FitLife Brands(FTLF) - 2020 Q1 - Quarterly Report

Financial Performance - Revenue for the three months ended March 31, 2020, was $6,151,000, an increase of 4.6% compared to $5,878,000 for the same period in 2019[17] - Gross profit for the same period was $2,737,000, representing a gross margin of 44.4%, up from $2,541,000 and a gross margin of 43.2% in 2019[17] - Net income for the three months ended March 31, 2020, was $1,428,000, compared to $1,187,000 in 2019, reflecting a year-over-year increase of 20.3%[17] - Basic net income per share available to common shareholders increased to $1.36 in Q1 2020 from $1.07 in Q1 2019, a rise of 27.1%[17] - Operating income for the three months ended March 31, 2020, was $1,321,000, an increase from $1,202,000 in the same period of 2019[17] - Net income available to common shareholders for the three months ended March 31, 2020, was $1,428,000, compared to $1,187,000 for the same period in 2019, representing a 20.3% increase[45] - Basic earnings per share increased to $1.36 for the three months ended March 31, 2020, from $1.07 in the same period of 2019, a 27.1% increase[45] - Cash provided by operating activities was $1,000 for the three months ended March 31, 2020, a significant improvement from cash used in operations of $(121,000) for the same period in 2019[119] - Cash provided by financing activities was $2,400,000 for the three months ended March 31, 2020, compared to $300,000 for the same period in 2019[120] - Net income for the three-month period ended March 31, 2020 was $1,428,000, compared to $1,187,000 for the same period in 2019, reflecting an increase primarily due to higher revenue and lower operating expenses[111] Assets and Liabilities - Total current assets as of March 31, 2020, were $10,406,000, significantly higher than $5,701,000 as of December 31, 2019[15] - Total liabilities increased to $6,306,000 as of March 31, 2020, compared to $2,984,000 as of December 31, 2019[15] - The company reported a total stockholders' equity of $4,698,000 as of March 31, 2020, compared to $3,342,000 at the end of 2019[15] - As of March 31, 2020, the company had positive working capital of approximately $4,296,000, an increase from $2,925,000 at December 31, 2019[112] - The company owed $2.5 million under its existing Line of Credit as of March 31, 2020[137] Cash and Liquidity - Cash at the end of the period was $2,666,000, up from $438,000 at the end of Q1 2019, indicating a substantial liquidity improvement[23] - The company anticipates that cash derived from operations and existing cash resources will be sufficient to meet liquidity needs for the next twelve months[113] - The Company drew $2.5 million from the line of credit on March 20, 2020, to maintain financial flexibility amid COVID-19 uncertainties[31] - The Company received a loan of approximately $449,700 under the Paycheck Protection Program as part of the CARES Act[90] Sales and Revenue Sources - Sales to GNC accounted for 76% of total net revenue in Q1 2020, down from 82% in Q1 2019, with net sales of $4,697,000 compared to $4,864,000[50] - Online sales represented 14% of the Company's net revenue in Q1 2020, up from 10% in Q1 2019[51] - Online revenue accounted for approximately 14% of total revenue during the three months ended March 31, 2020, up from roughly 10% in the same period in 2019[104] Shareholder Activities - The Company repurchased 11,900 shares of Common Stock during Q1 2020, approximately 1% of the issued and outstanding shares[38] - The Company repurchased 11,900 shares of Common Stock for an aggregate purchase price of $171,000 during the three-month period ended March 31, 2020[78] - The Company repurchased 11,900 shares of Common Stock, approximately 1% of the issued and outstanding shares, at an average price of $14.35 per share[147] - The Share Repurchase Program was amended to allow for up to $2.5 million in repurchases over 24 months[36] - The Company issued a total of 123,222 shares of Common Stock following the conversion of 550 shares of Series A Preferred Stock on December 23, 2019[39] - The Company issued 417 shares of Common Stock with a fair value of $4,000 to directors for services rendered during the three-month period ended March 31, 2020[76] Operational Efficiency - General and administrative expenses decreased to $733,000 for the three months ended March 31, 2020, down from $774,000 in the same period last year, due to cost-reduction initiatives[108] - Selling and marketing expenses increased to $671,000 for the three months ended March 31, 2020, compared to $550,000 for the same period in 2019, reflecting increased marketing investments[109] - The Company allows for product returns, with less than 5% of products being returned, indicating a low risk of revenue reversal[57] Tax and Deferred Assets - The Company reported a federal net operating loss carryforward of approximately $26.6 million as of December 31, 2019, which can offset future taxable income[59] - During the quarter ended March 31, 2020, the Company received a tax refund of $41,000 related to alternative minimum tax carryforward[60] - The Company recorded a 100% valuation allowance against its net deferred tax assets as of March 31, 2020, due to uncertainties in future profitability[61] Inventory and Receivables - As of March 31, 2020, the Company's total inventories amounted to $3,023,000, a slight increase from $2,998,000 as of December 31, 2019[65] - Gross accounts receivable attributable to GNC as of March 31, 2020, were $4,186,000, representing 91% of total accounts receivable[50] Internal Controls - The Chief Executive Officer and Chief Financial Officer concluded that the internal control over financial reporting was effective as of March 31, 2020[141] - There have been no changes in internal controls over financial reporting during the quarter ended March 31, 2020[142]