I have reviewed this Annual Report on Form 10-K/A 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: October 13, 2022	FitLife Brands, Inc. By: /s/ Dayton Judd
	Dayton Judd
	Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and pursuant to Rule 13a-14(a) and Rule 15d-14 under the Securities Exchange Act of 1934

I, Jakob York, Chief Financial Officer of the Company, certify that:

1. I have reviewed this Annual Report on Form 10-K/A 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: October 13, 2022	FitLife Brands, Inc. By: /s/ Jakob York
	Jakob York
	Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Annual Report of FitLife Brands, Inc. (the "Company") on Form 10-K/A for the year ending December 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Dayton Judd, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(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: October 13, 2022	FitLife Brands, Inc. By: /s/ Dayton Judd
	Dayton Judd
	Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Annual Report of FitLife Brands, Inc. (the "Company") on Form 10-K/A for the year ending December 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jakob York, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(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: October 13, 2022	FitLife Brands, Inc. By: /s/ Jakob York
	Jakob York
	Chief Financial Officer (Principal Financial Officer)

XML

Document And Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2020	Mar. 26, 2021	Jun. 30, 2020
Document Information [Line Items]
Entity Central Index Key	0001374328
Entity Registrant Name	FITLIFE BRANDS, INC.
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2020
Document Type	10-K/A
Document Annual Report	true
Document Period End Date	Dec. 31, 2020
Document Transition Report	false
Entity File Number	000-52369
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	20-3464383
Entity Address, Address Line One	5214 S. 136th Street
Entity Address, City or Town	Omaha
Entity Address, State or Province	NE
Entity Address, Postal Zip Code	68137
City Area Code	402
Local Phone Number	991-5618
Title of 12(g) Security	Common Stock, $0.01 par value per share
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	Yes
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Public Float			$ 5,120,383
Entity Common Stock, Shares Outstanding		1,090,818

XML

Consolidated Balance Sheets - USD ($)		Dec. 31, 2020		Sep. 30, 2020		Jun. 30, 2020		Mar. 31, 2020		Dec. 31, 2019		Sep. 30, 2019		Jun. 30, 2019	Mar. 31, 2019
CURRENT ASSETS:
Cash		$ 6,336,000		$ 4,090,000		$ 2,218,000		$ 2,666,000		$ 265,000		$ 557,000		$ 917,000	$ 438,000
Accounts receivable, net of allowance of doubtful accounts		1,797,000	[1]	2,010,000	[2]	1,354,000	[3]	4,435,000	[4]	1,718,000	[5]	2,642,000	[6]	2,282,000	3,195,000
Inventories, net of allowance for obsolescence		3,529,000	[1]	2,580,000	[2],[7]	3,478,000	[3]	3,166,000	[4]	3,358,000	[5]	2,750,000	[6]	3,180,000	2,661,000
Income tax receivable		40,000		40,000		40,000		0		0
Prepaid expenses and other current assets		52,000		56,000	[7]	59,000		25,000		72,000		36,000	[8]	69,000	86,000
Total current assets		11,754,000		8,776,000		7,149,000		10,292,000		5,413,000		5,985,000		6,448,000	6,380,000
Property and equipment, net		98,000		105,000		113,000		124,000		136,000		148,000		161,000	174,000
Right of use asset, net of amortization		208,000		219,000		229,000		239,000		254,000		277,000		293,000	320,000
Goodwill		225,000		225,000		225,000		225,000		225,000		225,000		225,000	225,000
Deferred tax asset		4,339,000	[1]							0
Security deposits		0		0		0		10,000		10,000		10,000		10,000	10,000
TOTAL ASSETS		16,624,000		9,325,000		7,716,000		10,890,000		6,038,000		6,645,000		7,137,000	7,109,000
Right of use asset															320,000
CURRENT LIABILITIES:
Accounts payable		3,246,000		1,829,000	[7]	1,643,000	[9]	2,755,000	[10]	2,018,000	[11]	2,033,000		2,625,000	2,307,000
Accrued expense and other liabilities		498,000		502,000	[7]	471,000	[9]	519,000	[10]	464,000		986,000	[8]	475,000	470,000
Product returns		345,000	[12]	276,000		276,000		276,000		231,000	[11]				815,000
Lease liability - current portion		50,000		49,000		46,000		44,000		46,000		58,000		70,000	83,000
Total current liabilities		4,139,000		2,656,000		2,436,000		6,094,000		2,759,000		3,077,000		3,863,000	3,675,000
Long-term lease liability, net of current portion		158,000		171,000		183,000		196,000		208,000		219,000		227,000	240,000
PPP loan				452,000		450,000		0
TOTAL LIABILITIES		4,750,000		3,279,000		3,069,000		6,290,000		2,967,000		3,296,000		4,090,000	3,915,000
Line of credit				0		0		2,500,000
Notes payable												0		693,000	815,000
STOCKHOLDERS' EQUITY:
Common stock		12,000		12,000		12,000		12,000		12,000		11,000		11,000	11,000
Treasury stock		(1,790,000)		(1,790,000)		(1,790,000)		(1,790,000)		(1,619,000)		(1,385,000)		(566,000)	0
Additional paid-in capital		32,204,000		32,195,000		32,176,000		32,154,000		32,055,000		32,218,000		32,199,000	32,156,000
Accumulated deficit		(18,552,000)	[1],[12]	(24,371,000)	[2],[7]	(25,751,000)	[3],[9]	(25,776,000)	[4],[10]	(27,377,000)	[5],[11]	(27,495,000)	[6],[8]	(28,597,000)	(28,973,000)
TOTAL STOCKHOLDERS' EQUITY		11,874,000		6,046,000		4,647,000		4,600,000		3,071,000		3,349,000		3,047,000	3,194,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		16,624,000		9,325,000		7,716,000		10,890,000		6,038,000		6,645,000		7,137,000	7,109,000
Series A Preferred Stock [Member]
STOCKHOLDERS' EQUITY:
Preferred stock														0	0
SBA CARES Act Paycheck Protection Program [Member]
CURRENT LIABILITIES:
PPP loan		453,000		452,000		450,000		0		0				693,000
Previously Reported [Member]
CURRENT ASSETS:
Cash		6,336,000		4,090,000		2,218,000		2,666,000		265,000		557,000		917,000	438,000
Accounts receivable, net of allowance of doubtful accounts		2,044,000	[1]	2,594,000	[2]	1,362,000	[3]	4,692,000	[4]	2,366,000	[5]	3,170,000	[6]	3,220,000	3,817,000
Inventories, net of allowance for obsolescence		3,401,000	[1]	2,255,000	[2],[7]	3,467,000	[3]	3,023,000	[4]	2,998,000	[5]	2,482,000	[6]	2,712,000	2,338,000
Income tax receivable		40,000		40,000		40,000
Prepaid expenses and other current assets		52,000		57,000	[7]	59,000		25,000		72,000		63,000	[8]	96,000	113,000
Total current assets		11,873,000		9,036,000		7,146,000		10,406,000		5,701,000		6,272,000		6,945,000	6,706,000
Property and equipment, net		98,000		105,000		113,000		124,000		136,000		148,000		161,000	174,000
Right of use asset, net of amortization		208,000		219,000		229,000		239,000		254,000		277,000		293,000
Goodwill		225,000		225,000		225,000		225,000		225,000		225,000		225,000	225,000
Deferred tax asset	[1]	4,370,000
Security deposits		0						10,000		10,000		10,000		10,000	10,000
TOTAL ASSETS		16,774,000		9,585,000		7,713,000		11,004,000		6,326,000		6,932,000		7,634,000	7,435,000
Right of use asset															320,000
CURRENT LIABILITIES:
Accounts payable		3,246,000		1,821,000	[7]	1,635,000	[9]	2,747,000	[10]	2,010,000	[11]	2,033,000		2,625,000	2,307,000
Accrued expense and other liabilities		498,000		524,000	[7]	495,000	[9]	543,000	[10]	464,000		957,000	[8]	445,000	440,000
Product returns		335,000	[12]	276,000		276,000		276,000		256,000	[11]				815,000
Lease liability - current portion		50,000		49,000		46,000		44,000		46,000		58,000		70,000	83,000
Total current liabilities		4,129,000		2,670,000		2,452,000		6,110,000		2,776,000		3,048,000		3,833,000	3,645,000
Long-term lease liability, net of current portion		158,000		171,000		183,000		196,000		208,000		219,000		227,000	240,000
PPP loan				452,000		450,000		0
TOTAL LIABILITIES		4,740,000		3,293,000		3,085,000		6,306,000		2,984,000		3,267,000		4,060,000	3,885,000
STOCKHOLDERS' EQUITY:
Common stock		12,000		12,000		12,000		12,000		12,000		11,000			11,000
Treasury stock		(1,790,000)		(1,790,000)		(1,790,000)		(1,790,000)		(1,619,000)		(1,385,000)		(566,000)
Additional paid-in capital		32,204,000		32,195,000		32,176,000		32,154,000		32,055,000		32,218,000		32,199,000	32,156,000
Accumulated deficit		(18,392,000)	[1],[12]	(24,125,000)	[2],[7]	(25,770,000)	[3],[9]	(25,678,000)	[4],[10]	(27,106,000)	[5],[11]	(27,179,000)	[6],[8]	(28,070,000)	(28,617,000)
TOTAL STOCKHOLDERS' EQUITY		12,034,000		6,292,000		4,628,000		4,698,000		3,342,000		3,665,000		3,574,000	3,550,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		16,774,000		9,585,000		7,713,000		11,004,000		6,326,000		6,932,000		7,634,000	7,435,000
Previously Reported [Member] | SBA CARES Act Paycheck Protection Program [Member]
CURRENT LIABILITIES:
PPP loan		453,000
Revision of Prior Period, Adjustment [Member]
CURRENT ASSETS:
Cash		0		0		0		0		0		0		0	0
Accounts receivable, net of allowance of doubtful accounts		(247,000)	[1]	(584,000)	[2]	(8,000)	[3]	(257,000)	[4]	(648,000)	[5]	(528,000)	[6]	(938,000)	(622,000)
Inventories, net of allowance for obsolescence		128,000	[1]	325,000	[2],[7]	11,000	[3]	143,000	[4]	360,000	[5]	268,000	[6]	468,000	323,000
Income tax receivable
Prepaid expenses and other current assets				(1,000)	[7]									(27,000)	(27,000)
Total current assets		(119,000)		(260,000)		3,000		(114,000)		(288,000)		(287,000)		(497,000)	(326,000)
Property and equipment, net				0						0
Right of use asset, net of amortization				0						0
Goodwill				0						0
Deferred tax asset	[1]	(31,000)
Security deposits		0						0		0
TOTAL ASSETS		(150,000)		(260,000)		3,000		(114,000)		(288,000)				(497,000)
TOTAL ASSETS												(287,000)			(326,000)
Right of use asset															0
CURRENT LIABILITIES:
Accounts payable		0		8,000	[7]	8,000	[9]	8,000	[10]	8,000	[11]	0		0	0
Accrued expense and other liabilities		0		(22,000)	[7]	(24,000)	[9]	(24,000)	[10]	0		29,000	[8]	30,000	30,000
Product returns		10,000	[12]	0		0		0		(25,000)	[11]				0
Lease liability - current portion		0		0		0		0		0
Total current liabilities		10,000		(14,000)		(16,000)		(16,000)		(17,000)		29,000		30,000	30,000
Long-term lease liability, net of current portion		0		0		0		0		0				0	0
PPP loan				0		0		0
TOTAL LIABILITIES		10,000		(14,000)		(16,000)		(16,000)		(17,000)		29,000		30,000	30,000
STOCKHOLDERS' EQUITY:
Common stock		0		0		0		0		0
Treasury stock		0		0		0		0		0
Additional paid-in capital		0		0		0		0		0
Accumulated deficit		(160,000)	[1],[12]	(246,000)	[2],[7]	19,000	[3],[9]	(98,000)	[4],[10]	(271,000)	[5],[11]	(316,000)	[6],[8]	(527,000)	(356,000)
TOTAL STOCKHOLDERS' EQUITY		(160,000)		(246,000)		19,000		(98,000)		(271,000)		(316,000)		(527,000)	(356,000)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		(150,000)		$ (260,000)		$ 3,000		$ (114,000)		$ (288,000)		$ (316,000)		$ (497,000)	$ (356,000)
Revision of Prior Period, Adjustment [Member] | SBA CARES Act Paycheck Protection Program [Member]
CURRENT LIABILITIES:
PPP loan		$ 0

[1] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $247,000, an increase to inventory of $128,000, a reduction of deferred tax asset of $31,000, and an increase to accumulated deficit of $150,000

[2] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $584,000, an increase to inventory of $317,000, and an increase of accumulated deficit of $267,000

[3] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $8,000, an increase to inventory of $4,000, and an increase of accumulated deficit of $4,000

[4] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $257,000, an increase to inventory of $136,000, and an increase of accumulated deficit of $121,000

[5] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $648,000, an increase to inventories of $353,000, and an increase of accumulated deficit of $295,000

[6] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $528,000, an increase to inventory of $268,000, and an increase to accumulated deficit of $260,000

[7] Other adjustments – The correction of these misstatements resulted in an increase to inventory of $8,000, a decrease in prepaid expenses and other current assets of $1,000, an increase in accounts payable of $8,000, a decrease in accrued expense and other liabilities of $22,000 and a reduction in accumulated deficit of $21,000.

[8] Other Reclasses – A decrease of $27,000 in prepaid expenses and other current assets and an increase of accrued expenses and other liabilities of $29,000, and an increase in accumulated deficit of $56,000

[9] Other adjustments – The correction of these misstatements resulted in an increase to inventories of $7,000, an increase in accounts payable of $8,000, a decrease in accrued expense and other liabilities of $24,000 and a decrease in accumulated deficit of $23,000.

[10] Other adjustments – The correction of these misstatements resulted in an increase to inventory of $7,000, an increase in accounts payable of $8,000, a decrease in accrued expenses and other current liabilities of $24,000, and a reduction of accumulated deficit of $23,000.

[11] Other adjustments – The correction of these misstatements resulted in an increase to inventories of $7,000, an increase accounts payable of $8,000, a decrease in product returns liability of $25,000 and a decrease in accumulated deficit of $24,000.

[12] Other adjustments – The correction of these misstatements resulted in an increase of $10,000 to product returns reserve and an increase to accumulated deficit of $10,000.

XML

Consolidated Balance Sheets (Parentheticals) - USD ($)		Dec. 31, 2020		Sep. 30, 2020		Jun. 30, 2020		Mar. 31, 2020		Dec. 31, 2019		Sep. 30, 2019		Jun. 30, 2019	Mar. 31, 2019
Allowance of doubtful accounts		$ 51,000		$ 402,000		$ 387,000		$ 33,000		$ 27,000		$ 290,000		$ 294,000	$ 315,000
Allowance for obsolescence		56,000		67,000		75,000		130,000		130,000		143,000		131,000	$ 119,000
Right of use asset amortization		$ 272,000		$ 261,000		$ 251,000		$ 241,000		$ 226,000		$ 203,000		$ 251,000
Preferred stock, par value (in dollars per share)		$ 0.01		$ 0.01		$ 0.01		$ 0.01		$ 0.01		$ 0.01		$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)		10,000,000		10,000,000		10,000,000		10,000,000		10,000,000		10,000,000		10,000,000	10,000,000
Preferred stock, shares outstanding (in shares)		0		0		0		0		0		0		0	0
Common stock, par value (in dollars per share)		$ 0.01		$ 0.01		$ 0.01		$ 0.01		$ 0.01		$ 0.01		$ 0.01	$ 0.01
Common stock, shares authorized (in shares)		15,000,000		15,000,000		15,000,000		15,000,000		15,000,000		15,000,000		15,000,000	15,000,000
Common stock, shares issued (in shares)		1,060,818		1,060,644		1,060,033		1,060,033		1,054,516		933,305		1,015,120	1,113,952
Common stock, shares outstanding (in shares)		1,060,818		1,060,644		1,060,033		1,060,033		1,054,516		933,305		1,015,120	1,113,952
Treasury stock, shares (in shares)		210,631		210,631		210,631		210,631		198,731		181,454		99,238	0
Accounts receivable, net of allowance of doubtful accounts		$ 1,797,000	[1]	$ 2,010,000	[2]	$ 1,354,000	[3]	$ 4,435,000	[4]	$ 1,718,000	[5]	$ 2,642,000	[6]	$ 2,282,000	$ 3,195,000
Inventories, net of allowance for obsolescence		3,529,000	[1]	2,580,000	[2],[7]	3,478,000	[3]	3,166,000	[4]	3,358,000	[5]	2,750,000	[6]	3,180,000	2,661,000
Deferred tax asset		4,339,000	[1]							0
Product returns		345,000	[8]	276,000		276,000		276,000		231,000	[9]				815,000
Accumulated deficit		(18,552,000)	[1],[8]	(24,371,000)	[2],[7]	(25,751,000)	[3],[10]	(25,776,000)	[4],[11]	(27,377,000)	[5],[9]	(27,495,000)	[6],[12]	(28,597,000)	(28,973,000)
Accounts payable		3,246,000		1,829,000	[7]	1,643,000	[10]	2,755,000	[11]	2,018,000	[9]	2,033,000		2,625,000	2,307,000
Right of use asset amortization												203,000		187,000	0
Accounts receivable, net of allowance of doubtful accounts		(1,797,000)	[1]	(2,010,000)	[2]	(1,354,000)	[3]	(4,435,000)	[4]	(1,718,000)	[5]	(2,642,000)	[6]	(2,282,000)	(3,195,000)
Prepaid expenses and other current assets		52,000		56,000	[7]	59,000		25,000		72,000		36,000	[12]	69,000	86,000
Accrued expense and other liabilities		$ 498,000		502,000	[7]	471,000	[10]	519,000	[11]	$ 464,000		$ 986,000	[12]	$ 475,000	$ 470,000
Series A Preferred Stock [Member]
Preferred stock, par value (in dollars per share)		$ 0.01										$ 0.01		$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)		10										1,000		1,000	1,000
Preferred stock, shares outstanding (in shares)		0								0		600		600	600
Preferred stock, shares issued (in shares)												600		600	600
Revision of Prior Period, Adjustment [Member]
Accounts receivable, net of allowance of doubtful accounts		$ (247,000)	[1]	(584,000)	[2]	(8,000)	[3]	(257,000)	[4]	$ (648,000)	[5]	$ (528,000)	[6]	$ (938,000)	$ (622,000)
Inventories, net of allowance for obsolescence		128,000	[1]	325,000	[2],[7]	11,000	[3]	143,000	[4]	360,000	[5]	268,000	[6]	468,000	323,000
Deferred tax asset	[1]	(31,000)
Product returns		10,000	[8]	0		0		0		(25,000)	[9]				0
Accumulated deficit		(160,000)	[1],[8]	(246,000)	[2],[7]	19,000	[3],[10]	(98,000)	[4],[11]	(271,000)	[5],[9]	(316,000)	[6],[12]	(527,000)	(356,000)
Accounts payable		0		8,000	[7]	8,000	[10]	8,000	[11]	8,000	[9]	0		0	0
Accounts receivable, net of allowance of doubtful accounts		247,000	[1]	584,000	[2]	8,000	[3]	257,000	[4]	648,000	[5]	528,000	[6]	938,000	622,000
Prepaid expenses and other current assets				(1,000)	[7]									(27,000)	(27,000)
Accrued expense and other liabilities		0		(22,000)	[7]	(24,000)	[10]	(24,000)	[11]	0		29,000	[12]	30,000	30,000
Revision of Prior Period, Adjustment [Member] | Revenue Recognition [Member]
Accounts receivable, net of allowance of doubtful accounts		(247,000)		(584,000)		(8,000)		(257,000)		(648,000)		(528,000)		(938,000)	(622,000)
Inventories, net of allowance for obsolescence		128,000		317,000		4,000		136,000		353,000		268,000		468,000	323,000
Deferred tax asset		(31,000)
Accumulated deficit		(150,000)		(267,000)		(4,000)		(121,000)		(295,000)		260,000		(470,000)	(299,000)
Accounts receivable, net of allowance of doubtful accounts		247,000		584,000		8,000		257,000		648,000		528,000		938,000	622,000
Revision of Prior Period, Adjustment [Member] | Error Correction, Other [Member]
Inventories, net of allowance for obsolescence				8,000		7,000		7,000		7,000
Product returns		10,000								(25,000)
Accumulated deficit		$ (10,000)		21,000		23,000		23,000		24,000		(56,000)		(57,000)	(57,000)
Accounts payable				8,000		8,000		8,000		$ 8,000
Prepaid expenses and other current assets				(1,000)								(27,000)		(27,000)
Accrued expense and other liabilities				$ (22,000)		$ (24,000)		$ (24,000)				$ 29,000		$ 30,000	$ 30,000

