Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 13, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | FITLIFE BRANDS, INC. | |
Entity Central Index Key | 1,374,328 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 10,623,522 | |
Trading Symbol | FTLF | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Cash | $ 1,104,872 | $ 1,293,041 |
Accounts receivable, net | 3,380,984 | 2,792,649 |
Security deposits | 24,956 | 24,956 |
Inventory | 2,869,383 | 3,756,716 |
Note receivable, current portion | 48,727 | 2,782 |
Prepaid income tax | 120,000 | 120,000 |
Prepaid expenses and other current assets | 184,958 | 136,014 |
Total current assets | 7,733,880 | 8,126,158 |
PROPERTY AND EQUIPMENT, net | 145,910 | 171,004 |
Note receivable, net of current portion | 0 | 52,696 |
Deferred taxes | 689,000 | 689,000 |
Intangibles assets, net | 6,212,193 | 6,507,505 |
TOTAL ASSETS | 14,780,983 | 15,546,363 |
CURRENT LIABILITIES: | ||
Accounts payable | 2,476,417 | 1,596,748 |
Accrued expenses and other liabilities | 590,756 | 539,765 |
Line of credit | 1,950,000 | 1,950,000 |
Term loan agreement, current portion | 506,889 | 544,825 |
Notes payable | 4,131 | 12,700 |
Total current liabilities | 5,528,193 | 4,644,038 |
LONG-TERM DEBT, net of current portion | 0 | 369,177 |
TOTAL LIABILITIES | 5,528,193 | 5,013,215 |
CONTINGENCIES AND COMMITMENTS | ||
STOCKHOLDERS' EQUITY: | ||
Common stock, $.01 par value, 150,000,000 shares authorized; 10,623,533 and 10,483,389 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 106,235 | 104,495 |
Subscribed common stock | 0 | 339 |
Treasury stock | 0 | (44,416) |
Additional paid-in capital | 30,988,947 | 30,919,289 |
Accumulated deficit | (21,842,392) | (20,446,559) |
Total stockholders' equity | 9,252,790 | 10,533,148 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 14,780,983 | 15,546,363 |
Preferred Class A [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock | 0 | 0 |
Preferred Class B [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock | 0 | 0 |
Preferred Class C [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
STOCKHOLDERS' EQUITY: | ||
Common Stock, Par Value Per Share | $ .01 | $ .01 |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 |
Common Stock, Shares, Issued | 10,623,533 | 10,483,389 |
Common Stock, Shares, Outstanding | 10,623,533 | 10,483,389 |
Preferred Class A [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred Stock, Par Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares, Issued | 0 | 0 |
Preferred Stock, Shares, Outstanding | 0 | 0 |
Preferred Class B [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred Stock, Par Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 1,000 | 1,000 |
Preferred Stock, Shares, Issued | 0 | 0 |
Preferred Stock, Shares, Outstanding | 0 | 0 |
Preferred Class C [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred Stock, Par Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 500 | 500 |
Preferred Stock, Shares, Issued | 0 | 0 |
Preferred Stock, Shares, Outstanding | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Revenue | $ 4,025,580 | $ 5,340,616 | $ 14,637,273 | $ 21,615,605 |
Cost of Goods Sold | 2,550,760 | 3,353,224 | 9,718,670 | 12,469,081 |
Gross Profit | 1,474,820 | 1,987,392 | 4,918,603 | 9,146,524 |
OPERATING EXPENSES: | ||||
General and administrative | 1,030,215 | 1,131,692 | 3,200,218 | 3,854,128 |
Selling and marketing | 828,829 | 1,088,400 | 2,689,587 | 3,138,323 |
Depreciation and amortization | 98,917 | 125,751 | 335,566 | 376,502 |
Total operating expenses | 1,957,961 | 2,345,843 | 6,225,371 | 7,368,953 |
OPERATING INCOME (LOSS) | (483,141) | (358,451) | (1,306,768) | 1,777,571 |
OTHER (INCOME) AND EXPENSES | ||||
Interest expense | 28,243 | 27,417 | 83,920 | 84,016 |
Other expense (income) | 0 | (150) | 5,145 | (2,917) |
Total other income, net | 28,243 | 27,267 | 89,065 | 81,099 |
INCOME TAXES (BENEFIT) | 0 | (25,000) | 0 | 164,000 |
NET INCOME (LOSS) | $ (511,384) | $ (360,718) | $ (1,395,833) | $ 1,532,472 |
NET INCOME (LOSS) PER SHARE: | ||||
Basic | $ (0.05) | $ (0.03) | $ (0.13) | $ 0.15 |
Diluted | $ (0.05) | $ (0.03) | $ (0.13) | $ 0.13 |
Basic weighted average common shares | 10,537,805 | 10,446,954 | 10,488,135 | 10,413,703 |
