FitLife Brands Announces Fiscal First Quarter 2017 Results

OMAHA, Neb.--(BUSINESS WIRE)-- FitLife Brands, Inc. (“FitLife”) (OTCBB: FTLF), an international provider of innovative and proprietary nutritional supplements for health conscious consumers marketed under the brand names NDS Nutrition Products™ ("NDS") (www.ndsnutrition.com), PMD® (www.pmdsports.com), SirenLabs® (www.sirenlabs.com), CoreActive® (www.coreactivenutrition.com), Metis Nutrition™ (www.metisnutrition.com), iSatori™ (www.isatori.com), Energize (www.tryenergize.com), and BioGenetic Laboratories, (www.biogeneticlabs.com), today announced results for its fiscal first quarter ended March 31, 2017.

Highlights for the quarter-ended March 31, 2017 include:

• Total revenue decreased 29% to $5.6 million for the quarter.
• Net loss for the quarter was $0.3 million or ($0.03) per share, versus a gain of $0.8 million or $0.07 per share.

For the first quarter ended March 31, 2017, total revenue was $5.6 million, a 29% decrease over reported revenue of $7.9 million last year. During the quarter, the Company incurred a one-time non-recurring adjustment to revenue of $700,000 related to a credit memorandum with our largest customer. Excluding the one-time charge, total revenue would have been $6.3 million for the first quarter of 2017. Core FitLife revenue for the quarter was $4.1 million versus $5.3 million a year ago. Excluding the revenue adjustment, core FitLife revenue would have been $4.8 million, a decline of 8% from the prior period. iSatori generated $1.5 million in revenue compared to $2.6 million for the first quarter of 2016. In addition to the non-recurring credit, core FitLife and iSatori’s revenue declines were both primarily attributable to fewer new product introductions during the first quarter of 2017 as compared to the first quarter of 2016. On average we introduce approximately 8 to 10 new products every 6 months, but the timing of such product launches can vary from quarter to quarter.

Gross margin was 34.4% for the quarter compared to 45.9% in the same period a year ago. Excluding the revenue adjustment, gross margin would have been 46.9%. Operating expenses were 39.8% of revenue as reported and 35.4% excluding the revenue adjustment versus 34.3% last year.

First quarter net loss was $0.3 million or ($0.03) per share versus a gain of $0.8 million or $0.07 per share last year. Excluding the one-time revenue adjustment, net income would have been $0.4 million or $0.03 per share. The core FitLife business posted a net loss of $0.2 million relative to net income of $0.7 million in the first quarter of 2016. Absent the revenue adjustment, net income for the core FitLife business would have been $0.5 million. iSatori lost ($115,000) as a result of lower sales levels compared to a gain of $159,000 in the same period a year ago.

The Company ended the first quarter with $1.1 million in cash, down from $1.3 million at December 31, 2016. At quarter end, total debt decreased to $2.7 million from $2.9 million at the end of 2016.

“Facing a challenging retail environment, many of our customers are choosing to hold less inventory, which has led to some lumpiness in the year over year comparisons,” said John S. Wilson, Chief Executive Officer of FitLife Brands. “We also absorbed a non-recurring credit from our largest customer of $700,000 in the quarter, which further reduced our revenue in the first quarter. In fact, without the one-time adjustment to revenue we incurred during the quarter, we would have generated positive net income, which we feel is a testament to our strong fundamentals and conservative management of the business. We continue with our efforts to streamline the business and reduced our expenses in the quarter by almost $500,000 and our cash position remains solid with cash flow from operations essentially breakeven.”

Following the issuance of first quarter financial results, the company will provide recorded comments that can be accessed on the FitLife Brands' website under the "Investor Relations" section.

About FitLife Brands

FitLife Brands is a marketer and manufacturer of innovative and proprietary nutritional supplements for health conscious consumers. FitLife markets over 80 different dietary supplements to promote sports nutrition, improved performance, weight loss and general health primarily through domestic and international GNC® franchise locations. FitLife is headquartered in Omaha, Nebraska. For more information please visit our new website at www.fitlifebrands.com.

Forward-Looking StatementStatements in this release that are forward looking involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to be materially different from any future performance that may be suggested in this news release. Such factors may include, but are not limited to: the ability to of the Company to continue to grow revenue; and the Company's ability to continue to achieve positive cash flow given the Company's existing and anticipated operating and other costs. Many of these risks and uncertainties are beyond the Company's control. Reference is made to the discussion of risk factors detailed in The Company's filings with the Securities and Exchange Commission including its reports on Form 10-K and 10-Q. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

Non-GAAP Financial MeasuresThis press release includes the following financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission: non-GAAP net income, non-GAAP earnings per share. 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 accordance with generally accepted accounting principles. Reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures will be provided upon the completion of the Company’s annual audit.

Non-GAAP net income excludes items such as impairment charges, allowance for doubtful accounts, charges to consolidate and integrate recently acquired businesses, costs of closing corporate facilities, non-cash stock based compensation and other one-time cash and non-cash charges. Non-GAAP EPS excludes items such as non-cash stock based compensation, charges to consolidate and integrate recently acquired businesses, costs for closing corporate facilities, amortization of acquired intangible assets and other one-time cash and non-cash charges. The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses or net purchases of property and equipment, as the case may be, which may not be indicative of its core operation results and business outlook.

FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
			(Unaudited)
ASSETS:			March 31,					December 31,
			2017					2016
CURRENT ASSETS
Cash			$	1,133,148				$	1,293,041
Accounts receivable, net				4,385,965					2,792,649
Security deposits				24,956					24,956
Inventory				2,895,670					3,756,716
Note receivable, current portion				53,227					2,782
Prepaid income tax				120,000					120,000
Prepaid expenses and other current assets				48,549					136,014
Total current assets				8,661,514					8,126,158
PROPERTY AND EQUIPMENT, net				157,166					171,004
Note receivable, net of current portion				-					52,695
Deferred Taxes				689,000					689,000
Intangibles assets, net				6,402,006					6,507,505
TOTAL ASSETS			$	15,909,686				$	15,546,363
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable			$	2,446,192				$	1,596,748
Accrued expenses and other liabilities				494,769					539,765
Litigation Reserve				-					-
Income tax payable				-					-
Line of credit				1,950,000					1,950,000
Term loan agreement, current portion				549,743					544,825
Notes payable				9,860					12,700
Total current liabilities				5,450,564					4,644,038
LONG-TERM DEBT, net of current portion				229,779					369,177
TOTAL LIABILITIES				5,680,344					5,013,215
CONTINGENCIES AND COMMITMENTS				-					-
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of March 31, 2017 and December 31, 2016:
Preferred stock Series A; 10,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2017 and December 31, 2016				-					-
Preferred stock Series B; 1,000 shares authorized; 0 shares issued and outstanding as of March 31, 2017 and December 31, 2016				-					-
Preferred stock Series C; 500 shares authorized; 0 shares issued and outstanding as of March 31, 2017 and December 31, 2016				-					-
Common stock, $.01 par value, 150,000,000 shares authorized; 10,441,469 and 10,449,520 issued and outstanding as of March 31, 2017 and December 31, 2016, respectively				104,415					104,495
Subscribed common stock				287					339
Treasury stock				-					(44,416.17	)
Additional paid-in capital				30,904,089					30,919,289
Accumulated deficit				(20,779,449	)				(20,446,559	)
Total stockholders' equity			$	10,229,342				$	10,533,148
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	15,909,686				$	15,546,363
The accompanying notes are an integral part of these consolidated financial statements

FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016
			(Unaudited)
			2017					2016
Revenue			$	5,589,354				$	7,882,953
Total				5,589,354					7,882,953
Cost of Goods Sold				3,668,790					4,264,691
Gross Profit				1,920,564					3,618,262
OPERATING EXPENSES:
General and administrative				1,160,069					1,378,859
Selling and marketing				947,386					1,196,629
Depreciation and amortization				119,338					124,756
Total operating expenses				2,226,793					2,700,244
OPERATING INCOME (LOSS)				(306,229	)				918,018
OTHER (INCOME) AND EXPENSES
Interest expense				26,661					29,429
Other expense (income)				-					(565	)
Total other (income) expense				26,661					28,864
INCOME TAXES (BENEFIT)				-					75,000
NET INCOME (LOSS)			$	(332,890	)			$	814,154
NET INCOME (LOSS) PER SHARE:
Basic			$	(0.03	)			$	0.08
Diluted			$	(0.03	)			$	0.07
Basic				10,441,469					10,385,890
Diluted				11,472,013					11,398,715
The accompanying notes are an integral part of these consolidated financial statements

FITLIFE BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016
			(Unaudited)
			2017					2016
Net income			$	(332,890	)			$	814,154
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization				119,338					124,756
Capitalization of select merger costs				-					-
Common stock issued (cancelled) for services				17,500					43,831
Warrants and options issued (cancelled) for services				11,585					15,166
Gain on write-up of investment				-					-
Intercompany transfer				-					(0	)
Changes in operating assets and liabilities:
Accounts receivable				(1,593,316	)				(2,533,242	)
Inventory				861,047					1,253,518
Deferred tax asset				-					123,879
Prepaid income tax				-					75,000
Prepaid expenses				87,466					37,470
Note receivable				2,250					3,936
Deposits				-					-
Accounts payable				849,444					(1,053,510	)
Accrued liabilities				(44,996	)				(102,222	)
Litigation reserve				-					(5,775	)
Income tax payable				-					-
Net cash provided by (used in) operating activities				(22,573	)				(1,203,040	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment				-					(9,772	)
Long-term investment				-					2,027
Repurchases of common stock				-					-
Net cash provided by (used in) investing activities				-					(7,745	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt				-					520,000
Payments for redemption of preferred stock				-					-
Repayments of note payable				(137,320	)				(134,166	)
Net cash provided by (used in) financing activities				(137,320	)				385,834
INCREASE (DECREASE) IN CASH				(159,893	)				(824,951	)
CASH, BEGINNING OF PERIOD				1,293,041					1,532,550
CASH, END OF PERIOD			$	1,133,148				$	707,599
Supplemental disclosure operating activities
Cash paid for interest			$	26,661				$	29,429
The accompanying notes are an integral part of these consolidated financial statements

View source version on businesswire.com: http://www.businesswire.com/news/home/20170523005897/en/

Investor Relations Contact:
Three Part Advisors, LLC
Jeff Elliott, 972-423-7070
or
David Burtzlaff, CFA, 817-527-8837

Source: FitLife Brands, Inc.

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