[1] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $247,000, an increase to inventory of $128,000, a reduction of deferred tax asset of $31,000, and an increase to accumulated deficit of $150,000

[2] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $584,000, an increase to inventory of $317,000, and an increase of accumulated deficit of $267,000

[3] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $8,000, an increase to inventory of $4,000, and an increase of accumulated deficit of $4,000

[4] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $257,000, an increase to inventory of $136,000, and an increase of accumulated deficit of $121,000

[5] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $648,000, an increase to inventories of $353,000, and an increase of accumulated deficit of $295,000

[6] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $528,000, an increase to inventory of $268,000, and an increase to accumulated deficit of $260,000

[7] Other adjustments – The correction of these misstatements resulted in an increase to inventory of $8,000, a decrease in prepaid expenses and other current assets of $1,000, an increase in accounts payable of $8,000, a decrease in accrued expense and other liabilities of $22,000 and a reduction in accumulated deficit of $21,000.

[8] Other adjustments – The correction of these misstatements resulted in an increase of $10,000 to product returns reserve and an increase to accumulated deficit of $10,000.

[9] Other adjustments – The correction of these misstatements resulted in an increase to inventories of $7,000, an increase accounts payable of $8,000, a decrease in product returns liability of $25,000 and a decrease in accumulated deficit of $24,000.

[10] Other adjustments – The correction of these misstatements resulted in an increase to inventories of $7,000, an increase in accounts payable of $8,000, a decrease in accrued expense and other liabilities of $24,000 and a decrease in accumulated deficit of $23,000.

[11] Other adjustments – The correction of these misstatements resulted in an increase to inventory of $7,000, an increase in accounts payable of $8,000, a decrease in accrued expenses and other current liabilities of $24,000, and a reduction of accumulated deficit of $23,000.

[12] Other Reclasses – A decrease of $27,000 in prepaid expenses and other current assets and an increase of accrued expenses and other liabilities of $29,000, and an increase in accumulated deficit of $56,000

XML

Consolidated Statements of Operations - USD ($)	3 Months Ended											6 Months Ended				9 Months Ended				12 Months Ended
	Sep. 30, 2020		Jun. 30, 2020		Mar. 31, 2020		Sep. 30, 2019		Jun. 30, 2019		Mar. 31, 2019	Jun. 30, 2020		Jun. 30, 2019		Sep. 30, 2020		Sep. 30, 2019		Dec. 31, 2020		Dec. 31, 2019
Revenue	$ 6,345,000		$ 2,990,000		$ 6,542,000		$ 5,726,000		$ 4,302,000		$ 5,489,000	$ 9,532,000		$ 9,791,000		$ 15,877,000		$ 15,517,000		$ 22,111,000	[1],[2]	$ 19,136,000
Cost of goods sold	3,748,000		1,554,000		3,632,000		3,262,000		2,619,000		3,121,000	5,186,000		5,740,000		8,934,000		9,002,000		12,574,000	[1],[2]	11,155,000
Gross profit	2,597,000		1,436,000		2,910,000		2,464,000		1,683,000		2,368,000	4,346,000		4,051,000		6,943,000		6,515,000		9,537,000		7,981,000
OPERATING EXPENSES:
General and administrative	684,000		1,001,000		733,000		782,000		796,000		774,000	1,734,000		1,570,000		2,418,000		2,352,000		3,047,000		3,049,000
Selling and marketing	509,000		435,000		671,000		583,000		616,000		550,000	1,106,000		1,166,000		1,615,000		1,749,000		2,106,000	[1]	2,387,000
Depreciation and amortization	9,000		10,000		12,000		12,000		13,000		15,000	22,000		28,000		31,000		40,000		38,000		52,000
Total operating expenses	1,202,000		1,446,000		1,416,000		1,377,000		1,425,000		1,339,000	2,862,000		2,764,000		4,064,000		4,141,000		5,191,000		5,488,000
OPERATING INCOME	1,395,000		(10,000)		1,494,000		1,087,000		258,000		1,029,000	1,484,000		1,287,000		2,879,000		2,374,000		4,346,000		2,493,000
OTHER EXPENSES (INCOME):
Interest expense	(1,000)		(8,000)		(4,000)		(14,000)		(18,000)		(15,000)	(12,000)		(33,000)		(13,000)		(47,000)		(15,000)		(47,000)
Interest income	(3,000)		(3,000)									(3,000)				(6,000)				(9,000)		0
Gain on settlement	0		0		(70,000)		(29,000)		(142,000)		0	(70,000)		(142,000)		(70,000)		(171,000)		(70,000)		(171,000)
Total other expenses (income)	(2,000)		5,000		(66,000)		(15,000)		(124,000)		15,000	(61,000)		(109,000)		(63,000)		(124,000)		(64,000)		(124,000)
PRE-TAX NET INCOME	1,397,000		(15,000)		1,560,000		1,102,000		382,000		1,014,000	1,545,000		1,396,000		2,942,000		2,498,000		4,410,000		2,617,000
PROVISION (BENEFIT) FOR INCOME TAXES	17,000		(40,000)		(41,000)		0		6,000		0	(81,000)		6,000		(64,000)		6,000		(4,415,000)	[2]	7,000
NET INCOME	1,380,000		25,000		1,601,000		1,102,000		376,000		1,014,000	1,626,000		1,390,000		3,006,000		2,492,000		8,825,000		2,610,000
PREFERRED STOCK DIVIDEND							(19,000)		(18,000)		0			(18,000)				(37,000)		0		(63,000)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS							1,083,000		358,000		1,014,000			1,372,000				2,455,000		8,825,000		2,547,000
Interest expense	$ 1,000		$ 8,000		$ 4,000		14,000		18,000		15,000	$ 12,000		33,000		13,000		47,000		15,000		47,000
PREFERRED STOCK DIVIDEND							$ 19,000		$ 18,000		$ (0)			$ 18,000				$ 37,000		$ (0)		$ 63,000
Interest expense																14,000
Interest income																$ (7,000)
NET INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS:
Basic (in dollars per share)	$ 1.30		$ 0.02		$ 1.52		$ 1.08		$ 0.34		$ 0.91	$ 1.54		$ 1.27		$ 2.84		$ 2.33		$ 8.34		$ 2.48
Diluted (in dollars per share)	$ 1.22		$ 0.02		$ 1.42		$ 0.90		$ 0.29		$ 0.80	$ 1.44		$ 1.09		$ 2.65		$ 1.98		$ 7.76		$ 2.33
Basic weighted average common shares (in shares)	1,060,350		1,060,033		1,051,752		1,001,715		1,047,447		1,111,943	1,055,893		1,079,517		1,057,389		1,053,292		1,058,207		1,026,204
Diluted weighted average common shares (in shares)	1,134,379		1,125,999		1,126,303		1,207,024		1,239,875		1,268,526	1,126,631		1,258,520		1,132,764		1,241,875		1,137,349		1,092,312
Revenue	$ 6,345,000		$ 2,990,000		$ 6,542,000		$ 5,726,000		$ 4,302,000		$ 5,489,000	$ 9,532,000		$ 9,791,000		$ 15,877,000		$ 15,517,000		$ 22,111,000	[1],[2]	$ 19,136,000
Cost of goods sold	3,748,000		1,554,000		3,632,000		3,262,000		2,619,000		3,121,000	5,186,000		5,740,000		8,934,000		9,002,000		12,574,000	[1],[2]	11,155,000
Gross profit	2,597,000		1,436,000		2,910,000		2,464,000		1,683,000		2,368,000	4,346,000		4,051,000		6,943,000		6,515,000		9,537,000		7,981,000
Previously Reported [Member]
Revenue	6,923,000		2,740,000		6,151,000		5,316,000		4,618,000		5,878,000	8,891,000		10,496,000		15,814,000		15,812,000		21,744,000	[1],[2]	19,497,000
Cost of goods sold	4,061,000		1,421,000		3,414,000		3,063,000		2,764,000		3,337,000	4,835,000		6,101,000		8,896,000		9,163,000		12,350,000	[1],[2]	11,436,000
Gross profit	2,862,000		1,319,000		2,737,000		2,253,000		1,854,000		2,541,000	4,056,000		4,395,000		6,918,000		6,649,000		9,394,000		8,061,000
OPERATING EXPENSES:
General and administrative	684,000		1,001,000		733,000		782,000		796,000		774,000	1,734,000		1,570,000		2,419,000		2,352,000		3,047,000		3,049,000
Selling and marketing	509,000		435,000		671,000		583,000		616,000		550,000	1,106,000		1,166,000		1,614,000		1,749,000		2,105,000	[1]	2,379,000
Depreciation and amortization	9,000		10,000		12,000		12,000		13,000		15,000	23,000		28,000		31,000		40,000		38,000		52,000
Total operating expenses	1,202,000		1,446,000		1,416,000		1,377,000		1,425,000		1,339,000	2,863,000		2,764,000		4,064,000		4,141,000		5,190,000		5,480,000
OPERATING INCOME	1,660,000		(127,000)		1,321,000		876,000		429,000		1,202,000	1,193,000		1,631,000		2,854,000		2,508,000		4,204,000		2,581,000
OTHER EXPENSES (INCOME):
Interest expense	(1,000)		(8,000)		(4,000)		(14,000)		(18,000)		(15,000)	(12,000)		(33,000)				(47,000)		(15,000)		(47,000)
Interest income	(3,000)		(3,000)									(4,000)								(9,000)
Gain on settlement	0				(70,000)		(29,000)		(142,000)			(70,000)		(142,000)		(70,000)		(171,000)		(70,000)		(171,000)
Total other expenses (income)	(2,000)		5,000		(66,000)		(15,000)		(124,000)		15,000	(62,000)		(109,000)		(63,000)		(124,000)		(64,000)		(124,000)
PRE-TAX NET INCOME	1,662,000		(132,000)		1,387,000		891,000		553,000		1,187,000	1,255,000		1,740,000		2,917,000		2,632,000		4,268,000		2,705,000
PROVISION (BENEFIT) FOR INCOME TAXES	17,000		(40,000)		(41,000)		0		6,000		0	(81,000)		6,000		(64,000)		7,000		(4,446,000)	[2]	7,000
NET INCOME	1,645,000		(92,000)		1,428,000		891,000		547,000		1,187,000	1,336,000		1,734,000		2,981,000		2,625,000		8,714,000		2,698,000
PREFERRED STOCK DIVIDEND							(19,000)		(18,000)					(18,000)				(37,000)		0		(63,000)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS							872,000		529,000		1,187,000			1,716,000				2,588,000		8,714,000		2,635,000
Interest expense	$ 1,000		$ 8,000		$ 4,000		14,000		18,000		$ 15,000	$ 12,000		33,000				47,000		15,000		47,000
PREFERRED STOCK DIVIDEND							$ 19,000		$ 18,000					$ 18,000				$ 37,000		$ 0		$ 63,000
Interest expense																14,000
Interest income																$ (7,000)
NET INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS:
Basic (in dollars per share)	$ 1.55		$ (0.09)		$ 1.36		$ 0.87		$ 0.51		$ 1.07	$ 1.27		$ 1.59		$ 2.82		$ 2.46		$ 8.23		$ 2.57
Diluted (in dollars per share)	$ 1.45		$ (0.09)		$ 1.27		$ 0.72		$ 0.43		$ 0.94	$ 1.19		$ 1.36		$ 2.63		$ 2.08		$ 7.66		$ 2.41
Basic weighted average common shares (in shares)	1,060,350		1,060,033		1,051,752		1,001,715		1,047,447		1,111,943	1,055,893		1,079,517		1,057,389		1,053,292		1,058,207		1,026,204
Diluted weighted average common shares (in shares)	1,134,379		1,060,033		1,126,303		1,207,024		1,239,875		1,268,526	1,126,631		1,258,520		1,132,764		1,241,875		1,137,349		1,092,312
Revenue	$ 6,923,000		$ 2,740,000		$ 6,151,000		$ 5,316,000		$ 4,618,000		$ 5,878,000	$ 8,891,000		$ 10,496,000		$ 15,814,000		$ 15,812,000		$ 21,744,000	[1],[2]	$ 19,497,000
Cost of goods sold	4,061,000		1,421,000		3,414,000		3,063,000		2,764,000		3,337,000	4,835,000		6,101,000		8,896,000		9,163,000		12,350,000	[1],[2]	11,436,000
Gross profit	2,862,000		1,319,000		2,737,000		2,253,000		1,854,000		2,541,000	4,056,000		4,395,000		6,918,000		6,649,000		9,394,000		8,061,000
Revision of Prior Period, Adjustment [Member]
Revenue	(578,000)	[3]	250,000	[4]	391,000	[5]	410,000	[6]	(316,000)	[7]	(389,000)	641,000	[8]	(705,000)	[9]	63,000	[10]	(295,000)	[11]	367,000	[1],[2]	(361,000)	[12],[13]
Cost of goods sold	(313,000)	[3]	133,000	[4]	218,000	[5]	199,000	[6]	(145,000)	[7]	(216,000)	351,000	[8]	(361,000)	[9]	38,000	[10]	(161,000)	[11]	224,000	[1],[2]	(281,000)	[12],[13]
Gross profit	(265,000)		117,000		173,000		211,000		(171,000)		(173,000)	290,000		(344,000)		25,000		(134,000)		143,000		(80,000)
OPERATING EXPENSES:
General and administrative	0		0		0		0		0		0	0		0		(1,000)		0
Selling and marketing	0		0		0		0		0		0	0		0		1,000		0		1,000	[1]	8,000	[12]
Depreciation and amortization												(1,000)
Total operating expenses	0		0		0		0		0		0	(1,000)		0		0		0		1,000		8,000
OPERATING INCOME	(265,000)		117,000		173,000		211,000		(171,000)		(173,000)	291,000		(344,000)		25,000		(134,000)		142,000		(88,000)
OTHER EXPENSES (INCOME):
Interest income												(1,000)
Total other expenses (income)												(1,000)
PRE-TAX NET INCOME	(265,000)		117,000		173,000		211,000		(171,000)		(173,000)	290,000		(344,000)		25,000		(134,000)		142,000		(88,000)
PROVISION (BENEFIT) FOR INCOME TAXES	0		0		0		0		0		0	0		0		0		(1,000)		31,000	[2]	0
NET INCOME	$ (265,000)		$ 117,000		$ 173,000		211,000		(171,000)		(173,000)	$ 290,000		(344,000)		$ 25,000		(133,000)		111,000		(88,000)
PREFERRED STOCK DIVIDEND							0		0					0				0		0		0
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS							211,000		(171,000)		$ (173,000)			(344,000)				(133,000)		111,000		(88,000)
PREFERRED STOCK DIVIDEND							$ (0)		$ (0)					$ (0)				$ (0)		$ 0		$ (0)
NET INCOME PER SHARE AVAILABLE TO COMMON SHAREHOLDERS:
Basic (in dollars per share)	$ (0.25)		$ 0.11		$ 0.16		$ 0.21		$ (0.17)		$ (0.16)	$ 0.27		$ (0.32)		$ 0.02		$ (0.13)		$ 0.11		$ (0.09)
Diluted (in dollars per share)	$ (0.23)		$ 0.11		$ 0.15		$ 0.18		$ (0.14)		$ (0.14)	$ 0.25		$ (0.27)		$ 0.02		$ (0.10)		$ 0.10		$ (0.08)
Basic weighted average common shares (in shares)	0		0		0		0		0		0	0		0		0		0		0		0
Diluted weighted average common shares (in shares)	0		0		0		0		0		0	0		0		0		0		0		0
Revenue	$ (578,000)	[3]	$ 250,000	[4]	$ 391,000	[5]	$ 410,000	[6]	$ (316,000)	[7]	$ (389,000)	$ 641,000	[8]	$ (705,000)	[9]	$ 63,000	[10]	$ (295,000)	[11]	$ 367,000	[1],[2]	$ (361,000)	[12],[13]
Cost of goods sold	(313,000)	[3]	133,000	[4]	218,000	[5]	199,000	[6]	(145,000)	[7]	(216,000)	351,000	[8]	(361,000)	[9]	38,000	[10]	(161,000)	[11]	224,000	[1],[2]	(281,000)	[12],[13]
Gross profit	$ (265,000)		$ 117,000		$ 173,000		$ 211,000		$ (171,000)		$ (173,000)	$ 290,000		$ (344,000)		$ 25,000		$ (134,000)		$ 143,000		$ (80,000)

[1] Other adjustments – The correction of these misstatements resulted in a decrease to revenue of $34,000, a decrease to cost of goods sold of $1,000, an increase in selling and marketing of $1,000, and a decrease to net income of $34,000.