Diluted weighted average common shares | 10,537,805 | 10,446,954 | 10,488,135 | 11,515,169 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2017 - USD ($) | Common Stock | Subscribed Stock | Treasury Stock [Member] | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, Shares at Dec. 31, 2016 | 10,483,389 | |||||
Beginning balance, Amount at Dec. 31, 2016 | $ 104,495 | $ 339 | $ (44,416) | $ 30,919,289 | $ (20,446,559) | $ 10,533,148 |
Common stock issued for services, Shares | 182,604 | |||||
Common stock issued for services, Amount | $ 1,820 | 80,180 | 82,001 | |||
Cancellation of treasury stock, Shares | (41,920) | |||||
Cancellation of treasury stock, Amount | $ (419) | 44,416 | (43,997) | 0 | ||
Subscribed common stock | 333 | 16,667 | 17,000 | |||
Issuance of subscribed common stock, Amount | $ 339 | (339) | 0 | |||
Fair value of options issued for services | 33,474 | 33,474 | ||||
Net loss | (1,395,833) | (1,395,833) | ||||
Ending balance, Shares at Sep. 30, 2017 | 10,623,533 | |||||
Ending balance, Amount at Sep. 30, 2017 | $ 106,235 | $ 0 | $ 0 | $ 30,988,947 | $ (21,842,392) | $ 9,252,790 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Cash Flows [Abstract] | ||
Net income (loss) | $ (1,395,833) | $ 1,532,472 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 335,566 | 376,502 |
Common stock issued for services | 82,001 | 105,501 |
Warrants and options issued for services | 33,474 | 45,028 |
Loss on disposal of property and equipment | 5,145 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (588,335) | (1,369,673) |
Inventory | 887,333 | 357,326 |
Deferred tax asset | 0 | 123,879 |
Prepaid income tax | 0 | 151,000 |
Prepaid expenses | (48,944) | 145,167 |
Note receivable | 6,751 | 9,985 |
Accounts payable | 879,669 | (666,806) |
Accrued liabilities | 50,991 | (369,941) |
Litigation reserve | 0 | (95,775) |
Income tax payable | 0 | 13,000 |
Net cash provided by operating activities | 247,818 | 357,665 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (20,305) | (21,619) |
Long-term investment | 0 | 2,027 |
Net cash used in investing activities | (20,305) | (19,592) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from draw down on credit line | 0 | 520,000 |
Payments for redemption of preferred stock | 0 | 0 |
Repayments of note payable | (415,682) | (404,261) |
Net cash provided by (used in) financing activities | (415,682) | 115,739 |
INCREASE (DECREASE) IN CASH | (188,169) | 453,812 |
CASH, BEGINNING OF PERIOD | 1,293,041 | 1,532,550 |
CASH, END OF PERIOD | 1,104,872 | 1,986,362 |
Supplemental disclosure operating activities | ||
Cash paid for interest | $ 83,920 | $ 84,016 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | Summary FitLife Brands, Inc. (the “ Company NDS www.ndsnutrition.com www.pmdsports.com www.sirenlabs.com www.coreactivenutrition.com NDS Products iSatori www.isatori.com iSatori Products GNC The Company was incorporated in the State of Nevada on July 26, 2005. In October 2008, the Company acquired the assets of NDS Nutritional Products, Inc., a Nebraska corporation, and moved those assets into its wholly owned subsidiary NDS Nutrition Products, Inc., a Florida corporation (“ NDS The Company is headquartered in Omaha, Nebraska and maintains an office in Golden, Colorado. For more information on the Company, please go to http://www.fitlifebrands.com |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | The accompanying interim condensed unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation are included. Operating results for the three and nine-month period ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. While management of the Company believes the disclosures presented herein are adequate and not misleading, these interim condensed consolidated financial statements should be read in conjunction with the audited condensed consolidated financial statements and the footnotes thereto for the fiscal year ended December 31, 2016 as filed with the Securities and Exchange Commission as an exhibit to our Annual Report on Form 10-K. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
