GlobeNewswire Inc | Nov 12, 2020 08:30AM EST

November 12, 2020

Omaha, Nov. 12, 2020 (GLOBE NEWSWIRE) -- OMAHA, NE November 12, 2020 -- FitLife Brands, Inc. (FitLife or the Company) (OTC Pink: FTLF), an international provider of innovative and proprietary nutritional supplements for health-conscious consumers marketed under the brand names NDS Nutrition, PMD, SirenLabs, CoreActive, Metis Nutrition, iSatori, Energize, and BioGenetic Laboratories, today announced results for the three and nine months ended September 30, 2020.

Highlights for the third quarter ended September 30, 2020 include:

-- Total revenue increased 30% to $6.9 million compared to $5.3 million in the same quarter last year. -- Direct-to-consumer online sales increased 96% to $1.2 million, representing 17% of total revenue compared to 12% in the same quarter last year. -- Gross profit increased 27% to $2.9 million. -- Operating expenses declined 13% to $1.2 million. -- The Company generated net income of $1.6 million compared to $0.9 million during the same quarter last year, an increase of 85%. -- Net income per share increased to $1.55 per share, or $1.45 per diluted share, compared to $0.87 per share, or $0.72 per diluted share, in the same quarter last year. -- The Company ended the quarter with $4.1 million of cash, compared to $0.3 million as of December 31, 2019. Subsequent to the end of the quarter, the Company received a payment of $0.8 million from GNC in full satisfaction of the Companys administrative claim related to GNCs bankruptcy filing.

For the third quarter ended September 30, 2020, total revenue was $6.9 million compared to $5.3 million in the same quarter last year, an increase of 30.2%. The increase was primarily attributable to continued strong growth in our direct-to-consumer online sales and a restocking of our products at GNC following its bankruptcy filing. For the third quarter of 2020, online sales increased 96% to $1.2 million and accounted for approximately 17% of the Companys revenue compared to 12% during the third quarter of 2019.

Gross profit increased to $2.9 million, an increase of 27.0% from the third quarter of 2019. Gross margin decreased slightly from 42.4% to 41.3% over the same time period. During the quarter, total operating expenses declined 12.7% to $1.2 million.

Net income for the third quarter of 2020 was $1.6 million compared to net income of $0.9 million during the same quarter in 2019. The Company delivered basic earnings per share of $1.55 in the third quarter of 2020 compared to $0.87 in the same quarter last year, an increase of 78.2%. Diluted earnings per share for the quarter more than doubled to $1.45 compared to $0.72 in the third quarter of last year.

GNC Bankruptcy

The Companys 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 around 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 Companys receivables from GNC as of the petition date related to product that was delivered in the 20 days leading up to the bankruptcy filing. Subsequent to the end of the third quarter, the Company received payment of approximately $829,000 from GNC in full settlement of Companys administrative claim.

The remaining receivables of approximately $354,000 relating to product delivered to GNC more than 20 days prior to its bankruptcy filing were fully reserved by the Company during the second quarter of 2020. The Company expects to receive an immaterial partial recovery on these receivables during the fourth quarter. Subsequent to the end of the quarter, GNCs Plan of Reorganization was confirmed by the Bankruptcy Court, and the Plan became effective on October 30, 2020.

Dayton Judd, the Companys Chairman and CEO, commented The third quarter was one of the strongest in the Companys history. I am proud of our team and the results they generated in a difficult retail environment. While the fourth quarter is traditionally our slowest, we continue to see increasing demand for our products online and in GNC franchise locations. And in addition to growing organically, we continue to look for opportunities to grow through prudent, accretive acquisitions.

About FitLife BrandsFitLife Brands is a developer and marketer of innovative and proprietary nutritional supplements for health-conscious consumers. FitLife markets over 80 different dietary supplements to promote sports nutrition, improved performance, weight loss and general health primarily through domestic and international GNC franchise locations as well as through more than 25,000 additional domestic retail locations and, increasingly, online. FitLife is headquartered in Omaha, Nebraska. For more information please visit our new website at www.fitlifebrands.com.