[2] Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $401,000, an increase of cost of goods sold of $225,000, an increase in tax provision of $31,000, and an increase to net income of $145,000

[3] Revenue Recognition – The correction of these misstatements resulted in a decrease to revenue of $578,000, a decrease of cost of goods sold of $313,000, and a decrease to net income of $265,000

[4] Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $250,000, an increase to cost of goods sold of $133,000, and an increase to net income of $117,000

[5] Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $391,000, an increase of cost of goods sold of $218,000, and an increase to net income of $173,000.

[6] Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $410,000, an increase of cost of goods sold of $199,000, and an increase to net income of $211,000

[7] Revenue Recognition – The correction of these misstatements resulted in a decrease to revenue of $316,000, a decrease of cost of goods sold of $145,000, and a decrease to net income of $171,000

[8] Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $640,000, an increase of cost of goods sold of $349,000, and an increase to net income of $291,000

[9] Revenue Recognition – The correction of these misstatements resulted in a decrease to revenue of $705,000, a decrease of cost of goods sold of $361,000, and a decrease to net income of $344,000

[10] Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $64,000, an increase of cost of goods sold of $36,000, and an increase to net income of $28,000

[11] Revenue Recognition – The correction of these misstatements resulted in a decrease to revenue of $295,000, a decrease of cost of goods sold of $162,000, and a decrease to net income of $133,000

[12] Other adjustments – The correction of these misstatements resulted in an increase to revenue of $56,000, a decrease to cost of goods sold of $34,000, an increase in selling and marketing of $8,000, and an increase to net income of $82,000.

[13] Revenue Recognition – The correction of these misstatements resulted in a decrease to revenue of $417,000, a decrease of cost of goods sold of $247,000, and a decrease to net income of $170,000

XML

Consolidated Statements of Operations (Parentheticals) - USD ($)	3 Months Ended											6 Months Ended				9 Months Ended				12 Months Ended
	Sep. 30, 2020		Jun. 30, 2020		Mar. 31, 2020		Sep. 30, 2019		Jun. 30, 2019		Mar. 31, 2019	Jun. 30, 2020		Jun. 30, 2019		Sep. 30, 2020		Sep. 30, 2019		Dec. 31, 2020		Dec. 31, 2019
Revenue	$ 6,345,000		$ 2,990,000		$ 6,542,000		$ 5,726,000		$ 4,302,000		$ 5,489,000	$ 9,532,000		$ 9,791,000		$ 15,877,000		$ 15,517,000		$ 22,111,000	[1],[2]	$ 19,136,000
Cost of goods sold	3,748,000		1,554,000		3,632,000		3,262,000		2,619,000		3,121,000	5,186,000		5,740,000		8,934,000		9,002,000		12,574,000	[1],[2]	11,155,000
Selling and marketing	509,000		435,000		671,000		583,000		616,000		550,000	1,106,000		1,166,000		1,615,000		1,749,000		2,106,000	[1]	2,387,000
PROVISION (BENEFIT) FOR INCOME TAXES	17,000		(40,000)		(41,000)		0		6,000		0	(81,000)		6,000		(64,000)		6,000		(4,415,000)	[2]	7,000
NET INCOME	1,380,000		25,000		1,601,000		1,102,000		376,000		1,014,000	1,626,000		1,390,000		3,006,000		2,492,000		8,825,000		2,610,000
General and administrative	684,000		1,001,000		733,000		782,000		796,000		774,000	1,734,000		1,570,000		2,418,000		2,352,000		3,047,000		3,049,000
Depreciation and amortization	9,000		10,000		12,000		12,000		13,000		15,000	22,000		28,000		31,000		40,000		38,000		52,000
Interest income	3,000		3,000									3,000				6,000				9,000		(0)
Revision of Prior Period, Adjustment [Member]
Revenue	(578,000)	[3]	250,000	[4]	391,000	[5]	410,000	[6]	(316,000)	[7]	(389,000)	641,000	[8]	(705,000)	[9]	63,000	[10]	(295,000)	[11]	367,000	[1],[2]	(361,000)	[12],[13]
Cost of goods sold	(313,000)	[3]	133,000	[4]	218,000	[5]	199,000	[6]	(145,000)	[7]	(216,000)	351,000	[8]	(361,000)	[9]	38,000	[10]	(161,000)	[11]	224,000	[1],[2]	(281,000)	[12],[13]
Selling and marketing	0		0		0		0		0		0	0		0		1,000		0		1,000	[1]	8,000	[12]
PROVISION (BENEFIT) FOR INCOME TAXES	0		0		0		0		0		0	0		0		0		(1,000)		31,000	[2]	0
NET INCOME	(265,000)		117,000		173,000		211,000		(171,000)		(173,000)	290,000		(344,000)		25,000		(133,000)		111,000		(88,000)
General and administrative	0		0		0		0		0		0	0		0		(1,000)		0
Depreciation and amortization												(1,000)
Interest income												1,000
Revision of Prior Period, Adjustment [Member] | Revenue Recognition [Member]
Revenue	(578,000)		250,000		391,000		410,000		(316,000)		(389,000)	641,000		(705,000)		63,000		(295,000)		401,000		(417,000)
Cost of goods sold	(313,000)		133,000		218,000		199,000		(145,000)		(216,000)	351,000		(361,000)		38,000		(161,000)		225,000		(247,000)
PROVISION (BENEFIT) FOR INCOME TAXES																				31.000
NET INCOME	$ (265,000)		$ 117,000		$ 173,000		$ 211,000		$ (171,000)		$ (173,000)	290,000		$ (344,000)		25,000		(134,000)		145,000		(170,000)
Revision of Prior Period, Adjustment [Member] | Error Correction, Other [Member]
Revenue																				(34,000)		56,000
Cost of goods sold																				(2,000)		(34,000)
Selling and marketing																1,000				1,000		8,000
PROVISION (BENEFIT) FOR INCOME TAXES																		(1,000)
NET INCOME																		$ 1,000		$ (34,000)		$ 82,000
General and administrative																$ (1,000)
Depreciation and amortization												(1,000)
Interest income												$ 1,000

[1] Other adjustments – The correction of these misstatements resulted in a decrease to revenue of $34,000, a decrease to cost of goods sold of $1,000, an increase in selling and marketing of $1,000, and a decrease to net income of $34,000.

[2] Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $401,000, an increase of cost of goods sold of $225,000, an increase in tax provision of $31,000, and an increase to net income of $145,000

[3] Revenue Recognition – The correction of these misstatements resulted in a decrease to revenue of $578,000, a decrease of cost of goods sold of $313,000, and a decrease to net income of $265,000

[4] Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $250,000, an increase to cost of goods sold of $133,000, and an increase to net income of $117,000

[5] Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $391,000, an increase of cost of goods sold of $218,000, and an increase to net income of $173,000.

[6] Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $410,000, an increase of cost of goods sold of $199,000, and an increase to net income of $211,000

[7] Revenue Recognition – The correction of these misstatements resulted in a decrease to revenue of $316,000, a decrease of cost of goods sold of $145,000, and a decrease to net income of $171,000

[8] Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $640,000, an increase of cost of goods sold of $349,000, and an increase to net income of $291,000

[9] Revenue Recognition – The correction of these misstatements resulted in a decrease to revenue of $705,000, a decrease of cost of goods sold of $361,000, and a decrease to net income of $344,000

[10] Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $64,000, an increase of cost of goods sold of $36,000, and an increase to net income of $28,000

[11] Revenue Recognition – The correction of these misstatements resulted in a decrease to revenue of $295,000, a decrease of cost of goods sold of $162,000, and a decrease to net income of $133,000

[12] Other adjustments – The correction of these misstatements resulted in an increase to revenue of $56,000, a decrease to cost of goods sold of $34,000, an increase in selling and marketing of $8,000, and an increase to net income of $82,000.

[13] Revenue Recognition – The correction of these misstatements resulted in a decrease to revenue of $417,000, a decrease of cost of goods sold of $247,000, and a decrease to net income of $170,000

XML

Consolidated Statement of Stockholders' Equity - USD ($)	Previously Reported [Member] Common Stock Outstanding [Member]	Previously Reported [Member] Common Stock [Member]	Previously Reported [Member] Treasury Stock [Member]	Previously Reported [Member] Additional Paid-in Capital [Member]	Previously Reported [Member] Retained Earnings [Member]	Previously Reported [Member] Preferred Stock [Member] Series A Preferred Stock [Member]	Previously Reported [Member]	Revision of Prior Period, Adjustment [Member] Additional Paid-in Capital [Member]	Revision of Prior Period, Adjustment [Member] Retained Earnings [Member]	Revision of Prior Period, Adjustment [Member]	Common Stock Outstanding [Member]	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Preferred Stock [Member] Series A Preferred Stock [Member]	Total
Balance (in shares) at Dec. 31, 2018	1,111,943					600					1,111,943	1,111,943				600
Balance at Dec. 31, 2018		$ 11,000		$ 32,107,000	$ (29,804,000)		$ 2,314,000		$ (183,000)	$ (183,000)		$ 11,000	$ 0	$ 32,107,000	$ (29,987,000)	$ 0	$ 2,131,000
Fair value of common stock issued for services (in shares)	2,415										2,415
Fair value of common stock issued for services				23,000			23,000					0	0	23,000	0	$ 0	23,000
Repurchase of common stock (in shares)											0					0
Repurchase of stock												0	0	0	0	$ 0	0
Exercise of stock options (in shares)											0					0
Exercise of stock options												0	0	0	0	$ 0	0
NET INCOME					1,187,000		1,187,000		(173,000)	(173,000)					1,014,000	0	1,014,000
Fair value of vested common shares and options issued for services				26,000			26,000					0	0	26,000	0	$ 0	26,000
Balance (in shares) at Mar. 31, 2019	1,113,952					600					1,113,952					600
Balance at Mar. 31, 2019		11,000		32,156,000	(28,617,000)		3,550,000		(356,000)	(356,000)		$ 11,000	0	32,156,000	(28,973,000)	$ 0	3,194,000
Repurchase of preferred and common stock (in shares)											0					0
Total number of shares purchased (in shares)											(0)					(0)
Balance. at Dec. 31, 2018									(183,000)	(83,000)
Balance (in shares) at Dec. 31, 2018	1,111,943					600					1,111,943	1,111,943				600
Balance at Dec. 31, 2018		11,000		32,107,000	(29,804,000)		2,314,000		(183,000)	(183,000)		$ 11,000	0	32,107,000	(29,987,000)	$ 0	2,131,000
Fair value of common stock issued for services (in shares)	2,415										2,415
Fair value of common stock issued for services				39,000			39,000					0	0	39,000	0	$ 0	39,000
Repurchase of common stock (in shares)	(99,238)										(99,238)					0
Repurchase of stock			$ (566,000)				(566,000)					0	(566,000)	0	0	$ 0	(566,000)
NET INCOME					1,734,000		1,734,000		(344,000)	(344,000)		0	0	0	1,390,000	0	1,390,000
Dividend payments on preferred stock				(18,000)			(18,000)					0	0	(18,000)	0	0	(18,000)
Fair value of vested common shares and options issued for services				71,000			71,000					0	0	71,000	0	$ 0	71,000
Balance (in shares) at Jun. 30, 2019	1,015,120					600					1,015,120					600
Balance at Jun. 30, 2019		11,000	(566,000)	32,199,000	(28,070,000)		3,574,000		(527,000)	(527,000)		$ 11,000	(566,000)	32,199,000	(28,597,000)	$ 0	3,047,000
Repurchase of preferred and common stock (in shares)	(99,238)										(99,238)					0
Total number of shares purchased (in shares)	99,238										99,238					(0)
Balance. at Dec. 31, 2018									(183,000)	(83,000)
Net income															1,391,000		1,391,000
Balance (in shares) at Dec. 31, 2018	1,111,943					600					1,111,943	1,111,943				600
Balance at Dec. 31, 2018		11,000		32,107,000	(29,804,000)		2,314,000		(183,000)	(183,000)		$ 11,000	0	32,107,000	(29,987,000)	$ 0	2,131,000
Fair value of common stock issued for services (in shares)	2,816										2,816
Fair value of common stock issued for services				43,000			43,000					0	0	43,000	0	$ 0	43,000
Repurchase of common stock (in shares)	(181,454)										(181,454)					0
Repurchase of stock			(1,385,000)				(1,385,000)					0	(1,385,000)	0	0	$ 0	(1,385,000)
NET INCOME					2,625,000		2,625,000		(133,000)	(133,000)		0	0	0	2,492,000	0	2,492,000
Dividend payments on preferred stock				(37,000)			(37,000)					0	0	(37,000)	0	0	(37,000)
Fair value of vested common shares and options issued for services				105,000			105,000					0	0	105,000	0	$ 0	105,000
Balance (in shares) at Sep. 30, 2019	933,305					600					933,305					600
Balance at Sep. 30, 2019		11,000	(1,385,000)	32,218,000	(27,179,000)		3,665,000		(316,000)	(316,000)		$ 11,000	(1,385,000)	32,218,000	(27,495,000)	$ 0	3,349,000
Repurchase of preferred and common stock (in shares)	(181,454)										(181,454)					0
Total number of shares purchased (in shares)	181,454										181,454					(0)
Balance. at Dec. 31, 2018									(183,000)	(83,000)
Balance (in shares) at Dec. 31, 2018	1,111,943					600					1,111,943	1,111,943				600
Balance at Dec. 31, 2018		11,000		32,107,000	(29,804,000)		2,314,000		(183,000)	(183,000)		$ 11,000	0	32,107,000	(29,987,000)	$ 0	$ 2,131,000
Fair value of common stock issued for services (in shares)	18,082										18,082	18,082					18,082
Fair value of common stock issued for services				47,000			47,000							47,000			$ 47,000
Repurchase of common stock (in shares)	(198,731)										(198,731)	(198,731)
Repurchase of stock			(1,619,000)	(168,000)			(1,787,000)						(1,619,000)	(168,000)			$ (1,787,000)
Exercise of stock options (in shares)																	(0)
NET INCOME					2,698,000		2,698,000		(88,000)	(88,000)					2,610,000		$ 2,610,000
Repurchase of preferred and common stock (in shares)						(50)										(50)
Conversion of preferred stock to common stock (in shares)	(123,222)					550					(123,222)	(123,222)				(550)
Conversion of preferred stock to common stock (in shares)	123,222					(550)					123,222	123,222				550
Conversion of preferred stock to common stock		1,000		1,000								$ 1,000		1,000
Conversion of preferred stock to common stock		$ (1,000)		(1,000)								$ (1,000)		(1,000)
Dividend payments on preferred stock				(63,000)			(63,000)							(63,000)			(63,000)
Fair value of vested common shares and options issued for services				133,000			133,000							133,000			133,000
Balance (in shares) at Dec. 31, 2019	1,054,516	1,054,516									1,054,516	1,054,516				0
Balance at Dec. 31, 2019		$ 12,000	(1,619,000)	32,055,000	(27,106,000)		3,342,000		(271,000)	(271,000)		$ 12,000	(1,619,000)	32,055,000	(27,377,000)	$ 0	3,071,000
Repurchase of preferred and common stock (in shares)	(198,731)										(198,731)	(198,731)
Total number of shares purchased (in shares)	198,731										198,731	198,731
Balance. at Dec. 31, 2018									(183,000)	(83,000)
Balance (in shares) at Mar. 31, 2019	1,113,952					600					1,113,952					600
Balance at Mar. 31, 2019		11,000		32,156,000	(28,617,000)		3,550,000		(356,000)	(356,000)		$ 11,000	0	32,156,000	(28,973,000)	$ 0	3,194,000
NET INCOME							547,000			(171,000)							376,000
Balance (in shares) at Jun. 30, 2019	1,015,120					600					1,015,120					600
Balance at Jun. 30, 2019		11,000	(566,000)	32,199,000	(28,070,000)		3,574,000		(527,000)	(527,000)		11,000	(566,000)	32,199,000	(28,597,000)	$ 0	3,047,000
NET INCOME							891,000			211,000							1,102,000
Balance (in shares) at Sep. 30, 2019	933,305					600					933,305					600
Balance at Sep. 30, 2019		$ 11,000	(1,385,000)	32,218,000	(27,179,000)		3,665,000		(316,000)	(316,000)		$ 11,000	(1,385,000)	32,218,000	(27,495,000)	$ 0	3,349,000
Balance (in shares) at Dec. 31, 2019	1,054,516	1,054,516									1,054,516	1,054,516				0
Balance at Dec. 31, 2019		$ 12,000	(1,619,000)	32,055,000	(27,106,000)		3,342,000		(271,000)	(271,000)		$ 12,000	(1,619,000)	32,055,000	(27,377,000)	$ 0	3,071,000
Fair value of common stock issued for services (in shares)		417										417
Fair value of common stock issued for services				16,000			16,000					$ 0	0	16,000	0	$ 0	$ 16,000
Repurchase of common stock (in shares)		(11,900)									(11,900)	(11,900)				0	(11,900)
Repurchase of stock			(171,000)				(171,000)					$ 0	(171,000)	0	0	$ 0	$ (171,000)
Exercise of stock options (in shares)		17,000									17,000	17,000				0
Exercise of stock options				71,000			71,000					$ 0	0	71,000	0	$ 0	71,000
NET INCOME					1,428,000		1,428,000		173,000	173,000					1,601,000	0	1,601,000
Fair value of vested common shares and options issued for services				12,000			12,000					$ 0	0	12,000	0	$ 0	12,000
Balance (in shares) at Mar. 31, 2020		1,060,033									1,060,033	1,060,033				0
Balance at Mar. 31, 2020		$ 12,000	(1,790,000)	32,154,000	(25,678,000)		4,698,000		(98,000)	(98,000)		$ 12,000	(1,790,000)	32,154,000	(25,776,000)	$ 0	$ 4,600,000
Repurchase of preferred and common stock (in shares)		(11,900)									(11,900)	(11,900)				0	(11,900)
Total number of shares purchased (in shares)		11,900									11,900	11,900				(0)	11,900
Balance (in shares) at Dec. 31, 2019	1,054,516	1,054,516									1,054,516	1,054,516				0
Balance at Dec. 31, 2019		$ 12,000	(1,619,000)	32,055,000	(27,106,000)		3,342,000		(271,000)	(271,000)		$ 12,000	(1,619,000)	32,055,000	(27,377,000)	$ 0	$ 3,071,000
Fair value of common stock issued for services (in shares)		417										417
Fair value of common stock issued for services				26,000			26,000							26,000			26,000
Repurchase of common stock (in shares)		(11,900)									(11,900)	(11,900)
Repurchase of stock			(171,000)				(171,000)						(171,000)				(171,000)
Exercise of stock options (in shares)		17,000									17,000	17,000
Exercise of stock options				71,000			71,000							71,000			71,000
NET INCOME					1,336,000		1,336,000		290,000	290,000					1,626,000		1,626,000
Fair value of vested common shares and options issued for services				24,000			24,000							24,000			24,000
Balance (in shares) at Jun. 30, 2020		1,060,033									1,060,033	1,060,033
Balance at Jun. 30, 2020			(1,790,000)	32,176,000	(25,770,000)		4,628,000		19,000	19,000		$ 12,000	(1,790,000)	32,176,000	(25,751,000)		4,647,000
Repurchase of preferred and common stock (in shares)		(11,900)									(11,900)	(11,900)
Total number of shares purchased (in shares)		11,900									11,900	11,900
Balance (in shares) at Dec. 31, 2019	1,054,516	1,054,516									1,054,516	1,054,516				0
Balance at Dec. 31, 2019		$ 12,000	(1,619,000)	32,055,000	(27,106,000)		3,342,000		(271,000)	(271,000)		$ 12,000	(1,619,000)	32,055,000	(27,377,000)	$ 0	3,071,000
Fair value of common stock issued for services (in shares)		1,028									1,028	1,028
Fair value of common stock issued for services				34,000			34,000							34,000			34,000
Repurchase of common stock (in shares)		(11,900)									(11,900)	11,900
Repurchase of stock			(171,000)				(171,000)						(171,000)				(171,000)
Exercise of stock options (in shares)		17,000									17,000	17,000
Exercise of stock options				71,000			71,000							71,000			71,000
NET INCOME					2,981,000		2,981,000		25,000	25,000					3,006,000		3,006,000
Fair value of vested common shares and options issued for services				35,000			35,000							35,000			35,000
Balance (in shares) at Sep. 30, 2020		1,060,644									1,060,644	1,060,644
Balance at Sep. 30, 2020		$ 12,000	(1,790,000)	32,195,000	(24,125,000)		6,292,000		(246,000)	(246,000)		$ 12,000	(1,790,000)	32,195,000	(24,371,000)		6,046,000
Repurchase of preferred and common stock (in shares)		(11,900)									(11,900)	11,900
Total number of shares purchased (in shares)		11,900									11,900	(11,900)
Balance (in shares) at Dec. 31, 2019	1,054,516	1,054,516									1,054,516	1,054,516				0
Balance at Dec. 31, 2019		$ 12,000	(1,619,000)	32,055,000	(27,106,000)		3,342,000		(271,000)	(271,000)		$ 12,000	(1,619,000)	32,055,000	(27,377,000)	$ 0	$ 3,071,000
Fair value of common stock issued for services (in shares)	1,202										1,202						1,202
Fair value of common stock issued for services			0	15,000			15,000							15,000			$ 15,000
Repurchase of common stock (in shares)	(11,900)										(11,900)						(11,900)
Repurchase of stock													(171,000)				$ (171,000)
Exercise of stock options (in shares)	17,000										17,000						17,000
Exercise of stock options				71,000			71,000							71,000			$ 71,000
Stock-based compensation				63,000			63,000							63,000			63,000
NET INCOME					8,714,000		8,714,000		111,000	111,000					8,825,000		8,825,000
Balance (in shares) at Dec. 31, 2020	1,060,818										1,060,818
Balance at Dec. 31, 2020		$ 12,000	(1,790,000)	32,204,000	(18,392,000)		12,034,000		(160,000)	(160,000)		$ 12,000	(1,790,000)	32,204,000	(18,552,000)		$ 11,874,000
Repurchase of common stock			(171,000)				(171,000)
Repurchase of preferred and common stock (in shares)	(11,900)										(11,900)						(11,900)
Total number of shares purchased (in shares)	11,900										11,900						11,900
Balance (in shares) at Mar. 31, 2020		1,060,033									1,060,033	1,060,033				0
Balance at Mar. 31, 2020		$ 12,000	(1,790,000)	32,154,000	(25,678,000)		4,698,000		(98,000)	(98,000)		$ 12,000	(1,790,000)	32,154,000	(25,776,000)	$ 0	$ 4,600,000
Repurchase of common stock (in shares)																	0
NET INCOME							(92,000)			117,000							$ 25,000
Balance (in shares) at Jun. 30, 2020		1,060,033									1,060,033	1,060,033
Balance at Jun. 30, 2020			(1,790,000)	32,176,000	(25,770,000)		4,628,000		19,000	19,000		$ 12,000	(1,790,000)	32,176,000	(25,751,000)		$ 4,647,000
Repurchase of preferred and common stock (in shares)																	0
Total number of shares purchased (in shares)																	0
Repurchase of common stock (in shares)																	0
NET INCOME							1,645,000			(265,000)							$ 1,380,000
Balance (in shares) at Sep. 30, 2020		1,060,644									1,060,644	1,060,644
Balance at Sep. 30, 2020		$ 12,000	(1,790,000)	32,195,000	(24,125,000)		6,292,000		(246,000)	(246,000)		$ 12,000	(1,790,000)	32,195,000	(24,371,000)		$ 6,046,000
Repurchase of preferred and common stock (in shares)																	0
Total number of shares purchased (in shares)																	0
Repurchase of common stock (in shares)																	0
Balance (in shares) at Dec. 31, 2020	1,060,818										1,060,818
Balance at Dec. 31, 2020		$ 12,000	$ (1,790,000)	$ 32,204,000	$ (18,392,000)		$ 12,034,000		$ (160,000)	$ (160,000)		$ 12,000	$ (1,790,000)	$ 32,204,000	$ (18,552,000)		$ 11,874,000
Repurchase of preferred and common stock (in shares)																	0
Total number of shares purchased (in shares)																	0