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 its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in the consolidated condensed financial statements. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“ GAAP These estimates and assumptions also affect the reported amounts of revenues, costs and expenses and valuations of long term assets, deferred tax assets and equity instruments issued for services during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates. Impairment of Long-Lived Assets The Company had goodwill and intangible assets with a carrying value of $6,212,193 and $6,507,505, respectively, as of September 30, 2017 and December 31, 2016. In accordance with ASC Topic 350 – Goodwill and Other Intangible Assets, the Company assesses the carrying value of such intangible assets for impairment on a periodic basis and records an impairment charge if the carrying value of such intangible assets exceeds the estimated fair value of the reporting unit, which in this case is the Company. The Company performed its annual goodwill impairment test as of December 31, 2016, which did not indicate the existence of an impairment at that time. While the fiscal year-to-date financial performance have not met our expectations, and the enterprise value of the Company based on the current price of our common stock may fluctuate at or near the recorded levels of goodwill and indefinite-lived intangible assets, Management does not consider these results to be a triggering event requiring the performance of an interim goodwill impairment test. The Company will continue to monitor its operating results for indicators of impairment and perform additional tests as necessary. The Company's fiscal 2017 annual impairment test will be performed as of December 31, 2017, which could result in an impairment charge to goodwill depending on the Company’s finalized forecast for fiscal 2018 and other market conditions. Customer Concentration Gross sales prior to reduction for vendor funded discounts and coupons to GNC during the period ended September 30, 2017 and 2016 were $15,569,430 and $20,696,007, respectively, representing 81.0% and 82.5% of total revenue, respectively. Accounts receivable attributable to GNC as of September 30, 2017 and September 30, 2016 were $2,679,885 and $3,201,464, respectively, representing 77.7% and 79.4% of the Company's total accounts receivable balance, respectively. Share Based Payment The Company issues stock options, warrants and common stock as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation to employees in accordance with FASB ASC718 "Compensation - Stock Compensation." Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. The Company accounts for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 "Equity - Based Payment to Non-Employees." 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. For interim periods, the fair value is estimated and the percentage of completion is applied to that estimate to determine the cumulative expense recorded. The Company values stock compensation based on the market price on the measurement date. For employees this is the date of grant, and for non-employees, this is the date of performance completion. The Company values stock options and warrants using the Black-Scholes option pricing model. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ( "FASB "ASU" Revenue from Contracts with Customers In February 2016, the FASB issued ASU No. 2016-02, Leases Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | The Company’s inventories as of September 30, 2017 and December 31, 2016 are as follows: September 30, 2017 December 31, 2016 Finished goods $ 2,237,607 $ 3,069,531 Components 631,777 687,185 Total $ 2,869,383 $ 3,756,716 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | The Company’s fixed assets as of September 30, 2017 and December 31, 2016 are as follows: September 30, 2017 December 31, 2016 Equipment $ 807,061 792,930 Accumulated depreciation (661,151 ) (621,926 ) Total $ 145,910 171,004 Depreciation expense for the nine months ended September 30, 2017 was $40,254 as compared to $60,003 for the nine-month period ended September 30, 2016. During the period ended September 30, 2017, the Company disposed an equipment with a cost of $6,174 and accumulated depreciation of $1,029 which resulted in a loss of $5,145. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | Notes payable consist of the following as of September 30, 2017 and December 31, 2016: September 30, 2017 December 31, 2016 Revolving line of credit of $3.0 million from U.S. Bank, dated April 9, 2009, as amended July 15, 2010, May 25, 2011, August 22, 2012, April 29, 2013, May 22, 2014, June 25, 2014, May 15, 2015, August 15, 2016 and August 28, 2017, at an effective interest rate equal to the prime rate announced from time to time by U.S. Bank plus 0.50%. The line of credit matured on June 15, 2017; however , $ 1,950,000 $ 1,950,000 Term loan of $2,600,000 from US Bank, dated September 4, 2013, at a fixed interest rate of 3.6%. The term loan amortizes evenly on a monthly basis and matures August 15, 2018. 