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

FITLIFE BRANDS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS: September 30, December 31, 2020 2019 (Unaudited) CURRENT ASSETS Cash $ 4,090,000 $ 265,000 Accounts receivable, net ofallowance of doubtful accounts, 2,594,000 2,366,000 $402,000 and $27,000 respectivelyInventories, net of allowance forobsolescence of $67,000 and 2,255,000 2,998,000 $130,000, respectivelyIncome tax receivable 40,000 - Prepaid expenses and other current 57,000 72,000 assetsTotal current assets 9,036,000 5,701,000 Property and equipment, net 105,000 136,000 Right of use asset, net ofamortization, $261,000 and 219,000 254,000 $226,000 respectivelyGoodwill 225,000 225,000 Security deposits - 10,000 TOTAL ASSETS $ 9,585,000 $ 6,326,000 LIABILITIES AND STOCKHOLDERS' EQUITY: CURRENT LIABILITIES: Accounts payable $ 1,821,000 $ 2,010,000 Accrued expense and other 524,000 464,000 liabilitiesProduct returns 276,000 256,000 Lease liability - current 49,000 46,000 portionTotal current 2,670,000 2,776,000 liabilities Long-term lease liability, net of 171,000 208,000 current portionPPP loan 452,000 - TOTAL LIABILITIES 3,293,000 2,984,000 STOCKHOLDERS' EQUITY: Preferred stock, $0.01 par value,10,000,000 shares authorized, none outstandingas of September 30, 2020 and December 31, 2019Common stock, $.01 par value,15,000,000 shares authorized; 1,060,644 and 1,054,516issued and outstanding as ofSeptember 30, 2020 and December 12,000 12,000 31, 2019 respectivelyTreasury stock, 210,631 and (1,790,000 ) (1,619,000 ) 198,731 shares, respectivelyAdditional paid-in capital 32,195,000 32,055,000 Accumulated deficit (24,125,000 ) (27,106,000 ) TOTAL STOCKHOLDERS' 6,292,000 3,342,000 EQUITY TOTAL LIABILITIES AND $ 9,585,000 $ 6,326,000 STOCKHOLDERS' EQUITY The accompanying notes are an integral part of these condensed consolidated financial statements

FITLIFE BRANDS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSFOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 Three months ended Nine months ended September 30 September 30 2020 2019 2020 2019 (Unaudited) (Unaudited) Revenue $ 6,923,000 $ 5,316,000 $ 15,814,000 $ 15,812,000 Cost of goods sold 4,061,000 3,063,000 8,896,000 9,163,000 Gross profit 2,862,000 2,253,000 6,918,000 6,649,000 OPERATING EXPENSES: General and 684,000 782,000 2,419,000 2,352,000 administrativeSelling and 509,000 583,000 1,614,000 1,749,000 marketingDepreciation 9,000 12,000 31,000 40,000 and amortizationTotal 1,202,000 1,377,000 4,064,000 4,141,000 operating expensesOPERATING INCOME 1,660,000 876,000 2,854,000 2,508,000 OTHER EXPENSES (INCOME) Interest 1,000 14,000 14,000 47,000 expenseInterest (3,000 ) - (7,000 ) - incomeGain on settlement - (29,000 ) (70,000 ) (171,000 )Total (2,000 ) (15,000 ) (63,000 ) (124,000 )other expenses (income) PRE-TAX NET INCOME 1,662,000 891,000 2,917,000 2,632,000 PROVISION FOR INCOME 17,000 - (64,000 ) 7,000 TAXES NET INCOME 1,645,000 891,000 2,981,000 2,625,000 PREFERRED STOCK - (19,000 ) - (37,000 )DIVIDEND NET INCOME AVAILABLE TO $ 1,645,000 $ 872,000 $ 2,981,000 $ 2,588,000 COMMON SHAREHOLDERS NET INCOME PER SHAREAVAILABLE TO COMMON SHAREHOLDERS:Basic $ 1.55 $ 0.87 $ 2.82 $ 2.46 Diluted $ 1.45 $ 0.72 $ 2.63 $ 2.08 Basic weighted 1,060,350 1,001,715 1,057,389 1,053,292 average common shares Diluted weighted 1,134,379 1,207,024 1,132,764 1,241,875 average common shares Theaccompanying notes are an integral part of these condensed consolidatedfinancial statements

FITLIFE BRANDS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 Nine months ended September 30 2020 2019 (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,981,000 $ 2,625,000 Adjustments to reconcile netincome to net cash used in operating activities:Depreciation and amortization 32,000 40,000 Allowance for doubtful accounts 375,000 (166,000 ) Allowance for inventory (62,000 ) 36,000 obsolescenceCommon stock issued for services 40,000 55,000 Fair value of options issued for 29,000 94,000 servicesRight of use asset net of - 66,000 amortization and lease liabilityChanges in operating assets and liabilities:Accounts receivable - trade (603,000 ) (1,572,000 ) Inventories 805,000 1,005,000 Prepaid expense 15,000 160,000 Income tax receivable (40,000 ) - Security deposit 10,000 - Accounts payable (189,000 ) (595,000 ) Accrued interest 1,000 41,000 Accrued liabilities and other 61,000 (65,000 ) liabilitiesProduct returns 20,000 - Net cash provided 3,475,000 1,724,000 by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Net cash provided - - by investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of notes - 300,000 payableProceeds from exercise of stock 71,000 - optionsProceeds from paycheck protection 450,000 - programDividend payments on preferred - (37,000 ) stockRepurchases of common stock (171,000 ) (889,000 ) Repayments of note payable - (800,000 ) Net cash provided 350,000 (1,426,000 ) by (used in) financing activities CHANGE IN CASH 3,825,000 298,000 CASH, BEGINNING OF PERIOD 265,000 259,000 CASH, END OF PERIOD $ 4,090,000 $ 557,000 Supplemental disclosure operating activitiesCash paid for interest $ - $ 47,000 Non-cash investing and financing activitiesRecording of lease asset andliability upon adoption of $ - $ 343,000 ASU-2016-02Accrued liability for stock buyback $ 94,000 $ 496,000 The accompanying notes are an integral part of these condensed consolidated financial statements







Dayton Judddjudd@fitlifebrands.com