XML

Consolidated Statements of Cash Flows - USD ($)	3 Months Ended		6 Months Ended		9 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2020	Dec. 31, 2019
NET INCOME	$ 1,601,000	$ 1,014,000	$ 1,626,000	$ 1,390,000	$ 3,006,000	$ 2,492,000	$ 8,825,000	$ 2,610,000
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	12,000	15,000	23,000	28,000	32,000	40,000	38,000	52,000
Allowance for doubtful accounts	6,000	(140,000)	360,000	(161,000)	375,000	(166,000)	25,000	17,000
Allowance for inventory obsolescence	0	12,000	(55,000)	24,000	(62,000)	36,000	(74,000)	23,000
Common stock issued for services	16,000	23,000	26,000	39,000	40,000	55,000	49,000	71,000
Fair value of options issued for services	12,000	26,000	24,000	71,000	29,000	94,000	29,000	111,000
Right of use asset net of amortization and lease liability	2,000	3,000	0	4,000	0	1,000	0	(2,000)
Right of use asset net of amortization and lease liability				50,000
Changes in operating assets and liabilities:
Accounts receivable - trade	(2,721,000)	(1,855,000)	3,000	(920,000)	(667,000)	(1,276,000)	(104,000)	(89,000)
Inventories	191,000	957,000	(64,000)	425,000	844,000	844,000	(97,000)	249,000
Deferred tax asset	4,000						(4,339,000)	0
Prepaid expense	46,000	109,000	13,000	127,000	15,000	160,000	20,000	124,000
Income tax receivable	0		(40,000)		(40,000)		(40,000)	0
Security deposit	0		10,000		10,000		10,000	0
Accounts payable	737,000	(320,000)	(375,000)	(3,000)	(189,000)	(595,000)	1,228,000	(610,000)
Accrued liabilities and other liabilities	79,000	35,000	32,000	(36,000)	62,000	39,000	72,000	(81,000)
Product returns	20,000		20,000		20,000		79,000	(214,000)
Net cash provided by operating activities	1,000	(121,000)	1,603,000	988,000	3,475,000	1,724,000	5,721,000	2,261,000
Net cash provided by investing activities	0	0	0	0	0	0	0	0
Proceeds from exercise of stock options	71,000		71,000		71,000		71,000	0
Proceeds from Paycheck Protection Program	0		450,000		450,000		450,000	0
Repurchases of common stock	(171,000)	0	(171,000)	(472,000)	(171,000)	(889,000)	(171,000)	(1,524,000)
Net cash provided by (used in) financing activities	2,400,000	300,000	350,000	(330,000)	350,000	(1,426,000)	350,000	(2,255,000)
CHANGE IN CASH	2,401,000	179,000	1,953,000	658,000	3,825,000	298,000	6,071,000	6,000
CASH, BEGINNING OF PERIOD	265,000	259,000	265,000	259,000	265,000	259,000	265,000	259,000
CASH, END OF PERIOD	2,666,000	438,000	2,218,000	917,000	4,090,000	557,000	6,336,000	265,000
NET INCOME	1,601,000	1,014,000	1,626,000	1,390,000	3,006,000	2,492,000	8,825,000	2,610,000
Accrued liabilities and other liabilities	75,000			(69,000)
Accrued interest				33,000
Right of use asset - Lease Liability				(46,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by investing activities	0	0	0	0	0	0	0	0
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable		300,000		300,000		300,000	0	300,000
Proceeds from exercise of stock options	71,000		71,000		71,000		71,000	0
Proceeds from Paycheck Protection Program	0		450,000		450,000		450,000	0
Dividend payments on preferred stock		0		(18,000)		(37,000)	0	(63,000)
Repurchases of common stock	(171,000)	0	(171,000)	(472,000)	(171,000)	(889,000)	(171,000)	(1,524,000)
Repurchases of preferred stock							0	(168,000)
Repayments of note payable		0		(140,000)		(800,000)	0	(800,000)
Net cash provided by (used in) financing activities	2,400,000	300,000	350,000	(330,000)	350,000	(1,426,000)	350,000	(2,255,000)
CHANGE IN CASH	2,401,000	179,000	1,953,000	658,000	3,825,000	298,000	6,071,000	6,000
CASH, BEGINNING OF PERIOD	265,000	259,000	265,000	259,000	265,000	259,000	265,000	259,000
CASH, END OF PERIOD	2,666,000	438,000	2,218,000	917,000	4,090,000	557,000	6,336,000	265,000
Proceeds from line of credit, net	2,500,000		0		0
NET INCOME	1,601,000	1,014,000	1,626,000	1,390,000	3,006,000	2,492,000	8,825,000	2,610,000
Supplemental disclosure operating activities
Cash paid for interest							12,000	47,000
Recording of lease asset and liability upon adoption of ASU-2016-02							0	343,000
Conversion of Series A preferred stock into common stock							0	567,000
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME	1,601,000	1,014,000	1,626,000	1,390,000	3,006,000	2,492,000	8,825,000	2,610,000
Depreciation and amortization	12,000	15,000	23,000	28,000	32,000	40,000	38,000	52,000
Allowance for doubtful accounts	6,000	(140,000)	360,000	(161,000)	375,000	(166,000)	25,000	17,000
Common stock issued for services	16,000	23,000	26,000	39,000	40,000	55,000	49,000	71,000
Fair value of options issued for services	12,000	26,000	24,000	71,000	29,000	94,000	29,000	111,000
Right of use asset net of amortization and lease liability	2,000	3,000	0	4,000	0	1,000	0	(2,000)
Net cash provided by investing activities	0	0	0	0	0	0	0	0
Previously Reported [Member]
NET INCOME	1,428,000	1,187,000	1,336,000	1,734,000	2,981,000	2,625,000	8,714,000	2,698,000
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	12,000	15,000	23,000	28,000	32,000	40,000	38,000	52,000
Allowance for doubtful accounts	6,000	(140,000)	360,000	(161,000)	375,000	(166,000)	25,000	17,000
Allowance for inventory obsolescence		12,000	(55,000)	24,000	(62,000)	36,000	(74,000)	23,000
Common stock issued for services	16,000	23,000	26,000	39,000	40,000	55,000	49,000	71,000
Fair value of options issued for services	12,000	26,000	24,000	71,000	29,000	94,000	29,000	111,000
Right of use asset net of amortization and lease liability	2,000	3,000				1,000		(2,000)
Right of use asset net of amortization and lease liability				50,000
Changes in operating assets and liabilities:
Accounts receivable - trade	(2,332,000)	(2,244,000)	643,000	(1,626,000)	(603,000)	(1,572,000)	297,000	(505,000)
Inventories	(25,000)	1,173,000	(414,000)	787,000	805,000	1,005,000	(329,000)	502,000
Deferred tax asset	4,000						(4,370,000)
Prepaid expense	46,000	109,000	13,000	127,000	15,000	160,000	20,000	151,000
Income tax receivable			(40,000)		(40,000)		(40,000)
Security deposit			10,000		10,000		10,000
Accounts payable	737,000	(320,000)	(375,000)	(3,000)	(189,000)	(595,000)	1,236,000	(618,000)
Accrued liabilities and other liabilities		35,000	32,000		62,000	41,000	37,000	(50,000)
Product returns	20,000		20,000		20,000		79,000	(189,000)
Net cash provided by operating activities	1,000	(121,000)	1,603,000	988,000	3,475,000	1,724,000	5,721,000	2,261,000
Net cash provided by investing activities	0	0	0	0	0	0	0	0
Proceeds from exercise of stock options	71,000		71,000		71,000		71,000
Proceeds from Paycheck Protection Program			450,000		450,000		450,000
Repurchases of common stock	(171,000)		(171,000)	(472,000)	(171,000)	(889,000)	(171,000)	(1,524,000)
Net cash provided by (used in) financing activities	2,400,000	300,000	350,000	(330,000)	350,000	(1,426,000)	350,000	(2,255,000)
CHANGE IN CASH	2,401,000	179,000	1,953,000	658,000	3,825,000	298,000	6,071,000	6,000
CASH, BEGINNING OF PERIOD	265,000	259,000	265,000	259,000	265,000	259,000	265,000	259,000
CASH, END OF PERIOD	2,666,000	438,000	2,218,000	917,000	4,090,000	557,000	6,336,000	265,000
NET INCOME	1,428,000	1,187,000	1,336,000	1,734,000	2,981,000	2,625,000	8,714,000	2,698,000
Accrued liabilities and other liabilities	75,000			(69,000)
Accrued interest				33,000
Right of use asset - Lease Liability				(46,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by investing activities	0	0	0	0	0	0	0	0
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable		300,000		300,000		300,000		300,000
Proceeds from exercise of stock options	71,000		71,000		71,000		71,000
Proceeds from Paycheck Protection Program			450,000		450,000		450,000
Dividend payments on preferred stock				(18,000)		(37,000)		(63,000)
Repurchases of common stock	(171,000)		(171,000)	(472,000)	(171,000)	(889,000)	(171,000)	(1,524,000)
Repurchases of preferred stock								(168,000)
Repayments of note payable				(140,000)		(800,000)		(800,000)
Net cash provided by (used in) financing activities	2,400,000	300,000	350,000	(330,000)	350,000	(1,426,000)	350,000	(2,255,000)
CHANGE IN CASH	2,401,000	179,000	1,953,000	658,000	3,825,000	298,000	6,071,000	6,000
CASH, BEGINNING OF PERIOD	265,000	259,000	265,000	259,000	265,000	259,000	265,000	259,000
CASH, END OF PERIOD	2,666,000	438,000	2,218,000	917,000	4,090,000	557,000	6,336,000	265,000
Proceeds from line of credit, net	2,500,000
NET INCOME	1,428,000	1,187,000	1,336,000	1,734,000	2,981,000	2,625,000	8,714,000	2,698,000
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME	1,428,000	1,187,000	1,336,000	1,734,000	2,981,000	2,625,000	8,714,000	2,698,000
Depreciation and amortization	12,000	15,000	23,000	28,000	32,000	40,000	38,000	52,000
Allowance for doubtful accounts	6,000	(140,000)	360,000	(161,000)	375,000	(166,000)	25,000	17,000
Common stock issued for services	16,000	23,000	26,000	39,000	40,000	55,000	49,000	71,000
Fair value of options issued for services	12,000	26,000	24,000	71,000	29,000	94,000	29,000	111,000
Right of use asset net of amortization and lease liability	2,000	3,000				1,000		(2,000)
Net cash provided by investing activities	0	0	0	0	0	0	0	0
Revision of Prior Period, Adjustment [Member]
NET INCOME	173,000	(173,000)	290,000	(344,000)	25,000	(133,000)	111,000	(88,000)
Adjustments to reconcile net income to net cash used in operating activities:
Right of use asset net of amortization and lease liability		0
Changes in operating assets and liabilities:
Accounts receivable - trade	(389,000)	389,000	(640,000)	706,000	(64,000)	296,000	(401,000)	416,000
Inventories	216,000	(216,000)	350,000	(362,000)	39,000	(161,000)	232,000	(253,000)
Prepaid expense		0			0	0	0
Accounts payable					0	0	(8,000)	8,000
Accrued liabilities and other liabilities		0			0	(2,000)	35,000	(31,000)
Product returns					0		0
Net cash provided by operating activities		0	0	0	0	0	0	0
Net cash provided by investing activities		0	0	0	0	0	0	0
Net cash provided by (used in) financing activities	0		0	0	0	0	0	0
NET INCOME	173,000	(173,000)	290,000	(344,000)	25,000	(133,000)	111,000	(88,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by investing activities		0	0	0	0	0	0	0
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash provided by (used in) financing activities	0		0	0	0	0	0	0
NET INCOME	173,000	(173,000)	290,000	(344,000)	25,000	(133,000)	111,000	(88,000)
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME	$ 173,000	(173,000)	290,000	(344,000)	25,000	(133,000)	111,000	(88,000)
Right of use asset net of amortization and lease liability		0
Net cash provided by investing activities		$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0

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Note 1 - Description of Business

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Nature of Operations [Text Block]

NOTE 1.  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 following brand names: (i) NDS Nutrition, PMD Sports, SirenLabs, CoreActive, and Metis Nutrition (together, “NDS Products”); and (ii) iSatori, BioGenetic Laboratories, and Energize (together, the "iSatori Products").  The Company distributes the NDS Products 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 17,000 retail locations, which include specialty, mass, and online.

FitLife Brands is headquartered in Omaha, Nebraska. For more information on the Company, please go to www.fitlifebrands.com. The Company’s Common Stock currently trades under the symbol “FTLF” on the OTC: PINK market.

Recent Developments

Share Repurchase Plan 

On August 16, 2019, the Company's Board of Directors (the "Board") authorized management to repurchase up to $500,000 of the Company's 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. 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 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.

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.

Subsequent to the end of the fiscal year, on February 1, 2021, the Board approved an additional amendment to the previously authorized Share Repurchase Program. Under the terms of the amendment, the Company is authorized to repurchase up to $5.0 million of securities issued by the Company.