506,889 914,002 Notes payable for warehouse equipment 4,131 12,700 Total of notes payable and advances 2,461,021 2,876,703 Less current portion (2,461,021 ) (2,507,526 ) Long-term portion $ - $ 369,177 The U.S. Bank revolving line of credit and term loan are subject to certain financial covenants for which the Company was not in compliance at September 30, 2017 (see Note 11). The Company is currently in violation of a loan covenant set forth in the Company’s revolving line of credit of $3.0 million from U.S. Bank as modified by that certain loan modification agreement dated August 28, 2017, of which approximately $1.95 million is due and owing as of September 30, 2017. On October 27, 2017, the Company received a notice of default from U.S. Bank related to the line of credit and term loan. The maturity date of the line of credit is currently December 15, 2017, and the Company currently does not anticipate that such line of credit will be extended or renewed. Although no assurances can be given, management is currently negotiating with alternative lenders to replace the line of credit and term loan currently with U.S. Bank. In the event the Company is unable to enter into a loan agreement with an alternate lender prior to December 15, 2017, the Company's financial condition will be negatively affected, and such affect will be material. |
NET INCOME _ (LOSS) PER SHARE
NET INCOME / (LOSS) PER SHARE | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
NET INCOME / (LOSS) PER SHARE | Basic net income per share is calculated by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share also includes the weighted average number of outstanding warrants and options in the denominator. In the event of a loss, the diluted loss per share is the same as basic loss per share. Because of the net loss, the weighted average number of diluted shares of common stock outstanding for the three and nine months ended September 30, 2017 did not include 60,620 shares of common stock issuable upon the exercise of outstanding common stock purchase warrants, and 893,361 shares of common stock issuable upon the exercise of outstanding options to purchase common stock due to its anti-dilutive effect. The following table represents the computation of basic and diluted income and (losses) per share for the three and nine months ended September 30, 2017 and 2016. Three months ended Nine months ended September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016 Income / (Losses) available for common shareholders $ (511,384 ) $ (360,718 ) $ (1,395,833 ) $ 1,532,472 Basic weighted average common shares outstanding 10,537,805 10,446,954 10,488,135 10,413,703 Basic income / (loss) per share $ (0.05 ) $ (0.03 ) $ (0.13 ) $ 0.15 Diluted weighted average common shares outstanding 10,537,805 10,446,954 10,488,135 11,515,169 Diluted income / (loss) per share $ (0.05 ) $ (0.03 ) $ (0.13 ) $ 0.13 |
EQUITY
EQUITY | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
EQUITY | Common Stock The Company is authorized to issue 150.0 million shares of common stock, $0.01 par value, of which 10,623,533 common shares were issued and outstanding as of September 30, 2017. During the period ended September 30, 2017, the Company issued 182,064 shares of common stock with a fair value of $82,001 to employees and directors for services rendered. The shares were valued at the respective date of issuance. Preferred Stock The Company is authorized to issue 10,000,000 shares of Series A Convertible Preferred Stock, $0.01 par value, 1,000 shares of its 10% Cumulative Perpetual Series B Preferred Stock, $0.01 par value, and 500 shares of its Series C Convertible Preferred Stock, par value $0.01, none of which were issued and outstanding as of September 30, 2017. Options As of September 30, 2017, options to purchase 877,725 shares of common stock of the Company were issued and outstanding, additional information about which is included in the following table. Outstanding Exercise Price Issuance Date Expiration Date Vesting 50,000 $ 0.90 01/16/13 01/16/18 No 10,000 $ 1.00 