FitLife Brands(FTLF) - 2023 Q2 - Quarterly Report

Financial Performance - Revenue for Q2 2023 reached $14,760,000, a 88% increase from $7,824,000 in Q2 2022[14] - Gross profit for Q2 2023 was $5,965,000, compared to $3,490,000 in Q2 2022, reflecting a 71% increase[14] - Operating income for the first half of 2023 was $3,258,000, slightly down from $3,421,000 in the same period of 2022[14] - Net income for Q2 2023 was $1,964,000, up from $1,446,000 in Q2 2022, representing a 36% increase[14] - Comprehensive income for Q2 2023 was $2,211,000, compared to $1,446,000 in Q2 2022, showing a significant increase[14] - Basic earnings per share (EPS) for the three months ended June 30, 2023, was $0.44, up from $0.32 in the same period of 2022, reflecting a 37.5% increase[30] - Revenue for the three months ended June 30, 2023 increased 89% to $14,760 compared to $7,824 for the same period in 2022, primarily due to revenue from the acquisition of MRC[95] - Revenue for the six months ended June 30, 2023 increased by 69% to $25,498 from $15,118 in the same period of 2022, largely due to MRC's acquisition[105] Assets and Liabilities - Total assets as of June 30, 2023, were $45,634,000, significantly higher than $25,707,000 at the end of 2022[12] - Current liabilities increased to $9,817,000 from $4,270,000 at the end of 2022, indicating a rise in short-term obligations[12] - Cash and cash equivalents decreased to $8,882,000 from $13,277,000 at the end of 2022, a decline of 33%[12] - The company’s total stockholders' equity increased to $23,850,000 as of June 30, 2023, up from $21,388,000 at the end of 2022[12] - As of June 30, 2023, the company had positive working capital of approximately $12,630, down from $18,933 at December 31, 2022[118] Cash Flow and Investments - The company reported a net cash used in investing activities of $17,153,000, primarily due to cash paid for acquisition[17] - Cash provided by operating activities for the six months ended June 30, 2023, was $1.794 million, a decrease from $2.378 million for the same period in 2022, primarily due to $1.5 million in transaction costs related to the acquisition of MRC[126] - Cash used in investing activities for the six months ended June 30, 2023, was $17.153 million, which includes $17.099 million paid for the acquisition of MRC, compared to $0 for the first six months of 2022[127] - Cash provided by financing activities for the six months ended June 30, 2023, was $11.875 million, a significant increase from $29 for the same period in 2022, mainly due to the funding of the Term Loan[128] Acquisitions - The Company completed the acquisition of Mimi's Rock Corp on February 28, 2023, enhancing its product offerings[21] - The acquisition of Mimi's Rock Corp was completed on February 28, 2023, for a purchase price of $17,099, funded through a Term Loan and cash on hand[78] - MRC generated revenue of $7,628 and net income of $1,118 for the three months ended June 30, 2023[83] - The company incurred transaction-related costs of $115 and $1,464 for the three and six months ended June 30, 2023, related to the acquisition of MRC[79] Revenue Sources - Online revenue accounted for approximately 67% of net revenue during the three months ended June 30, 2023, compared to 27% for the same period in 2022[46] - Online revenue constituted approximately 59% of net revenue for the six months ended June 30, 2023, up from 27% in the same period of 2022, reflecting a shift towards higher-margin online sales[106] - Sales to customers in the United States were approximately 93% and 99% for the three months ended June 30, 2023, and 2022, respectively[48] Expenses - Selling, general and administrative expenses for the three months ended June 30, 2023 rose to $3,243 from $1,445 in the same period last year, mainly due to MRC's SG&A expenses[101] - Cost of goods sold for the three months ended June 30, 2023 increased to $8,795, a 103% increase from $4,334 for the same period in 2022, primarily due to the acquisition of MRC and inflationary pressures[98] - The gross profit margin for the three months ended June 30, 2023, was 40.4%, down from 44.6% in the same period of 2022[95] - Gross margin for the three months ended June 30, 2023 decreased to 40.4% from 44.6% in the prior year, impacted by higher product costs and amortization of MRC inventory[100] Stock and Shareholder Information - The Company is authorized to issue 60 million shares of Common Stock, with 4,446 shares issued and outstanding as of June 30, 2023[68] - The Company recorded stock compensation expenses of $6 million and $31 million related to restricted share units during the three and six months ended June 30, 2023, respectively[69] - The Board approved a Share Repurchase Program allowing the repurchase of up to an additional $5 million of Common Stock over the next 24 months[70] - The Company did not repurchase any Common Stock under the 2023 Share Repurchase Program during the three and six months ended June 30, 2023[71] Tax and Regulatory Compliance - The effective income tax rate was 33% for the six months ended June 30, 2023, compared to 20% for the same period in 2022[53] - The financial report is filed in compliance with the Securities Exchange Act of 1934, ensuring regulatory adherence[163] Management and Governance - FitLife Brands, Inc. reported its earnings on August 14, 2023, with key leadership signing off on the report[164] - The company is led by CEO Dayton Judd and CFO Jakob York, indicating strong executive oversight[164] - Management has implemented a Remediation Plan to address previously identified material weaknesses in disclosure controls, concluding that controls are operating effectively as of June 30, 2023[151] Risk Factors - The Company has experienced inflationary pressure but has partially offset it through price increases; future inflation could adversely affect operating performance if price increases cannot be passed on[22] - The Company is dependent on cash flow from operations and available borrowings under the Line of Credit to meet liquidity needs for the next twelve months[125] - The Company engaged in hedging transactions to mitigate exposure to foreign currency exchange rate changes following the acquisition of MRC[147]