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 year ended December 31, 2020, the Company repurchased 11,900 shares of Common Stock under the Share Repurchase Program, or approximately 1% of the issued and outstanding shares of the Company’s Common Stock, through private transactions, as follows:

	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
First quarter ended March 31, 2020		11,900	$	14.35		11,900	$	1,110,917
Second quarter ended June 30, 2020		-		-		-		1,110,917
Third quarter ended September 30, 2020		-		-		-		1,110,917
Fourth quarter ended December 31, 2020		-		-		-		1,110,917
Subtotal		11,900	$	14.35		11,900

COVID-19 Pandemic

The novel coronavirus ("COVID-19") pandemic has had an effect on the Company’s employees, business and operations during the fiscal year ended December 31, 2020, and those of its customers, vendors and business partners. In this respect, the temporary or permanent closure of some of our retail partners’ store locations and the stay-at-home orders that occurred early in the pandemic negatively affected our results from operations, although much of the impact has been offset by an increase in revenue attributable to online sales, and increased sales during the more recent quarters. Our future financial position and operating results could be materially and adversely affected in the event that a resurgence of COVID-19 cases leads to new stay-at-home orders and/or disruptions in both our supply chain and manufacturing lead-times, which could lower demand for the Company’s products and/or prevent the Company from producing and delivering its products in a timely manner, although the extent of these effects 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 business and operations accordingly.

CARES Act

The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted on March 27, 2020 in the United States. On April 27, 2020, the Company received proceeds from a loan in the amount of $449,700 from its lender, CIT Bank, N.A. (the “PPP Lender”), pursuant to approval by the U.S. Small Business Administration (the “SBA”) for the PPP Lender to fund the Company’s request for a loan under the SBA’s Paycheck Protection Program (“PPP Loan”) created as part of the CARES ACT administered by the SBA (the “Loan Agreement”). In accordance with the requirements of the CARES Act, the Company used 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 was scheduled to mature on April 27, 2022, had a 1.0% interest rate, and was 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. Subsequent to the end of the fiscal year, the Company was informed by the PPP Lender and the SBA that the full balance of the PPP Loan, including accrued interest, was forgiven on January 15, 2021.

The CARES Act permits employers to defer payment of the employer portion of payroll taxes owed on wages paid through December 31, 2020 for a period of up to two years. Through December 31, 2020, the Company has deferred payment of $77,000, which amount has been expensed and is included in accrued liabilities.

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"), subsequently acquired by CIT Bank, 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. See Note 6.

On March 20, 2020, the Company drew on the Line of Credit in an amount equal to $2.5 million (the "Advance"), which Advance was repaid on April 29, 2020. The Company elected to borrow such amounts to ensure it maintained ample financial flexibility in light of the spread of the novel coronavirus ("COVID-19"). The Advance was intended to provide the Company with additional liquidity given the uncertainty regarding the timing of collection of certain accounts receivable and in anticipation of an expected negative impact on sales to GNC and our other wholesale customers resulting from the COVID-19 outbreak.

On August 4, 2020, the Company and the Lender amended the Line of Credit Agreement to extend the Maturity Date to September 23, 2021. The amendment also added a LIBOR floor of 75 bps to the Line of Credit Agreement. All other terms of the Line of Credit remain unchanged.

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Note 2 - Restatement of Previously Issued Consolidated Financial Statements

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Error Correction [Text Block]

Note 2. Restatement of Previously Issued Consolidated Financial Statements

We have restated herein our audited consolidated financial statements at December 31, 2020 and 2019 and for the years ended December 31, 2020 and 2019. We have also restated impacted amounts within the accompanying footnotes to the consolidated financial statements.

Restatement Background

On August 24, 2022, the Audit Committee of the Board of Directors (the “Audit Committee”) of FitLife Brands, Inc. (the “Company”) was advised by Weaver and Tidwell, L.L.P. (“Weaver”), its registered independent public accounting firm, that the Company’s previously issued financial statements included in its Annual Reports on Form 10-K for the years ended December 31, 2019 and 2020, and each of the interim financial statements for the quarterly periods in 2019, 2020 and 2021 included in its Quarterly Reports on Form 10-Q for the periods ending March 31, 2019, June 30, 2019, September 30, 2019, March 31, 2020, June 30, 2020, September 30, 2020, March 31, 2021, and June 30, 2021 (collectively, the "Restated Periods") should be restated to correct historical errors related to the recognition of  revenue, expensing of costs of inventory, inventory, accounts receivable and the financial reporting and internal controls related to such arrangements, and should therefore no longer be relied upon (the "Restatement"). As a result, we determined that we would restate such financial statements to correct the accounting errors.

The intended Restatement follows the determination that the revenue associated for all customers with standard FOB destination terms, as reported in the Company’s prior period consolidated financial statements, was incorrectly recognized at the time of shipment instead of when the performance obligation was satisfied upon delivery. In addition, the accounting treatment related to the recognition of corresponding accounts receivables, inventory and expensing of costs of goods sold. The Company’s errors in the misapplication of revenue recognition resulted in certain errors recorded in various account balances in the Company’s consolidated balance sheets, statements of operations, statements of stockholders’ equity, statement of cash flows, and the related notes to the consolidated financial statements (collectively referred to as the consolidated financial statements) for the Restated Periods.

Accordingly, we have restated herein our consolidated financial statements at December 31, 2020 and 2019 and for the fiscal years ended December 31, 2020 and 2019, in accordance with ASC Topic 250, Accounting Changes and Error Corrections. In addition to the misstatements related to ASC 606, we corrected additional identified out-of-period and uncorrected misstatements that were not material, individually or in the aggregate, to our consolidated financial statements. These misstatements are noted in restatement reference (b) below.

The relevant unaudited interim financial information for the quarterly periods ended September 30, 2020, June 30, 2020, March 31, 2020, September 30, 2019, June 30, 2019, and March 31, 2019, has also been restated. Please refer to Note 11, Quarterly Financial Data (Unaudited).

Description of misstatements

(a) Timing of recognition of revenue

We recorded adjustments for the revenues that were incorrectly recognized at the time of shipment instead of the time the products were received by the customers. The correction changed the timing of the revenue recognition for these deliveries, which results in recognizing such revenue when the Company is entitled to receive such revenue upon satisfaction of performance obligations in accordance with the requirements of ASC 606. The correction in the timing of revenue recognition under ASC 606 resulted in adjustments to revenue, cost of sales, inventory and accounts receivable.

(b) Other adjustments

We recorded adjustments to correct other identified out-of-period and uncorrected misstatements that were not material, individually or in the aggregate, to our consolidated financial statements. These other misstatements were primarily related to sales returns reserve, income statement reclassification, and certain accrued liabilities. The impacts of the other misstatements on each period are discussed in restatement reference (b) throughout this note and in Note 11, Quarterly Financial Data (Unaudited).

(c) Adjustment to opening balance

We recorded an adjustment to the 2019 opening balance for accumulated deficit to account for the impact of the FOB destination shipments that were in transit as of December 31, 2018 and had not yet been received by customers.

Description of Restatement Tables

The following tables represent our restated consolidated balance sheets, consolidated statements of operations, consolidated statements of stockholders’ equity, and consolidated statements of cash flows for the years ended December 31, 2020 and December 31, 2019, as well as our restated consolidated balance sheet at December 31, 2020 and 2019. Following the restated consolidated financial statement tables, we have presented a reconciliation from our prior periods as previously reported to the restated values. The values as previously reported for fiscal years 2020 and 2019 were derived from our 2020 Annual Report, filed on March 26, 2021.

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Note 3 - Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Significant Accounting Policies [Text Block]

NOTE 3.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are as follows:

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and NDS Nutrition Products, Inc. Intercompany accounts and transactions have been eliminated in the consolidated financial statements.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“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.

Those estimates and assumptions include estimates for reserves of uncollectible accounts receivable, allowance for inventory obsolescence, depreciable lives of property and equipment, analysis of impairment of goodwill, realization of deferred tax assets, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.

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 ASC 606. 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 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.

Customer Concentration

Total net sales to GNC during 2020 and 2019 were $15,833,000, and $14,386,000, respectively, representing 71% and 75% of total revenue, respectively. Accounts receivable attributable to GNC before adjusting for product return reserves as of December 31, 2020 and 2019 were $1,892,000 and $1,629,000, respectively, representing 89% and 85% of the Company’s total accounts receivable balance, respectively. The loss of this customer would have a material adverse effect on the Company’s business, financial condition, and results of operation.

Accounts Receivable and Allowance for Doubtful Accounts

All of the Company’s accounts receivable balance is related to trade receivables. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company will maintain allowances for doubtful accounts, estimating losses resulting from the inability of its customers to make required payments for products. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped into categories by the amount of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. We maintain an insurance policy for iSatori Products for international shipments, which protects the Company in the event the international distributor does not or cannot remit payment.

As of December 31, 2020 and 2019, the Company had provided a reserve for doubtful accounts of $51,000 and $27,000, respectively.

Product Returns, Sales Incentives and Other Forms of Variable Consideration 

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.

We currently have a 30-day product return policy for NDS Products, which allows for a 100% sales price refund for the return of unopened and undamaged products purchased from us online through one of our websites. Product sold to GNC may be returned from store shelves or the distribution center in the event product is damaged, short dated, expired or recalled. Information for product returns is received on regular basis and adjusted for accordingly. Adjustments for returns are based on factual information and historical trends for both NDS products and iSatori products and are specific to each distribution channel. We monitor, among other things, remaining shelf life and sell through data on a weekly basis. If we determine there are any risks or issues with any specific products, we accrue sales return allowances based on management’s assessment of the overall risk and likelihood of returns in light of all information available.

GNC maintains a customer satisfaction program that allows customers to return product to the store for credit or refund. Subject to certain terms and restrictions, GNC may require reimbursement from vendors for unsaleable returned product through either direct payment or credit against a future invoice. We also support a product return policy for iSatori Products, whereby customers can return product for credit or refund. Product returns can and do occur from time to time and can be material.

For the sale of goods with a right of return, the Company estimates variable consideration using the most likely amount method and recognizes revenue for the consideration it expects to be entitled to when control of the related product is transferred to the customers and records a product returns liability for the amount it expects to credit back its customers. Under this method, certain forms of variable consideration are based on expected sell-through results, which requires subjective estimates. These estimates are supported by historical results as well as specific facts and circumstances related to the current period. In addition, the Company recognizes an asset included in Inventories, net and a corresponding adjustment to Cost of Goods Sold for the right to recover goods from customers associated with the estimated returns. The product returns liability and corresponding asset include estimates that directly impact reported revenue. These estimates are calculated based on a history of actual returns, estimated future returns and information provided by customers regarding their inventory levels. Consideration of these factors results in an estimate for anticipated sales returns that reflects increases or decreases related to seasonal fluctuations. In addition, as necessary, product returns liability and the related assets may be established for significant future known or anticipated events. The types of known or anticipated events that are considered, and will continue to be considered, include, but are not limited to, changes in the retail environment and the Company's decision to continue to support new and existing products.

Information for product returns is received on regular basis and adjusted for accordingly. Adjustments for returns are based on factual information and historical trends for both NDS products and iSatori products and are specific to each distribution channel. We monitor, among other things, remaining shelf life and sell-through data on a weekly basis. If we determine there are any risks or issues with any specific products, we accrue sales return allowances based on management’s assessment of the overall risk and likelihood of returns in light of all information available.

Regarding incentives, the Company accrues an estimate of 3% for promotional expense it calls “vendor funded discounts” at the time of sale. The expense is recorded as a contra-revenue account, and the expected incentive costs are never included in accounts receivable. As such, an allowance account for incentives is not required or necessary. Actual incentive costs are reconciled to the estimate on a regular basis.

Total allowance for product returns, sales returns and incentive programs as of December 31, 2020 and 2019 amounted to $345,000 and $231,000, respectively.

Cost of Goods Sold

Cost of goods sold is comprised of the costs of products, repacking fees, in-bound freight charges, as well as certain internal transfer costs. Expense not related to the production of our products is classified as operating expense.

Delivery and Handling Expense

Shipping and handling costs are comprised of purchasing and receiving costs, inspection costs, warehousing costs, transfer freight costs, and other costs associated with product distribution and are included as part of operating expense.

Cash and Cash Equivalents

The Company’s cash balances on deposit with banks are guaranteed by the Federal Deposit Insurance Corporation up to $250,000 at December 31, 2020. The Company may be exposed to risk for the amounts of funds held in bank accounts more than the insurance limit. In assessing the risk, the Company’s policy is to maintain cash balances with high-quality financial institutions. The Company had cash balances more than the guarantee during the years ended December 31, 2020 and 2019. 

Inventory

Inventory is stated at the lower of cost to purchase and/or manufacture the inventory or the current estimated market value of the inventory. We regularly review our inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated forecast of product demand and/or our ability to sell the product(s) concerned and production requirements. Demand for our products can fluctuate significantly. Factors that could affect demand for our products include unanticipated changes in consumer preferences, general market conditions or other factors, which may result in cancellations of advance orders or a reduction in the rate of reorders placed by customers. Additionally, our management’s estimates of future product demand may be inaccurate, which could result in an understated or overstated provision required for excess and obsolete inventory. 

As of December 31, 2020 and 2019, the aggregate allowance for expiring, slow moving and excess inventory amounted to $56,000 and $130,000, respectively.

Property and Equipment

Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using the straight-line method. The Company amortizes leasehold improvements over the estimated life of these assets or the term of the lease, whichever is shorter. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized.

The range of estimated useful lives used to calculate depreciation for principal items of property and equipment are as follows:

Asset Category	Depreciation / Amortization Period (years)
Furniture and fixtures	3
Office equipment	3
Leasehold improvements	5

Management regularly reviews property, equipment and other long-lived assets for possible impairment. This review occurs annually or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Based upon management’s annual assessment, there were no indicators of impairment of the Company’s property and equipment and other long-lived assets as of December 31, 2020 and 2019.

Goodwill and Intangible Assets

In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment (“ASU 2017-04”). 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.

Identifiable intangible assets are stated at cost and accounted for based on whether the useful life of the asset is finite or indefinite. Identified intangible assets with finite useful lives are amortized using the straight-line methods over their estimated useful lives, which was originally ten years. Intangible assets with indefinite lives are not amortized to operations, but instead are reviewed for impairment at least annually, or more frequently if there is an indicator of impairment. The Company does not own any indefinite lived intangible assets.

There were no impairment charges incurred during the years ended December 31, 2020 and 2019.

Income Taxes

The Company accounts for income taxes under FASB ASC Topic 740, Income Taxes (“ASC 740”). Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred tax assets of the Company relate primarily to operating loss carryforwards for federal income tax purposes.

As discussed in more detail in Note 9, during the fourth quarter of fiscal 2020, management determined that it is more likely than not that the Company will be able to utilize the majority of its net operating loss carryforwards. The release of a substantial portion of the reserve against the Company’s deferred tax assets resulted in an income tax benefit of $4,339,000 for 2020, and a corresponding increase in net income of the same amount.

The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. FASB ASC Topic 820, Fair Value Measurement (“ASC 820”), establishes a three-level valuation hierarchy for the use of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date:

Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing the net income available to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period.

The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive:

	December 31,
	2020		2019
Series A Preferred Stock		-		-
Warrants		-		-
Options		5,575		34,075
Total		5,575		34,075

Fair Value Measurements

The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. ASC 820 establishes a three-level valuation hierarchy for the use of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date:

● Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

● Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

● Level 3 - Inputs that are both significant to the fair value measurement and unobservable. These inputs rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. The unobservable inputs are developed based on the best information available in the circumstances and may include the Company’s own data.

The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments. The carrying values of the line of credit, notes payable and long-term financing obligations approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates.

Stock Compensation Expense

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services rendered. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the FASB where the value of the award is measured on the date of grant and recognized as compensation on the straight-line basis over the vesting period.

From prior periods until December 31, 2018 the Company accounted for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date.

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). The guidance was issued to simplify the accounting for share-based transactions by expanding the scope of ASU 2018-07 from only being applicable to share-based payments to employees to also include share-based payment transactions for acquiring goods and services from nonemployees. As a result, nonemployee share-based transactions will be measured by estimating the fair value of the equity instruments at the grant date, taking into consideration the probability of satisfying performance conditions. We adopted ASU 2018-07 on January 1, 2019. The adoption of ASU 2018-07 did not have a material impact on our financial statements for the year ended December 31, 2019 or the previously reported financial statements.

The fair value of the Company’s stock option and warrant grants are estimated using the Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model and based on actual experience. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.

Segments

The Company operates in one segment for the distribution of our products.  In accordance with the “Segment Reporting” Topic of ASC 280, the Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company.  Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue.  All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes.  Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated financial statements.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). This update requires the recognition of a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, for all leases with terms longer than 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2019.

In January 2017, the FASB issued ASU 2017-04. 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. ASU 2017-04 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.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The amendments included in ASU 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Although the new standard, known as the current expected credit loss (“CECL”) model, has a greater impact on financial institutions, most other organizations with financial instruments or other assets (trade receivables, contract assets, lease receivables, financial guarantees, loans and loan commitments, and held-to-maturity debt securities) are subject to the CECL model and will need to use forward-looking information to better evaluate their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 was originally effective for public companies for fiscal years beginning after December 15, 2019. In November of 2019, the FASB issued ASU 2019-10, which delayed the implementation of ASU 2016-13 to fiscal years beginning after December 15, 2022 for smaller reporting companies. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

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Note 4 - Inventories

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Inventory Disclosure [Text Block]

NOTE 4.  INVENTORIES

At December 31, 2020, the value of the Company’s inventory was $3,529,000. At December 31, 2019, the value of the Company’s inventory was $3,358,000.

	As Restated
	December 31,			December 31,
	2020			2019
Finished goods	$	2,917,000		$	3,048,000
Components		668,000			440,000
Allowance for obsolescence		(56,000	)		(130,000	)
Total	$	3,529,000		$	3,358,000

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Note 5 - Property and Equipment

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE 5.  PROPERTY AND EQUIPMENT

The Company had fixed assets as of December 31, 2020 and 2019 as follows:

	December 31,			December 31,
	2020			2019
Equipment	$	902,000		$	902,000
Accumulated depreciation		(804,000	)		(766,000	)
Total	$	98,000		$	136,000

Depreciation expense was $38,000 for the year ended December 31, 2020 compared to $52,000 for the year ended December 31, 2019.

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Note 6 - Notes Payable

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE 6.  NOTES PAYABLES

Notes Payable – Related Parties

On December 26, 2018, the Company issued a line of credit promissory note to Sudbury Capital Fund, LP (“Sudbury”) to Sudbury, an entity controlled by Dayton Judd, the Company’s Chief Executive Officer and Chair of the Board, in the principal amount of $600,000 (the “Sudbury Note”), 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 under the Sudbury Note, resulting in aggregate borrowings of $600,000. In addition, on December 26, 2018, the Company also issued a promissory note to Dayton Judd, the Company’s Chair of the Board and Chief Executive Officer, in the principal amount of $200,000 (the “Judd Note”) (together with the Sudbury Note, 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.