03/04/13 03/04/18 No 217,614 $ 1.39 05/09/16 05/09/21 Yes 4,330 $ 1.44 09/29/15 09/29/25 No 40,000 $ 2.20 04/11/14 04/11/19 No 370,000 $ 2.30 02/23/15 02/23/20 No 93,503 $ 3.31 02/16/12 02/16/22 No 19,424 $ 4.62 05/13/15 05/13/25 Yes 4,330 $ 5.49 04/08/15 04/08/25 No 1,732 $ 5.81 03/05/15 03/05/25 No 33,774 $ 5.89 03/23/15 03/23/25 Yes 8,660 $ 12.13 09/17/13 09/17/23 Yes 7,038 $ 12.99 11/14/12 09/27/22 No 17,320 $ 14.43 01/16/13 11/30/22 No 877,725 During the nine-month period ended September 30, 2017 and 2016, the Company recognized compensation expense of $33,474 and $45,028, respectively, to account the fair value of stock options that vested during the period. There was no intrinsic value for all the outstanding options at September 30, 2017 since the exercise price of these options were greater than the September 30, 2017 closing stock price of $0.35 per share. Warrants As of September 30, 2017, warrants to purchase 60,620 shares of common stock of the Company were issued and outstanding, additional information about which is included in the following table: Outstanding Exercise Price Issuance Date Expiration Date Vesting 17,320 $ 12.99 10/01/13 01/01/18 No 43,300 $ 12.99 07/16/13 07/16/18 No 60,620 There was no intrinsic value for all the outstanding warrants at September 30, 2017 since the exercise price of these warrants was greater than the September 30, 2017 closing stock price of $0.35 per share. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | No federal tax provision has been provided for the period ended September 30, 2017 due to the loss incurred during such periods. A provision for $0 was provided for the period ended September 30, 2016 based on the Company’s net income for the period and projected annual effective tax rate. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | On December 31, 2014, various plaintiffs, individually and on behalf of a purported nationwide and sub-class of purchasers, filed a lawsuit in the U.S. District Court for the Northern District of California, captioned Ryan et al. v. Gencor Nutrients, Inc. et al., Case No.: 4:14-CV-05682. The lawsuit includes claims made against the manufacturer and various producers and sellers of products containing a nutritional supplement known as Testofen, which is manufactured and sold by Gencor Nutrients, Inc. (“ Gencor On February 19, 2015, this matter was transferred to the Central District of California to the Honorable Manuel Real. Judge Real had previously issued an order dismissing a previously filed but similar lawsuit that had been filed by the same lawyer who represents the plaintiffs in the Ryan matter. The United States Court of Appeals recently reversed part of the dismissal issued by Judge Real and remanded the case back down to the district court for further proceedings. As a result, the parties in the Ryan matter recently issued a joint status report and that matter is again active. On February 28, 2017, Kevin Fahey, through his attorney, and on behalf of himself and the citizens of the District of Columbia, file a Complaint in the Superior Court of the District of Columbia Civil Division captioned Fahey vs. BioGenetic Laboratories, Inc., et al, case No.2017 CA 001240. The Complaint was filed against BioGenetics, a division of the Company, and various General Nutrition Center (“ GNC 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. Other than described above, 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. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | The Company is currently in violation of a loan covenant set forth in the Company’s revolving line of credit of $3.0 million from U.S. Bank, as modified by that certain loan modification agreement dated August 28, 2017, of which approximately $1.95 million is due and owing as of September 30, 2017. On October 27, 2017, the Company received a notice of default from U.S. Bank related to the line of credit and term loan. The maturity date of the line of credit is currently December 15, 2017, and the Company currently does not anticipate that such line of credit will be extended or renewed. Although no assurances can be given, management is currently negotiating with alternative lenders to replace the line of credit and term loan currently with U.S. Bank. In the event the Company is unable to enter into a loan agreement with an alternative lender prior to December 15, 2017, the Company's financial condition will be negatively affected, and such affect will be material. |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Summary Of Significant Accounting Policies Policies | |