Line of Credit – CIT Bank

On September 24, 2019, the Company entered into entered into a Line of Credit Agreement with the Lender providing the Company with a $2.5 million revolving 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 the Maturity Date, or unless renewed at maturity upon approval by the Company’s Board 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 and in anticipation of an expected negative impact on sales to GNC and our other wholesale customers resulting from the COVID-19 outbreak.

On August 4, 2020, the Company and the Lender amended the Line of Credit Agreement to extend the Maturity Date to September 23, 2021. The amendment also added a LIBOR floor of 75 bps to the Line of Credit Agreement. All other terms of the Line of Credit remain unchanged.

Paycheck Protection Program Loan

On April 27, 2020, the Company received proceeds from a loan in the amount of $449,700 from the PPP Lender, pursuant to approval by the SBA for the Lender to fund the Company’s request for the PPP Loan created as part of the recently enacted CARES Act administered by the SBA. In accordance with the requirements of the CARES Act, the Company used 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 was scheduled to mature on April 27, 2022, had a 1.0% interest rate, and was 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. The Company did not provide any collateral or guarantees for the PPP Loan, nor did the Company pay any fees to obtain the PPP Loan.

Subsequent to the end of the fiscal year, the Company was informed by the PPP Lender and the SBA that the full amount balance of the PPP Loan, including accrued interest, was forgiven on January 15, 2021.

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Note 7 - Right of Use Assets and Liabilities

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

NOTE 7 - 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 Topic 842, 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 year ended December 31, 2020, the Company made payments resulting in a $46,000 reduction in the lease liability. As of December 31, 2020, lease liability amounted to $208,000. Topic 842 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 year ended December 31, 2020 was $67,000. The right-of-use asset at December 31, 2020 was $208,000, net of amortization of $272,000.

	Year ended
	December 31, 2020
Lease Cost
Operating lease cost	$	67,000
Other information
Cash paid for amounts included in the measurement of lease liabilities for 2021		-
Weighted average remaining lease term - operating leases (in years)		3.8
Average discount rate - operating leases		9	%

The supplemental balance sheet information related to leases for the period is as follows:

Operating leases	At December 31, 2020
Long-term right-of-use assets	$	208,000
Short-term operating lease liabilities		50,000
Long-term operating lease liabilities		158,000
Total operating lease liabilities	$	208,000

Maturities of the Company's lease liabilities are as follows (in thousands):

Year ending	Operating leases
2021	$	67,000
2022		67,000
2023		61,000
2024		51,000
Less: Imputed interest/present value discount		(38,000	)
Present value of lease liabilities	$	208,000

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Note 8 - Equity

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE 8.  EQUITY

The Company is authorized to issue 15.0 million shares of Common Stock, $0.01 par value per share, of which 1,060,818 and 1,054,516 shares of Common Stock were issued and outstanding as of December 31, 2020 and 2019, respectively.

Reverse/Forward Split

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. 

Common Stock

During the year ended December 31, 2020, the Company issued 1,202 shares of Common Stock with a fair value of $15,000 to directors for services rendered. The shares were valued at the respective date of issuance. Total stock-based compensation, related to previously issued option and restricted stock grants, was $63,000 for the year ended December 31, 2020. As of December 31, 2020, there was unearned compensation of $3,000 to be amortized as a compensation cost on a straight-line basis through 2021.

During the year ended December 31, 2019, the Company issued 18,082 shares of Common Stock with a fair value of $47,000 to employees and directors for services rendered. The shares were valued at the respective date of issuance. As of December 31, 2019, there was unearned compensation of $36,800 to be amortized as a compensation cost on a straight-line basis through 2020.

Series A Preferred Stock 

The Company is authorized to issue up to 10 million shares of preferred stock, par value $0.01 per share.

During November 2019, the Company repurchased and retired 50 shares of Series A Convertible Preferred Stock. During December 2019, the remaining 550 shares of Series A Convertible Preferred Stock were converted into Common Stock in accordance with the terms of the Certificate of Designations. As a result, no shares of Series A Preferred Stock were outstanding as of December 31, 2020 and 2019.

During 2019, the Company paid $63,000 for preferred dividends.

Options

The following table summarizes option activity: 

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Life (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		(39,500	)		19.04
Outstanding, December 31, 2020		92,785		$	10.05		5.9

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
$	2.8	-	23.00		87,210		6.2	$	4.93		87,210	$	4.93
$	23.10	-	144.34		5,575		2.8	$	90.20		5,575	$	90.20
					92,785		5.9	$	10.05		92,785	$	10.05

The closing stock price for the Company’s stock on December 31, 2020 was $21.60. As such, there was an intrinsic value of outstanding options of $1,454,000. 

During the year ended December 31, 2020, the Company did not grant any stock options.  

During the year ended December 31, 2020, the Company recognized compensation expense of $29,000 based upon the vesting of outstanding options. As of December 31, 2020, there was $0 of unvested stock compensation that will be recognized as an expense in future periods as the options vest.

During the year ended December 31, 2019, the Company granted stock options to employees for services rendered to purchase 8,000 shares of Company Common Stock. The stock options are exercisable at a price of $6.85 per share, expire in five years and vest as follows: one-third vested immediate upon issuance, and the remainder vest equally in equal annual installments over a period of two years from grant date.

The total fair value of these options at grant date was approximately $38,000, which was determined using the Black-Scholes option pricing model with the following average assumption: stock price of $6.85 per share, expected term of three years, volatility of 108%, dividend rate of 0% and risk-free interest rate of 2.18%. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the expected term of the share option award; the expected term represents the weighted-average period of time that share option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s Common Stock; and the expected dividend yield is based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future.

During the year ended December 31, 2019, the Company recognized compensation expense of $111,000 based upon the vesting of outstanding options. As of December 31, 2019, there was $54,000 of unvested stock compensation to be recognized as an expense in future periods as the options vest.

Warrants

The following table summarizes warrant activity:

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Life (Years)
Outstanding, December 31, 2018		39,130		$	4.60
Issued		-			-
Repurchased/retired		(3,260	)		-
Forfeited		-			-
Outstanding, December 31, 2019		35,870		$	4.60
Issued		-			-
Exercised		-			-
Forfeited		-			-
Outstanding, December 31, 2020		35,870		$	4.60		2.9

The total intrinsic value of the outstanding warrants as of December 31, 2020 amounted to $610,000.

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Note 9 - Income Taxes

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE 9.  INCOME TAXES

The Company had available federal net operating loss (“NOL”) carryforwards of approximately $21.6 million and $25.9 million as of December 31, 2020 and 2019, respectively, to reduce future taxable income. The federal NOL carryforward expires between 2029 through 2037. Due to the restrictions imposed by Internal Revenue Code Section 382 regarding substantial changes in ownership of companies with NOL carryforwards, the utilization of the Company’s NOL carryforwards may be limited to statutory limits as a result of change in stock ownership. NOL carryforwards incurred subsequent to the latest change in control are not subject to the limitations.

Given the Company’s improving profitability over the past three fiscal years, management has concluded that it is more likely than not that the Company will be able to utilize the majority of its NOL carryforwards. The Company projects that roughly $2,557,000 of iSatori NOL carryforwards will not be able to be utilized prior to their expiration due to the ownership change limitations, which amount remains fully reserved.

For the year ended December 31, 2020, the Company recorded a provision (benefit) for income taxes of ($4,415,000), driven primarily by an income tax benefit of ($4,339,000) resulting from the elimination of a substantial portion of the reserve against the Company’s NOL carryforwards and other deferred tax assets. For the year ended December 31, 2019, the Company recorded a provision for income taxes of $7,000 pertaining to various state income taxes.

The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As of December 31, 2020 and December 31, 2019, the Company did not have a liability for unrecognized tax benefits.

The Company recognizes, as income tax expense, interest and penalties on uncertain tax provisions. As of December 31, 2020, and 2019, the Company has not accrued interest or penalties related to uncertain tax positions. Tax years 2017 through 2020 remain open to examination by the major taxing jurisdictions to which the Company is subject. 

Significant components of the Company’s deferred income tax assets are as follows:

	As Restated
	December 31, 2020			December 31, 2019
Net operating loss carryforward	$	4,526,000		$	5,579,000
Allowances for sales returns, bad debt and inventory		92,000			87,000
Share based compensation		80,000			94,000
Other		178,000			202,000
Total deferred asset		4,876,000			5,962,000
Valuation allowance		(537,000	)		(5,962,000	)
Net deferred tax asset	$	4,339,000		$	-

Reconciliation of the effective income tax rate to the U.S. statutory rate is as follows:

	As restated
	December 31, 2020			December 31, 2019
Federal statutory tax rate		21	%		21	%
State tax, net of federal benefit		-	%		4	%
		21	%		25	%
Valuation allowance		(121	%)		(25	%)
Effective tax rate		(100	%)		-	%

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Note 10 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE 10. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

We are currently not involved in any litigation except noted above 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.

Lease Commitments

The Company is headquartered in Omaha, Nebraska and maintains a lease at a cost of approximately $8,000 per month, which lease is currently set to expire in May 2024. The Omaha facility is a total of 11,088 square feet inclusive of approximately 6,179 square feet of on-site warehouse space. 

Rent expense for the year ended December 31, 2020 was $67,000, of which $41,000 is included in cost of goods sold and $26,000 is included in operating expense in the accompanying consolidated statement of operations. Rent expense for the year ended December 31, 2019 was $84,000 of which $50,000 was included in cost of goods sold and $34,000 was included in operating expenses.

Minimum annual rental commitments under non-cancelable leases are as follows:

	Lease
Years ending December 31,	Commitment
2021	$	67,000
2022		67,000
2023		61,000
2024		51,000
Less: Imputed interest/present value discount		(38,000	)
Present value of lease liabilities	$	208,000

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Note 11 - Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Quarterly Financial Information [Text Block]

NOTE 11. QUARTERly Financial Data (Unaudited)

Our quarterly financial data for 2020 and 2019 is summarized as follows:

	2020 Quarters
	As Restated (Unaudited)
	Third		Second		First
Net sales	$	6,345,000	$	2,990,000	$	6,542,000
Gross profit		2,597,000		1,436,000		2,910,000
Net income		1,380,000		25,000		1,601,000
Per share data applicable to common shareholders
Basic earnings	$	1.30	$	0.02	$	1.52
Diluted earnings	$	1.22	$	0.02	$	1.42

	2019 Quarters
	As Restated (Unaudited)
	Third		Second		First
Net sales	$	5,726,000	$	4,302,000	$	5,489,000
Gross profit		2,464,000		1,683,000		2,368,000
Net income		1,102,000		376,000		1,014,000
Net income attributable to common shareholders		1,083,000		358,000		1,014,000
Per share data applicable to common shareholders
Basic earnings	$	1.08	$	0.34	$	0.91
Diluted earnings	$	0.90	$	0.29	$	0.80

Restatement of Previously Issued Unaudited Condensed Consolidated Financial Statements

We have restated herein our previously issued  consolidated financial statements for each  of the fiscal years ended December 31, 2020 and 2019. See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for additional information.

The following tables represent our restated unaudited condensed consolidated financial statements for each quarter-to-date and year-to-date interim period of the years ended December 31, 2020 and 2019 and at each interim period therein.  The values as previously reported for the fiscal quarters ended September 30, 2020, June 30, 2020, and March 31, 2020 were derived from our Quarterly Reports on Form 10-Q filed on November 12,2020, August 13, 2020, and May 15, 2020, respectively. The values as previously reported for the fiscal quarters ended September 30, 2019, June 30, 2019, and March 31, 2019 were derived from our Quarterly Reports on Form 10-Q, which were filed on November 12, 2019, August 9, 2019 and May 15, 2019, respectively. See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) and (b).

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Note 12 - Subsequent Events

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE 12.  SUBSEQUENT EVENTS

Subsequent to the end of the fiscal year, the Company was informed by the PPP Lender and the SBA that the full amount of principal and accrued interest of the PPP Loan was forgiven on January 15, 2021.

On February 1, 2021, the Board approved an additional amendment to the previously authorized Share Repurchase Program. Under the terms of the amendment, the Company is authorized to repurchase up to $5.0 million of the Company's Common Stock, warrants to purchase shares of the Company's Common Stock ("Warrants"), and other securities issued by the Company ("Securities") 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 Warrants and Securities, at a purchase price determined by management, with the exact date and amount of such purchases to be determined by management.

On February 26, 2021, the Board of the Company declared a dividend distribution of one right (a “Right”) for each outstanding share of Common Stock per share to stockholders of record at the close of business on February 26, 2021 (the “Record Date”). Each Right entitles its holder, under the circumstances described below, to purchase from the Company one one-thousandth of a share of Series B Junior Participating Preferred Stock of the Company, par value $0.001 per share (the “Series B Preferred”), at an exercise price of $100.00 per Right, subject to adjustment. The description and terms of the Rights are set forth in the tax benefits preservation plan (the “Tax Benefits Preservation Plan”), dated as of February 26, 2021, between the Company and Colonial Stock, as rights agent (and any successor rights agent, the “Rights Agent”).

The Company adopted the Tax Benefits Preservation Plan in order to protect shareholder value against a possible limitation on the Company’s ability to use its NOL carryforwards and certain other tax benefits to reduce potential future U.S. federal income tax obligations. The NOL carryforwards are a valuable asset to the Company, which may inure to the benefit of the Company and its stockholders. However, if the Company experiences an “ownership change,” as defined in Section 382 of the IRC, its ability to fully utilize the NOL carryforwards and certain other tax benefits will be substantially limited and the timing of the usage of the NOL carryforwards and such other benefits could be substantially delayed, which could significantly impair the value of those assets. Generally, an “ownership change” occurs if the percentage of the Company’s stock owned by one or more of its “five-percent shareholders” (as such term is defined in Section 382 of the IRC) increases by more than 50 percentage points over the lowest percentage of stock owned by such stockholder or stockholders at any time over a three-year period. The Tax Benefits Preservation Plan is intended to prevent against such an “ownership change” by deterring any person or group from acquiring beneficial ownership of 4.9% or more of the Company’s securities.  

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and NDS Nutrition Products, Inc. Intercompany accounts and transactions have been eliminated in the consolidated financial statements.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“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.

Those estimates and assumptions include estimates for reserves of uncollectible accounts receivable, allowance for inventory obsolescence, depreciable lives of property and equipment, analysis of impairment of goodwill, realization of deferred tax assets, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.

Revenue from Contract with Customer [Policy Text Block]

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 ASC 606. 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 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.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Customer Concentration

Total net sales to GNC during 2020 and 2019 were $15,833,000, and $14,386,000, respectively, representing 71% and 75% of total revenue, respectively. Accounts receivable attributable to GNC before adjusting for product return reserves as of December 31, 2020 and 2019 were $1,892,000 and $1,629,000, respectively, representing 89% and 85% of the Company’s total accounts receivable balance, respectively. The loss of this customer would have a material adverse effect on the Company’s business, financial condition, and results of operation.

Receivable [Policy Text Block]

Accounts Receivable and Allowance for Doubtful Accounts

All of the Company’s accounts receivable balance is related to trade receivables. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company will maintain allowances for doubtful accounts, estimating losses resulting from the inability of its customers to make required payments for products. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped into categories by the amount of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. We maintain an insurance policy for iSatori Products for international shipments, which protects the Company in the event the international distributor does not or cannot remit payment.

As of December 31, 2020 and 2019, the Company had provided a reserve for doubtful accounts of $51,000 and $27,000, respectively.

Revenue from Contract with Customer, Product Returns, Sales Incentives and Other Forms of Variable Consideration [Policy Text Block]

Product Returns, Sales Incentives and Other Forms of Variable Consideration 

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.

We currently have a 30-day product return policy for NDS Products, which allows for a 100% sales price refund for the return of unopened and undamaged products purchased from us online through one of our websites. Product sold to GNC may be returned from store shelves or the distribution center in the event product is damaged, short dated, expired or recalled. Information for product returns is received on regular basis and adjusted for accordingly. Adjustments for returns are based on factual information and historical trends for both NDS products and iSatori products and are specific to each distribution channel. We monitor, among other things, remaining shelf life and sell through data on a weekly basis. If we determine there are any risks or issues with any specific products, we accrue sales return allowances based on management’s assessment of the overall risk and likelihood of returns in light of all information available.

GNC maintains a customer satisfaction program that allows customers to return product to the store for credit or refund. Subject to certain terms and restrictions, GNC may require reimbursement from vendors for unsaleable returned product through either direct payment or credit against a future invoice. We also support a product return policy for iSatori Products, whereby customers can return product for credit or refund. Product returns can and do occur from time to time and can be material.

For the sale of goods with a right of return, the Company estimates variable consideration using the most likely amount method and recognizes revenue for the consideration it expects to be entitled to when control of the related product is transferred to the customers and records a product returns liability for the amount it expects to credit back its customers. Under this method, certain forms of variable consideration are based on expected sell-through results, which requires subjective estimates. These estimates are supported by historical results as well as specific facts and circumstances related to the current period. In addition, the Company recognizes an asset included in Inventories, net and a corresponding adjustment to Cost of Goods Sold for the right to recover goods from customers associated with the estimated returns. The product returns liability and corresponding asset include estimates that directly impact reported revenue. These estimates are calculated based on a history of actual returns, estimated future returns and information provided by customers regarding their inventory levels. Consideration of these factors results in an estimate for anticipated sales returns that reflects increases or decreases related to seasonal fluctuations. In addition, as necessary, product returns liability and the related assets may be established for significant future known or anticipated events. The types of known or anticipated events that are considered, and will continue to be considered, include, but are not limited to, changes in the retail environment and the Company's decision to continue to support new and existing products.

Information for product returns is received on regular basis and adjusted for accordingly. Adjustments for returns are based on factual information and historical trends for both NDS products and iSatori products and are specific to each distribution channel. We monitor, among other things, remaining shelf life and sell-through data on a weekly basis. If we determine there are any risks or issues with any specific products, we accrue sales return allowances based on management’s assessment of the overall risk and likelihood of returns in light of all information available.

Regarding incentives, the Company accrues an estimate of 3% for promotional expense it calls “vendor funded discounts” at the time of sale. The expense is recorded as a contra-revenue account, and the expected incentive costs are never included in accounts receivable. As such, an allowance account for incentives is not required or necessary. Actual incentive costs are reconciled to the estimate on a regular basis.

Total allowance for product returns, sales returns and incentive programs as of December 31, 2020 and 2019 amounted to $345,000 and $231,000, respectively.

Cost of Goods and Service [Policy Text Block]

Cost of Goods Sold

Cost of goods sold is comprised of the costs of products, repacking fees, in-bound freight charges, as well as certain internal transfer costs. Expense not related to the production of our products is classified as operating expense.

Delivery and Handling Expense [Policy Text Block]

Delivery and Handling Expense

Shipping and handling costs are comprised of purchasing and receiving costs, inspection costs, warehousing costs, transfer freight costs, and other costs associated with product distribution and are included as part of operating expense.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

The Company’s cash balances on deposit with banks are guaranteed by the Federal Deposit Insurance Corporation up to $250,000 at December 31, 2020. The Company may be exposed to risk for the amounts of funds held in bank accounts more than the insurance limit. In assessing the risk, the Company’s policy is to maintain cash balances with high-quality financial institutions. The Company had cash balances more than the guarantee during the years ended December 31, 2020 and 2019. 

Inventory, Policy [Policy Text Block]

Inventory

Inventory is stated at the lower of cost to purchase and/or manufacture the inventory or the current estimated market value of the inventory. We regularly review our inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated forecast of product demand and/or our ability to sell the product(s) concerned and production requirements. Demand for our products can fluctuate significantly. Factors that could affect demand for our products include unanticipated changes in consumer preferences, general market conditions or other factors, which may result in cancellations of advance orders or a reduction in the rate of reorders placed by customers. Additionally, our management’s estimates of future product demand may be inaccurate, which could result in an understated or overstated provision required for excess and obsolete inventory. 

As of December 31, 2020 and 2019, the aggregate allowance for expiring, slow moving and excess inventory amounted to $56,000 and $130,000, respectively.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using the straight-line method. The Company amortizes leasehold improvements over the estimated life of these assets or the term of the lease, whichever is shorter. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized.

The range of estimated useful lives used to calculate depreciation for principal items of property and equipment are as follows:

Asset Category	Depreciation / Amortization Period (years)
Furniture and fixtures	3
Office equipment	3
Leasehold improvements	5

Management regularly reviews property, equipment and other long-lived assets for possible impairment. This review occurs annually or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Based upon management’s annual assessment, there were no indicators of impairment of the Company’s property and equipment and other long-lived assets as of December 31, 2020 and 2019.

Goodwill and Intangible Assets, Policy [Policy Text Block]

Goodwill and Intangible Assets

In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment (“ASU 2017-04”). 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.

Identifiable intangible assets are stated at cost and accounted for based on whether the useful life of the asset is finite or indefinite. Identified intangible assets with finite useful lives are amortized using the straight-line methods over their estimated useful lives, which was originally ten years. Intangible assets with indefinite lives are not amortized to operations, but instead are reviewed for impairment at least annually, or more frequently if there is an indicator of impairment. The Company does not own any indefinite lived intangible assets.

There were no impairment charges incurred during the years ended December 31, 2020 and 2019.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company accounts for income taxes under FASB ASC Topic 740, Income Taxes (“ASC 740”). Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred tax assets of the Company relate primarily to operating loss carryforwards for federal income tax purposes.

As discussed in more detail in Note 9, during the fourth quarter of fiscal 2020, management determined that it is more likely than not that the Company will be able to utilize the majority of its net operating loss carryforwards. The release of a substantial portion of the reserve against the Company’s deferred tax assets resulted in an income tax benefit of $4,339,000 for 2020, and a corresponding increase in net income of the same amount.

The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. FASB ASC Topic 820, Fair Value Measurement (“ASC 820”), establishes a three-level valuation hierarchy for the use of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date:

Earnings Per Share, Policy [Policy Text Block]

Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing the net income available to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period.

The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive:

	December 31,
	2020		2019
Series A Preferred Stock		-		-
Warrants		-		-
Options		5,575		34,075
Total		5,575		34,075

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements

The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. ASC 820 establishes a three-level valuation hierarchy for the use of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date:

● Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

● Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

● Level 3 - Inputs that are both significant to the fair value measurement and unobservable. These inputs rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. The unobservable inputs are developed based on the best information available in the circumstances and may include the Company’s own data.

The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments. The carrying values of the line of credit, notes payable and long-term financing obligations approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates.

Compensation Related Costs, Policy [Policy Text Block]

Stock Compensation Expense

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services rendered. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the FASB where the value of the award is measured on the date of grant and recognized as compensation on the straight-line basis over the vesting period.

From prior periods until December 31, 2018 the Company accounted for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date.

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). The guidance was issued to simplify the accounting for share-based transactions by expanding the scope of ASU 2018-07 from only being applicable to share-based payments to employees to also include share-based payment transactions for acquiring goods and services from nonemployees. As a result, nonemployee share-based transactions will be measured by estimating the fair value of the equity instruments at the grant date, taking into consideration the probability of satisfying performance conditions. We adopted ASU 2018-07 on January 1, 2019. The adoption of ASU 2018-07 did not have a material impact on our financial statements for the year ended December 31, 2019 or the previously reported financial statements.

The fair value of the Company’s stock option and warrant grants are estimated using the Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model and based on actual experience. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.

Segment Reporting, Policy [Policy Text Block]

Segments

The Company operates in one segment for the distribution of our products.  In accordance with the “Segment Reporting” Topic of ASC 280, the Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company.  Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue.  All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes.  Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated financial statements.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). This update requires the recognition of a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, for all leases with terms longer than 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2019.

In January 2017, the FASB issued ASU 2017-04. 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. ASU 2017-04 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.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The amendments included in ASU 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Although the new standard, known as the current expected credit loss (“CECL”) model, has a greater impact on financial institutions, most other organizations with financial instruments or other assets (trade receivables, contract assets, lease receivables, financial guarantees, loans and loan commitments, and held-to-maturity debt securities) are subject to the CECL model and will need to use forward-looking information to better evaluate their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 was originally effective for public companies for fiscal years beginning after December 15, 2019. In November of 2019, the FASB issued ASU 2019-10, which delayed the implementation of ASU 2016-13 to fiscal years beginning after December 15, 2022 for smaller reporting companies. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

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Note 1 - Description of Business (Tables)

12 Months Ended

Dec. 31, 2020

Notes Tables

Class of Treasury Stock [Table Text Block]

	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
First quarter ended March 31, 2020		11,900	$	14.35		11,900	$	1,110,917
Second quarter ended June 30, 2020		-		-		-		1,110,917
Third quarter ended September 30, 2020		-		-		-		1,110,917
Fourth quarter ended December 31, 2020		-		-		-		1,110,917
Subtotal		11,900	$	14.35		11,900

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Note 3 - Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2020

Notes Tables

Property, Plant and Equipment, Useful Life [Table Text Block]

Asset Category	Depreciation / Amortization Period (years)
Furniture and fixtures	3
Office equipment	3
Leasehold improvements	5

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	December 31,
	2020		2019
Series A Preferred Stock		-		-
Warrants		-		-
Options		5,575		34,075
Total		5,575		34,075

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Note 4 - Inventories (Tables)

12 Months Ended

Dec. 31, 2020

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	As Restated
	December 31,			December 31,
	2020			2019
Finished goods	$	2,917,000		$	3,048,000
Components		668,000			440,000
Allowance for obsolescence		(56,000	)		(130,000	)
Total	$	3,529,000		$	3,358,000

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Note 5 - Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2020

Notes Tables

Property, Plant and Equipment [Table Text Block]

	December 31,			December 31,
	2020			2019
Equipment	$	902,000		$	902,000
Accumulated depreciation		(804,000	)		(766,000	)
Total	$	98,000		$	136,000

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Note 7 - Right of Use Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2020

Notes Tables

Lease, Cost [Table Text Block]

	Year ended
	December 31, 2020
Lease Cost
Operating lease cost	$	67,000
Other information
Cash paid for amounts included in the measurement of lease liabilities for 2021		-
Weighted average remaining lease term - operating leases (in years)		3.8
Average discount rate - operating leases		9	%

Lessee, Operating Lease, Supplemental Balance Sheet Information [Table Text Block]

Operating leases	At December 31, 2020
Long-term right-of-use assets	$	208,000
Short-term operating lease liabilities		50,000
Long-term operating lease liabilities		158,000
Total operating lease liabilities	$	208,000

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

Year ending	Operating leases
2021	$	67,000
2022		67,000
2023		61,000
2024		51,000
Less: Imputed interest/present value discount		(38,000	)
Present value of lease liabilities	$	208,000

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Note 8 - Equity (Tables)

12 Months Ended

Dec. 31, 2020

Notes Tables

Share-Based Payment Arrangement, Option, Activity [Table Text Block]

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Life (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		(39,500	)		19.04
Outstanding, December 31, 2020		92,785		$	10.05		5.9

Share-Based Payment Arrangement, Option, Exercise Price Range [Table Text Block]

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
$	2.8	-	23.00		87,210		6.2	$	4.93		87,210	$	4.93
$	23.10	-	144.34		5,575		2.8	$	90.20		5,575	$	90.20
					92,785		5.9	$	10.05		92,785	$	10.05

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Life (Years)
Outstanding, December 31, 2018		39,130		$	4.60
Issued		-			-
Repurchased/retired		(3,260	)		-
Forfeited		-			-
Outstanding, December 31, 2019		35,870		$	4.60
Issued		-			-
Exercised		-			-
Forfeited		-			-
Outstanding, December 31, 2020		35,870		$	4.60		2.9

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Note 9 - Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Notes Tables

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	As Restated
	December 31, 2020			December 31, 2019
Net operating loss carryforward	$	4,526,000		$	5,579,000
Allowances for sales returns, bad debt and inventory		92,000			87,000
Share based compensation		80,000			94,000
Other		178,000			202,000
Total deferred asset		4,876,000			5,962,000
Valuation allowance		(537,000	)		(5,962,000	)
Net deferred tax asset	$	4,339,000		$	-

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	As restated
	December 31, 2020			December 31, 2019
Federal statutory tax rate		21	%		21	%
State tax, net of federal benefit		-	%		4	%
		21	%		25	%
Valuation allowance		(121	%)		(25	%)
Effective tax rate		(100	%)		-	%

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Note 10 - Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2020

Notes Tables

Lessee, Operating Lease Liability, Maturity Liability [Table Text Block]

	Lease
Years ending December 31,	Commitment
2021	$	67,000
2022		67,000
2023		61,000
2024		51,000
Less: Imputed interest/present value discount		(38,000	)
Present value of lease liabilities	$	208,000

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Note 11 - Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2020

Notes Tables

Quarterly Financial Information [Table Text Block]

	2020 Quarters
	As Restated (Unaudited)
	Third		Second		First
Net sales	$	6,345,000	$	2,990,000	$	6,542,000
Gross profit		2,597,000		1,436,000		2,910,000
Net income		1,380,000		25,000		1,601,000
Per share data applicable to common shareholders
Basic earnings	$	1.30	$	0.02	$	1.52
Diluted earnings	$	1.22	$	0.02	$	1.42

	2019 Quarters
	As Restated (Unaudited)
	Third		Second		First
Net sales	$	5,726,000	$	4,302,000	$	5,489,000
Gross profit		2,464,000		1,683,000		2,368,000
Net income		1,102,000		376,000		1,014,000
Net income attributable to common shareholders		1,083,000		358,000		1,014,000
Per share data applicable to common shareholders
Basic earnings	$	1.08	$	0.34	$	0.91
Diluted earnings	$	0.90	$	0.29	$	0.80

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Note 1 - Description of Business (Details Textual) - USD ($)						3 Months Ended				6 Months Ended	9 Months Ended	12 Months Ended
	Feb. 01, 2021	Apr. 27, 2020	Mar. 20, 2020	Sep. 23, 2019	Aug. 16, 2019	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2020	Sep. 30, 2020	Dec. 31, 2020	Dec. 31, 2019	Aug. 04, 2020	Nov. 06, 2019	Sep. 30, 2019	Sep. 24, 2019	Jun. 30, 2019	Mar. 31, 2019
Preferred Stock, Par or Stated Value Per Share (in dollars per share)						$ 0.01	$ 0.01	$ 0.01	$ 0.01	$ 0.01	$ 0.01	$ 0.01	$ 0.01			$ 0.01		$ 0.01	$ 0.01
Treasury Stock, Shares, Acquired (in shares)						0	0	0	11,900			11,900
Proceeds from Issuance of Unsecured Debt									$ 0	$ 450,000	$ 450,000	$ 450,000	$ 0
Accrual for Taxes Other than Income Taxes						$ 77,000						$ 77,000
Proceeds from Lines of Credit, Total									$ 2,500,000	$ 0	$ 0
Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity																	$ 2,500,000
Proceeds from Lines of Credit, Total			$ 2,500,000
Debt Instrument, LIBOR Floor														0.75%
Paycheck Protection Program CARES Act [Member]
Proceeds from Issuance of Unsecured Debt		$ 449,700
Series A Preferred Stock [Member]
Preferred Stock, Par or Stated Value Per Share (in dollars per share)				$ 0.01		$ 0.01						$ 0.01				$ 0.01		$ 0.01	$ 0.01
Share Repurchase Program [Member]
Stock Repurchase Program, Authorized Amount				$ 1,000,000	$ 500,000										$ 2,500,000
Stock Repurchase Program, Period in Force (Month)				24 months	24 months
Treasury Stock, Shares, Acquired (in shares)						0	0	0	11,900			11,900
Treasury Stock, Shares Acquired, Percentage of Common Stock Outstanding												1.00%
Share Repurchase Program [Member] | Subsequent Event [Member]
Stock Repurchase Program, Authorized Amount	$ 5,000,000.0
Stock Repurchase Program, Period in Force (Month)	24 years

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Note 1 - Description of Business - Shares Repurchased (Details) - USD ($)	3 Months Ended				12 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2020
Total number of shares purchased (in shares)	0	0	0	11,900	11,900
Average price paid per share (in dollars per share)	$ 0	$ 0	$ 0	$ 14.35	$ 14.35
Share Repurchase Program [Member]
Total number of shares purchased (in shares)	0	0	0	11,900	11,900
Dollar value of shares that may yet be purchased	$ 1,110,917	$ 1,110,917	$ 1,110,917	$ 1,110,917	$ 1,110,917

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Note 3 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended						6 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2020		Dec. 31, 2019
Revenue from Contract with Customer, Including Assessed Tax	$ 6,345,000	$ 2,990,000	$ 6,542,000	$ 5,726,000	$ 4,302,000	$ 5,489,000	$ 9,532,000	$ 9,791,000	$ 15,877,000	$ 15,517,000	$ 22,111,000	[1],[2]	$ 19,136,000
Accounts Receivable, Allowance for Credit Loss, Ending Balance											51,000		27,000
Contract with Customer, Refund Liability, Total											345,000		231,000
Inventory Valuation Reserves, Ending Balance	$ 67,000	$ 75,000	$ 130,000	$ 143,000	$ 131,000	$ 119,000	$ 75,000	$ 131,000	$ 67,000	$ 143,000	$ 56,000		130,000
Finite-Lived Intangible Asset, Useful Life (Year)											10 years
Goodwill and Intangible Asset Impairment, Total											$ 0
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability											$ (4,339,000)
Number of Operating Segments											1
GNC [Member]
Revenue from Contract with Customer, Including Assessed Tax											$ 15,833,000		14,386,000
Accounts Receivable, after Allowance for Credit Loss, Total											$ 1,892,000		$ 1,629,000
GNC [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Concentration Risk, Percentage											71.00%		75.00%
GNC [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member]
Concentration Risk, Percentage											89.00%		85.00%

[1] Other adjustments – The correction of these misstatements resulted in a decrease to revenue of $34,000, a decrease to cost of goods sold of $1,000, an increase in selling and marketing of $1,000, and a decrease to net income of $34,000.

[2] Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $401,000, an increase of cost of goods sold of $225,000, an increase in tax provision of $31,000, and an increase to net income of $145,000

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Note 3 - Summary of Significant Accounting Policies - Property and Equipment Useful Life (Details)	12 Months Ended
	Dec. 31, 2020
Furniture and Fixtures [Member]
Property and equipment (Year)	3 years
Office Equipment [Member]
Property and equipment (Year)	3 years
Leasehold Improvements [Member]
Property and equipment (Year)	5 years

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Note 3 - Summary of Significant Accounting Policies - Dilutive Shares Excluded From Calculation Diluted Earnings Per Share (Details) - shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Antidilutive Securities (in shares)	5,575	34,075
Series A Preferred Stock [Member]
Antidilutive Securities (in shares)	0	0
Warrant [Member]
Antidilutive Securities (in shares)	0	0
Share-Based Payment Arrangement, Option [Member]
Antidilutive Securities (in shares)	5,575	34,075

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Note 4 - Inventories (Details Textual) - USD ($)	Dec. 31, 2020		Sep. 30, 2020		Jun. 30, 2020		Mar. 31, 2020		Dec. 31, 2019		Sep. 30, 2019		Jun. 30, 2019	Mar. 31, 2019
Inventory, Net, Total	$ 3,529,000	[1]	$ 2,580,000	[2],[3]	$ 3,478,000	[4]	$ 3,166,000	[5]	$ 3,358,000	[6]	$ 2,750,000	[7]	$ 3,180,000	$ 2,661,000

[1] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $247,000, an increase to inventory of $128,000, a reduction of deferred tax asset of $31,000, and an increase to accumulated deficit of $150,000

[2] Other adjustments – The correction of these misstatements resulted in an increase to inventory of $8,000, a decrease in prepaid expenses and other current assets of $1,000, an increase in accounts payable of $8,000, a decrease in accrued expense and other liabilities of $22,000 and a reduction in accumulated deficit of $21,000.

[3] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $584,000, an increase to inventory of $317,000, and an increase of accumulated deficit of $267,000

[4] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $8,000, an increase to inventory of $4,000, and an increase of accumulated deficit of $4,000

[5] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $257,000, an increase to inventory of $136,000, and an increase of accumulated deficit of $121,000

[6] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $648,000, an increase to inventories of $353,000, and an increase of accumulated deficit of $295,000

[7] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $528,000, an increase to inventory of $268,000, and an increase to accumulated deficit of $260,000

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Note 4 - Inventories - Summary of Inventory (Details) - USD ($)	Dec. 31, 2020		Sep. 30, 2020		Jun. 30, 2020		Mar. 31, 2020		Dec. 31, 2019		Sep. 30, 2019		Jun. 30, 2019	Mar. 31, 2019
Finished goods	$ 2,917,000								$ 3,048,000
Components	668,000								440,000
Allowance for obsolescence	(56,000)		$ (67,000)		$ (75,000)		$ (130,000)		(130,000)		$ (143,000)		$ (131,000)	$ (119,000)
Total	$ 3,529,000	[1]	$ 2,580,000	[2],[3]	$ 3,478,000	[4]	$ 3,166,000	[5]	$ 3,358,000	[6]	$ 2,750,000	[7]	$ 3,180,000	$ 2,661,000

[1] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $247,000, an increase to inventory of $128,000, a reduction of deferred tax asset of $31,000, and an increase to accumulated deficit of $150,000

[2] Other adjustments – The correction of these misstatements resulted in an increase to inventory of $8,000, a decrease in prepaid expenses and other current assets of $1,000, an increase in accounts payable of $8,000, a decrease in accrued expense and other liabilities of $22,000 and a reduction in accumulated deficit of $21,000.