Principles of Consolidation | The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in the consolidated condensed financial statements. |
Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“ GAAP These estimates and assumptions also affect the reported amounts of revenues, costs and expenses and valuations of long term assets, deferred tax assets and equity instruments issued for services during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates. |
Impairment of Long-Lived Assets | The Company had goodwill and intangible assets with a carrying value of $6,212,193 and $6,507,505, respectively, as of September 30, 2017 and December 31, 2016. In accordance with ASC Topic 350 – Goodwill and Other Intangible Assets, the Company assesses the carrying value of such intangible assets for impairment on a periodic basis and records an impairment charge if the carrying value of such intangible assets exceeds the estimated fair value of the reporting unit, which in this case is the Company. The Company performed its annual goodwill impairment test as of December 31, 2016, which did not indicate the existence of an impairment at that time. While the fiscal year-to-date financial performance have not met our expectations, and the enterprise value of the Company based on the current price of our common stock may fluctuate at or near the recorded levels of goodwill and indefinite-lived intangible assets, Management does not consider these results to be a triggering event requiring the performance of an interim goodwill impairment test. The Company will continue to monitor its operating results for indicators of impairment and perform additional tests as necessary. The Company's fiscal 2017 annual impairment test will be performed as of December 31, 2017, which could result in an impairment charge to goodwill depending on the Company’s finalized forecast for fiscal 2018 and other market conditions. |
Customer Concentration | Gross sales prior to reduction for vendor funded discounts and coupons to GNC during the period ended September 30, 2017 and 2016 were $15,569,430 and $20,696,007, respectively, representing 81.0% and 82.5% of total revenue, respectively. Accounts receivable attributable to GNC as of September 30, 2017 and September 30, 2016 were $2,679,885 and $3,201,464, respectively, representing 77.7% and 79.4% of the Company's total accounts receivable balance, respectively. |
Share Based Payment | The Company issues stock options, warrants and common stock as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation to employees in accordance with FASB ASC718 "Compensation - Stock Compensation." Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. The Company accounts for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 "Equity - Based Payment to Non-Employees." 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. For interim periods, the fair value is estimated and the percentage of completion is applied to that estimate to determine the cumulative expense recorded. The Company values stock compensation based on the market price on the measurement date. For employees this is the date of grant, and for non-employees, this is the date of performance completion. The Company values stock options and warrants using the Black-Scholes option pricing model. |
Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board ( "FASB "ASU" Revenue from Contracts with Customers In February 2016, the FASB issued ASU No. 2016-02, Leases Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventories Tables | |
Inventories | September 30, 2017 December 31, 2016 Finished goods $ 2,237,607 $ 3,069,531 Components 631,776 687,185 Total $ 2,869,383 $ 3,756,716 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property And Equipment Tables | |
PROPERTY AND EQUIPMENT | September 30, 2017 December 31, 2016 Equipment $ 807,061 792,930 Accumulated depreciation (661,151 ) (621,926 ) Total $ 145,910 171,004 |
NOTE PAYABLES (Tables)
NOTE PAYABLES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Note Payables Tables | |