[3] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $584,000, an increase to inventory of $317,000, and an increase of accumulated deficit of $267,000

[4] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $8,000, an increase to inventory of $4,000, and an increase of accumulated deficit of $4,000

[5] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $257,000, an increase to inventory of $136,000, and an increase of accumulated deficit of $121,000

[6] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $648,000, an increase to inventories of $353,000, and an increase of accumulated deficit of $295,000

[7] Revenue Recognition – The correction of these misstatements resulted in a decrease to accounts receivable of $528,000, an increase to inventory of $268,000, and an increase to accumulated deficit of $260,000

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Note 5 - Property and Equipment (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Depreciation, Total	$ 38,000	$ 52,000

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Note 5 - Property and Equipment - Property and Equipment (Details) - USD ($)	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019
Equipment	$ 902,000				$ 902,000
Accumulated depreciation	(804,000)				(766,000)
Total	$ 98,000	$ 105,000	$ 113,000	$ 124,000	$ 136,000	$ 148,000	$ 161,000	$ 174,000

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Note 6 - Notes Payable (Details Textual) - USD ($)					3 Months Ended		6 Months Ended	9 Months Ended	12 Months Ended
	Apr. 27, 2020	Mar. 20, 2020	Sep. 24, 2019	Dec. 26, 2018	Mar. 31, 2020	Mar. 31, 2019	Jun. 30, 2020	Sep. 30, 2020	Dec. 31, 2020	Dec. 31, 2019	Aug. 04, 2020
Proceeds from Lines of Credit, Total					$ 2,500,000		$ 0	$ 0
Proceeds from Issuance of Unsecured Debt					$ 0		$ 450,000	$ 450,000	$ 450,000	$ 0
Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity			$ 2,500,000
Proceeds from Lines of Credit, Total		$ 2,500,000
Debt Instrument, LIBOR Floor											0.75%
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate			2.75%
Sudbury Note [Member]
Debt Instrument, Face Amount				$ 600,000
Proceeds from Issuance of Debt				300,000		$ 300,000
Short-Term Debt, Total						$ 600,000
Judd Note [Member]
Debt Instrument, Face Amount				$ 200,000
Repayments of Debt			$ 615,000
Paycheck Protection Program CARES Act [Member]
Proceeds from Issuance of Unsecured Debt	$ 449,700

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Note 7 - Right of Use Assets and Liabilities (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Jan. 01, 2019
Operating Lease, Right-of-Use Asset	$ 208,000	$ 219,000	$ 229,000	$ 239,000	$ 254,000	$ 277,000	$ 293,000	$ 320,000	$ 480,000
Lessee, Operating Lease, Discount Rate									9.00%
Operating Lease, Payments	46,000
Operating Lease, Liability, Total	208,000
Lessee, Operating Lease, Rent Expense	67,000
Operating Lease, Right-of-Use Asset, Accumulated Amortization	$ 272,000	$ 261,000	$ 251,000	$ 241,000	$ 226,000	$ 203,000	$ 251,000
Minimum [Member]
Lessee, Operating Lease, Term of Contract (Month)	36 months
Operating Lease, Monthly Payments	$ 200
Maximum [Member]
Lessee, Operating Lease, Term of Contract (Month)	84 months
Operating Lease, Monthly Payments	$ 7,000

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Note 7 - Right of Use Assets and Liabilities - Lease Cost (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Operating lease cost	$ 67,000
Recording of lease asset and liability upon adoption of ASU-2016-02	$ 0	$ 343,000
Weighted average remaining lease term - operating leases (in years) (Year)	3 years 9 months 18 days
Average discount rate - operating leases	9.00%

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Note 7 - Right of Use Assets and Liabilities - Supplemental Balance Sheet Information (Details) - USD ($)	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Jan. 01, 2019
Long-term right-of-use assets	$ 208,000	$ 219,000	$ 229,000	$ 239,000	$ 254,000	$ 277,000	$ 293,000	$ 320,000	$ 480,000
Short-term operating lease liabilities	50,000	49,000	46,000	44,000	46,000	58,000	70,000	83,000
Long-term operating lease liabilities	158,000	$ 171,000	$ 183,000	$ 196,000	$ 208,000	$ 219,000	$ 227,000	$ 240,000
Total operating lease liabilities	$ 208,000

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Note 7 - Right of Use Assets and Liabilities - Maturity of Lease Liabilities (Details)	Dec. 31, 2020 USD ($)
2021	$ 67,000
2022	67,000
2023	61,000
2024	51,000
Less: Imputed interest/present value discount	(38,000)
Present value of lease liabilities	$ 208,000

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Note 8 - Equity (Details Textual)		1 Months Ended		3 Months Ended		6 Months Ended		9 Months Ended		12 Months Ended
	Apr. 11, 2019 $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares	Nov. 30, 2019 shares	Mar. 31, 2020 USD ($) $ / shares shares	Mar. 31, 2019 USD ($) $ / shares shares	Jun. 30, 2020 USD ($) $ / shares shares	Jun. 30, 2019 USD ($) $ / shares shares	Sep. 30, 2020 USD ($) $ / shares shares	Sep. 30, 2019 USD ($) $ / shares shares	Dec. 31, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 01, 2020 shares	Sep. 23, 2019 $ / shares	Dec. 31, 2018 shares
Common Stock, Shares Authorized (in shares)	15,000,000	15,000,000		15,000,000	15,000,000	15,000,000	15,000,000	15,000,000	15,000,000	15,000,000	15,000,000	15,000,000.0		150,000,000
Common Stock, Par or Stated Value Per Share (in dollars per share) | $ / shares		$ 0.01		$ 0.01	$ 0.01	$ 0.01	$ 0.01	$ 0.01	$ 0.01	$ 0.01	$ 0.01
Common Stock, Shares, Issued (in shares)		1,054,516		1,060,033	1,113,952	1,060,033	1,015,120	1,060,644	933,305	1,060,818	1,054,516
Stockholders' Equity Note, Stock Split, Conversion Ratio	800
Weighted Average Price Per Share Issued in Cash in Lieu of Fractional Shares (in dollars per share) | $ / shares	$ 0.57
Stock Issued During Period, Shares, Issued for Services (in shares)										1,202	18,082
Stock Issued During Period, Value, Issued for Services | $				$ 16,000	$ 23,000	$ 26,000	$ 39,000	$ 34,000	$ 43,000	$ 15,000	$ 47,000
Share-Based Payment Arrangement, Expense | $										63,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total | $		$ 36,800								$ 3,000	$ 36,800
Preferred Stock, Shares Authorized (in shares)		10,000,000		10,000,000	10,000,000	10,000,000	10,000,000	10,000,000	10,000,000	10,000,000	10,000,000
Preferred Stock, Par or Stated Value Per Share (in dollars per share) | $ / shares		$ 0.01		$ 0.01	$ 0.01	$ 0.01	$ 0.01	$ 0.01	$ 0.01	$ 0.01	$ 0.01
Preferred Stock, Shares Outstanding, Ending Balance (in shares)		0		0	0	0	0	0	0	0	0
Dividends, Preferred Stock, Total | $											$ 63,000
Share Price (in dollars per share) | $ / shares										$ 21.60
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Intrinsic Value | $										$ 1,454,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross (in shares)										0	8,000
Share-Based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount | $		$ 54,000								$ 0	$ 54,000
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in dollars per share) | $ / shares										$ 0	$ 6.85
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Fair Value | $											$ 38,000
Warrants and Rights Outstanding | $										$ 610,000
Share-Based Payment Arrangement, Option [Member]
Share-Based Payment Arrangement, Expense | $										$ 29,000	$ 111,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Expiration Period (Year)											5 years
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)											2 years
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Exercise Price (in dollars per share) | $ / shares		$ 6.85									$ 6.85
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term (Year)											3 years
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate											108.00%
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Dividend Rate											0.00%
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate											2.18%
Share-Based Payment Arrangement, Option [Member] | Share-Based Payment Arrangement, Employee [Member] | Share-Based Payment Arrangement, Tranche One [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage											33.33%
Series A Preferred Stock Converted into Common Stock [Member]
Conversion of Stock, Shares Converted (in shares)		550
Series A Preferred Stock [Member]
Preferred Stock, Shares Authorized (in shares)					1,000		1,000		1,000	10
Preferred Stock, Par or Stated Value Per Share (in dollars per share) | $ / shares					$ 0.01		$ 0.01		$ 0.01	$ 0.01			$ 0.01
Stock Repurchased and Retired During Period, Shares (in shares)			50
Preferred Stock, Shares Outstanding, Ending Balance (in shares)		0			600		600		600	0	0
Reverse Stock Split [Member]
Stockholders' Equity Note, Stock Split, Conversion Ratio	8,000
Reverse/Forward Stock Split [Member]
Stockholders' Equity Note, Stock Split, Conversion Ratio										10

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Note 8 - Equity - Stock Option Activity (Details) - $ / shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Outstanding, number of options (in shares)	149,285	154,521
Outstanding, weighted average exercise price (in dollars per share)	$ 11.76	$ 13.10
Outstanding, weighted average remaining life (Year)	5 years 10 months 24 days	5 years	5 years 8 months 12 days
Issued, number of options (in shares)	0	8,000
Issued, weighted average exercise price (in dollars per share)	$ 0	$ 6.85
Exercised, number of options (in shares)	(17,000)	0
Exercised, weighted average exercise price (in dollars per share)	$ 4.20	$ 0
Forfeited, number of options (in shares)	(39,500)	(13,236)
Forfeited, weighted average exercise price (in dollars per share)	$ 19.04	$ 24.45
Outstanding, number of options (in shares)	92,785	149,285	154,521
Outstanding, weighted average exercise price (in dollars per share)	$ 10.05	$ 11.76	$ 13.10

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Note 8 - Equity - Exercise Price Range (Details)	12 Months Ended
	Dec. 31, 2020 $ / shares shares
Total number of options (in shares) | shares	92,785
Weighted average remaining life (Year)	5 years 10 months 24 days
Outstanding, weighted average exercise price (in dollars per share)	$ 10.05
Number of vested options (in shares) | shares	92,785
Exercisable, weighted average exercise price (in dollars per share)	$ 10.05
Range One [Member]
Lower range limit (in dollars per share)	2.8
Upper range limit (in dollars per share)	$ 23.00
Total number of options (in shares) | shares	87,210
Weighted average remaining life (Year)	6 years 2 months 12 days
Outstanding, weighted average exercise price (in dollars per share)	$ 4.93
Number of vested options (in shares) | shares	87,210
Exercisable, weighted average exercise price (in dollars per share)	$ 4.93
Range Two [Member]
Lower range limit (in dollars per share)	23.10
Upper range limit (in dollars per share)	$ 144.34
Total number of options (in shares) | shares	5,575
Weighted average remaining life (Year)	2 years 9 months 18 days
Outstanding, weighted average exercise price (in dollars per share)	$ 90.20
Number of vested options (in shares) | shares	5,575
Exercisable, weighted average exercise price (in dollars per share)	$ 90.20

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Note 8 - Equity - Warrants (Details) - $ / shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Outstanding, number of warrants (in shares)	35,870	39,130
Outstanding, weighted average exercise price, warrant (in dollars per share)	$ 4.60	$ 4.60
Issued, number of warrants (in shares)	0	0
Issued, weighted average exercise price, warrant (in dollars per share)	$ 0	$ 0
Repurchased/retired, number of warrants (in shares)		(3,260)
Repurchased/retired, weighted average exercise price, warrant (in dollars per share)		$ 0
Forfeited, number of warrants (in shares)	0	0
Forfeited, weighted average exercise price, warrant (in dollars per share)	$ 0	$ 0
Exercised, number of warrants (in shares)	0
Exercised, weighted average exercise price, warrant (in dollars per share)	$ 0
Outstanding, number of warrants (in shares)	35,870	35,870
Outstanding, weighted average exercise price, warrant (in dollars per share)	$ 4.60	$ 4.60
Outstanding, weighted average remaining life, warrants (Year)	2 years 10 months 24 days

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Note 9 - Income Taxes (Details Textual) - USD ($)	3 Months Ended						6 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2020		Dec. 31, 2019
Income Tax Expense (Benefit), Total	$ 17,000	$ (40,000)	$ (41,000)	$ 0	$ 6,000	$ 0	$ (81,000)	$ 6,000	$ (64,000)	$ 6,000	$ (4,415,000)	[1]	$ 7,000
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability											(4,339,000)
Unrecognized Tax Benefits, Ending Balance											0		0
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued, Total											$ 0		0
Open Tax Year											2017 2018 2019 2020
Domestic Tax Authority [Member]
Operating Loss Carryforwards											$ 21,600,000		$ 25,900,000
Domestic Tax Authority [Member] | iSatori [Member]
Operating Loss Carryforwards											$ 2,557,000

[1] Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $401,000, an increase of cost of goods sold of $225,000, an increase in tax provision of $31,000, and an increase to net income of $145,000

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Note 9 - Income Taxes - Deferred Tax Assets (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Net operating loss carryforward	$ 4,526,000	$ 5,579,000
Allowances for sales returns, bad debt and inventory	92,000	87,000
Share based compensation	80,000	94,000
Other	178,000	202,000
Total deferred asset	4,876,000	5,962,000
Valuation allowance	(537,000)	(5,962,000)
Net deferred tax asset	$ 4,339,000	$ 0

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Note 9 - Income Taxes - Reconciliations of Federal Statutory Rate to Effective Income Tax Rate (Details)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Federal statutory tax rate	21.00%	21.00%
State tax, net of federal benefit	0.00%	4.00%
Effective Income Tax Rate Reconciliation, Federal and State Statutory Income Tax Rate	21.00%	25.00%
Valuation allowance	(121.00%)	(25.00%)
Effective tax rate	(100.00%)	0.00%

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Note 10 - Commitments and Contingencies (Details Textual)	12 Months Ended
	Dec. 31, 2020 USD ($) ft²	Dec. 31, 2019 USD ($)
Operating Lease, Expense	$ 67,000	$ 84,000
Cost of Sales [Member]
Operating Lease, Expense	41,000	50,000
Operating Expense [Member]
Operating Lease, Expense	26,000	$ 34,000
Headquartered in Omaha, Nebraska [Member]
Lessee, Operating Lease, Monthly Rent	$ 8,000
Area of Real Estate Property (Square Foot) | ft²	11,088
On-site Warehouse Space [Member]
Area of Real Estate Property (Square Foot) | ft²	6,179

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Note 10 - Commitments and Contingencies - Minimum Annual Rental Commitments (Details)	Dec. 31, 2020 USD ($)
2021	$ 67,000
2022	67,000
2023	61,000
2024	51,000
Less: Imputed interest/present value discount	(38,000)
Present value of lease liabilities	$ 208,000

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Note 11 - Quarterly Financial Data (Unaudited) - Quarterly Financial Data (Details) - USD ($)	3 Months Ended						6 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2020		Dec. 31, 2019
Revenue	$ 6,345,000	$ 2,990,000	$ 6,542,000	$ 5,726,000	$ 4,302,000	$ 5,489,000	$ 9,532,000	$ 9,791,000	$ 15,877,000	$ 15,517,000	$ 22,111,000	[1],[2]	$ 19,136,000
Gross profit	2,597,000	1,436,000	2,910,000	2,464,000	1,683,000	2,368,000	4,346,000	4,051,000	6,943,000	6,515,000	9,537,000		7,981,000
NET INCOME	$ 1,380,000	$ 25,000	$ 1,601,000	$ 1,102,000	$ 376,000	$ 1,014,000	$ 1,626,000	$ 1,390,000	$ 3,006,000	$ 2,492,000	$ 8,825,000		$ 2,610,000
Basic (in dollars per share)	$ 1.30	$ 0.02	$ 1.52	$ 1.08	$ 0.34	$ 0.91	$ 1.54	$ 1.27	$ 2.84	$ 2.33	$ 8.34		$ 2.48
Diluted (in dollars per share)	$ 1.22	$ 0.02	$ 1.42	$ 0.90	$ 0.29	$ 0.80	$ 1.44	$ 1.09	$ 2.65	$ 1.98	$ 7.76		$ 2.33
Net income attributable to common shareholders				$ 1,083,000	$ 358,000	$ 1,014,000		$ 1,372,000		$ 2,455,000	$ 8,825,000		$ 2,547,000

[1] Other adjustments – The correction of these misstatements resulted in a decrease to revenue of $34,000, a decrease to cost of goods sold of $1,000, an increase in selling and marketing of $1,000, and a decrease to net income of $34,000.

[2] Revenue Recognition – The correction of these misstatements resulted in an increase to revenue of $401,000, an increase of cost of goods sold of $225,000, an increase in tax provision of $31,000, and an increase to net income of $145,000

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Note 12 - Subsequent Events (Details Textual)	Feb. 01, 2021 USD ($)	Sep. 23, 2019 USD ($)	Aug. 16, 2019 USD ($)	Feb. 26, 2021 $ / shares shares	Dec. 31, 2020 $ / shares	Sep. 30, 2020 $ / shares	Jun. 30, 2020 $ / shares	Mar. 31, 2020 $ / shares	Dec. 31, 2019 $ / shares	Nov. 06, 2019 USD ($)	Sep. 30, 2019 $ / shares	Jun. 30, 2019 $ / shares	Mar. 31, 2019 $ / shares	Dec. 31, 2018 $ / shares
Preferred Stock, Par or Stated Value Per Share (in dollars per share)					$ 0.01	$ 0.01	$ 0.01	$ 0.01	$ 0.01		$ 0.01	$ 0.01	$ 0.01
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)					$ 4.60				$ 4.60					$ 4.60
Share Repurchase Program [Member]
Stock Repurchase Program, Authorized Amount | $		$ 1,000,000	$ 500,000							$ 2,500,000
Stock Repurchase Program, Period in Force (Month)		24 months	24 months
Subsequent Event [Member]
Dividends Payable, Number of Rights				1
Subsequent Event [Member] | Series B Preferred Stock [Member]
Preferred Stock, Par or Stated Value Per Share (in dollars per share)				$ 0.001
Subsequent Event [Member] | Rights to Purchase Series B Preferred Stock [Member]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares) | shares				0.0001
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)				$ 100.00
Subsequent Event [Member] | Share Repurchase Program [Member]
Stock Repurchase Program, Authorized Amount | $	$ 5,000,000.0
Stock Repurchase Program, Period in Force (Month)	24 years