Notes payable | Notes payable consist of the following as of September 30, 2017 and December 31, 2016: September 30, 2017 December 31, 2016 Revolving line of credit of $3.0 million from U.S. Bank, dated April 9, 2009, as amended July 15, 2010, May 25, 2011, August 22, 2012, April 29, 2013, May 22, 2014, June 25, 2014, May 15, 2015, August 15, 2016 and August 28, 2017, at an effective interest rate equal to the prime rate announced from time to time by U.S. Bank plus 0.50%. The line of credit matured on June 15, 2017; however , $ 1,950,000 $ 1,950,000 Term loan of $2,600,000 from US Bank, dated September 4, 2013, at a fixed interest rate of 3.6%. The term loan amortizes evenly on a monthly basis and matures August 15, 2018. 506,889 914,002 Notes payable for warehouse equipment 4,131 12,700 Total of notes payable and advances 2,461,021 2,876,703 Less current portion (2,461,021 ) (2,507,526 ) Long-term portion $ - $ 369,177 |
NET INCOME _ (LOSS) PER SHARE (
NET INCOME / (LOSS) PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Net Income Loss Per Share Tables | |
NET INCOME / (LOSS) PER SHARE | Three months ended Nine months ended September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016 Income / (Losses) available for common shareholders $ (511,384 ) $ (360,718 ) $ (1,395,833 ) $ 1,532,472 Basic weighted average common shares outstanding 10,537,805 10,446,954 10,488,135 10,413,703 Basic income / (loss) per share $ (0.05 ) $ (0.03 ) $ (0.13 ) $ 0.15 Diluted weighted average common shares outstanding 10,537,805 10,446,954 10,488,135 11,515,169 Diluted income / (loss) per share $ (0.05 ) $ (0.03 ) $ (0.13 ) $ 0.13 |
EQUITY (Tables)
EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity Tables | |
Options issued and outstanding | Outstanding Exercise Price Issuance Date Expiration Date Vesting 50,000 $ 0.90 01/16/13 01/16/18 No 10,000 $ 1.00 03/04/13 03/04/18 No 217,614 $ 1.39 05/09/16 05/09/21 Yes 4,330 $ 1.44 09/29/15 09/29/25 No 40,000 $ 2.20 04/11/14 04/11/19 No 370,000 $ 2.30 02/23/15 02/23/20 No 93,503 $ 3.31 02/16/12 02/16/22 No 19,424 $ 4.62 05/13/15 05/13/25 Yes 4,330 $ 5.49 04/08/15 04/08/25 No 1,732 $ 5.81 03/05/15 03/05/25 No 33,774 $ 5.89 03/23/15 03/23/25 Yes 8,660 $ 12.13 09/17/13 09/17/23 Yes 7,038 $ 12.99 11/14/12 09/27/22 No 17,320 $ 14.43 01/16/13 11/30/22 No 877,725 |
Warrants issued and outstanding | Outstanding Exercise Price Issuance Date Expiration Date Vesting 17,320 $ 12.99 10/01/13 01/01/18 No 43,300 $ 12.99 07/16/13 07/16/18 No 60,620 |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details Narrative) | 3 Months Ended | 9 Months Ended |
Mar. 31, 2017 | Sep. 30, 2017 | |
Description of Business | ||
State of incorporation | Nevada | |
Date of incorporation | Jul. 26, 2005 | |
iSatori [Member] | ||
Description of Business | ||
Acquisition date | Sep. 1, 2015 |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Summary of Significant Accounting Policies | |||
Recovered bad debt and doubtful accounts | $ 2,328,000 | ||
Total sales revenue | $ 15,569,430 | $ 20,696,007 | |
Goodwill | $ 6,212,193 | $ 6,507,505 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Inventories | ||
Finished goods | $ 2,237,607 | $ 3,069,531 |
Components | 631,776 | 687,185 |
Total | $ 2,869,383 | $ 3,756,716 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
PROPERTY AND EQUIPMENT | ||
Equipment | $ 807,061 | $ 792,930 |
Accumulated depreciation | (661,151) | (621,926) |
Total | $ 145,910 | $ 171,004 |
PROPERTY AND EQUIPMENT (Detai28
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Property and Equipment | ||
Depreciation and amortization expense | $ 40,254 | $ 60,003 |
Disposal of equipment | 6,174 | |
Disposal, accumulated depreciation | 1,029 | |
Loss on disposal of equipment | $ 5,145 |
NOTE PAYABLES (Details)
NOTE PAYABLES (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Notes payable | ||
Revolving Line of Credit | $ 1,950,000 | $ 1,950,000 |
Term loan | 506,889 | 914,002 |
Notes payable | 4,131 | 12,700 |
Total of notes payable and advances | 2,461,021 | 2,876,703 |
Less current portion | (2,461,021) | (2,507,526) |
Long-term portion | $ 0 | $ 369,177 |
NOTE PAYABLES (Details Narrativ
NOTE PAYABLES (Details Narrative) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Note Payables Details | |
Revolving LOC maximum | $ 3,000,000 |
Revolving LOC begin date | Apr. 9, 2009 |
Revolving LOC interest rate | 0.50% |
Revolving LOC maturity date | Dec. 15, 2017 |
Term loan face amount | $ 2,600,000 |
Term loan interest rate | 3.60% |
Term loan maturity date | Aug. 15, 2018 |
Loan default | $ 1,950,000 |
NET INCOME _ (LOSS) PER SHARE31
NET INCOME / (LOSS) PER SHARE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
NET INCOME / (LOSS) PER SHARE | ||||
Income / (Losses) available for common shareholders | $ (511,384) | $ (360,718) | $ (1,395,833) | $ 1,532,472 |
Basic weighted average common shares outstanding | 10,537,805 | 10,446,954 | 10,488,135 | 10,413,703 |
Basic income / (loss) per share | $ (0.05) | $ (0.03) | $ (0.13) | $ 0.15 |
Diluted weighted average common shares outstanding | 10,537,805 | 10,446,954 | 10,488,135 | 11,515,169 |
Diluted income / (loss) per share | $ (0.05) | $ (0.03) | $ (0.13) | $ 0.13 |
EQUITY (Details)
EQUITY (Details) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Options Issued | 877,725 |
Equity Option [Member] | |
Options Issued | 50,000 |
Exercise price | $ / shares | $ 0.9 |
Issuance Date | Jan. 16, 2013 |
Expiration Date | Jan. 16, 2018 |
Vesting | No |
StockOption2Member | |
Options Issued | 10,000 |
Exercise price | $ / shares | $ 1 |
Issuance Date | Mar. 4, 2013 |
Expiration Date | Mar. 4, 2018 |
Vesting | No |
StockOption3Member | |
Options Issued | 217,614 |
Exercise price | $ / shares | $ 1.39 |
Issuance Date | May 9, 2016 |
Expiration Date | May 9, 2021 |
Vesting | Yes |
StockOption4Member | |
Options Issued | 4,330 |
Exercise price | $ / shares | $ 1.44 |
Issuance Date | Sep. 29, 2015 |
Expiration Date | Sep. 29, 2025 |
Vesting | No |
StockOption5Member | |
Options Issued | 40,000 |
Exercise price | $ / shares | $ 2.2 |
Issuance Date | Apr. 11, 2014 |
Expiration Date | Apr. 11, 2019 |
Vesting | No |
StockOption6Member | |
Options Issued | 370,000 |
Exercise price | $ / shares | $ 2.3 |
Issuance Date | Feb. 23, 2015 |
Expiration Date | Feb. 23, 2020 |
Vesting | No |
StockOption7Member | |
Options Issued | 93,503 |
Exercise price | $ / shares | $ 3.31 |
Issuance Date | Feb. 16, 2012 |
Expiration Date | Feb. 16, 2022 |
Vesting | No |
StockOption8Member | |
Options Issued | 19,424 |
Exercise price | $ / shares | $ 4.62 |
Issuance Date | May 13, 2015 |
Expiration Date | May 13, 2025 |
Vesting | Yes |
StockOption9Member | |
Options Issued | 4,330 |
Exercise price | $ / shares | $ 5.49 |
Issuance Date | Apr. 8, 2015 |
Expiration Date | Apr. 8, 2025 |
Vesting | No |
StockOption10Member | |
Options Issued | 1,732 |
Exercise price | $ / shares | $ 5.81 |
Issuance Date | Mar. 5, 2015 |
Expiration Date | Mar. 5, 2025 |
Vesting | No |
StockOption11Member | |
Options Issued | 33,774 |
Exercise price | $ / shares | $ 5.89 |
Issuance Date | Mar. 23, 2015 |
Expiration Date | Mar. 23, 2025 |
Vesting | Yes |
StockOption12Member | |
Options Issued | 8,660 |
Exercise price | $ / shares | $ 12.13 |
Issuance Date | Sep. 17, 2013 |
Expiration Date | Sep. 17, 2023 |
Vesting | Yes |
StockOption13Member | |
Options Issued | 7,038 |
Exercise price | $ / shares | $ 12.99 |
Issuance Date | Nov. 14, 2012 |
Expiration Date | Sep. 27, 2022 |
Vesting | No |
StockOption14Member | |
Options Issued | 17,320 |
Exercise price | $ / shares | $ 14.43 |
Issuance Date | Jan. 16, 2013 |
Expiration Date | Nov. 30, 2022 |
Vesting | No |
EQUITY (Details 1)
EQUITY (Details 1) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Warrants Issued | 60,620 |
Warrants1member | |
Warrants Issued | 17,320 |
Exercise price | $ / shares | $ 12.99 |
Issuance Date | Oct. 1, 2013 |
Expiration Date | Jan. 1, 2018 |
Vesting | No |
Warrants2Member | |
Warrants Issued | 43,300 |
Exercise price | $ / shares | $ 12.99 |
Issuance Date | Jul. 16, 2013 |
Expiration Date | Jul. 16, 2018 |
Vesting | No |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 | |
Common Stock, Shares, Issued | 10,623,533 | 10,483,389 | |
Common Stock, Shares, Outstanding | 10,623,533 | 10,483,389 | |
Common Stock, Par Value Per Share | $ .01 | $ .01 | |
Compensation expense | $ 33,474 | $ 45,028 | |
Warrants Issued | 60,620 | ||
Preferred Class A [Member] | |||
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 | |
Preferred Stock, Par Value Per Share | $ 0.01 | $ 0.01 | |
Preferred Class B [Member] | |||
Preferred Stock, Shares Authorized | 1,000 | 1,000 | |
Preferred Stock, Par Value Per Share | $ 0.01 | $ 0.01 | |
Preferred Class C [Member] | |||
Preferred Stock, Shares Authorized | 500 | 500 | |
Preferred Stock, Par Value Per Share | $ 0.01 | $ 0.01 |