Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 14, 2018 | |
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 | Mar. 31, 2018 | |
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 | 10,955,099 | |
Trading Symbol | FTLF | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash | $ 564,772 | $ 1,261,933 |
Accounts receivable, net of allowance for sales returns and doubtful accounts of $1,177,157 and $1,263,674, respectively | ||
Accounts receivable, Trade | 261,733 | 1,958,128 |
Accounts receivable, Factored | 2,209,964 | 0 |
Inventories, net of allowance for obsolescence of $81,524 and $48,730, respectively | 2,384,942 | 2,873,831 |
Customer note receivable | 0 | 5,000 |
Prepaid expenses and other current assets | 82,001 | 221,200 |
Total current assets | 5,503,412 | 6,320,092 |
PROPERTY AND EQUIPMENT, net | 274,848 | 295,187 |
Goodwill | 225,000 | 225,000 |
Security deposits | 21,908 | 21,908 |
TOTAL ASSETS | 6,025,168 | 6,862,187 |
CURRENT LIABILITIES: | ||
Accounts payable | 2,708,221 | 2,974,165 |
Accrued expenses and other liabilities | 379,565 | 611,548 |
Secured payable to factor | 1,715,434 | 0 |
Line of credit | 0 | 1,950,000 |
Term loan | 0 | 414,877 |
Total current liabilities | 4,803,220 | 5,950,590 |
STOCKHOLDERS' EQUITY: | ||
Common stock, $.01 par value, 150,000,000 shares authorized; 10,955,099 and 10,681,710 issued and outstanding as of March 31, 2018 and December 31, 2017, respectively | 109,551 | 106,819 |
Additional paid-in capital | 31,103,272 | 31,013,043 |
Accumulated deficit | (29,990,875) | (30,208,265) |
Total stockholders' equity | 1,221,948 | 911,597 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 6,025,168 | 6,862,187 |
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) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Allowance for doubtful accounts | $ 1,177,157 | $ 1,263,674 |
Allowance for obsolescence | $ 81,524 | $ 48,730 |
STOCKHOLDERS' EQUITY: | ||
Common Stock, Par Value Per Share | $ .01 | $ .01 |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 |
Common Stock, Shares, Issued | 10,955,099 | 10,681,710 |
Common Stock, Shares, Outstanding | 10,955,099 | 10,681,710 |
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 | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Revenue | $ 4,614,286 | $ 5,589,354 |
Cost of Goods Sold | 2,698,618 | 3,668,790 |
Gross Profit | 1,915,668 | 1,920,564 |
OPERATING EXPENSES: | ||
General and administrative | 870,382 | 1,160,069 |
Selling and marketing | 806,109 | 947,386 |
Depreciation and amortization | 18,840 | 119,338 |
Total operating expenses | 1,695,331 | 2,226,793 |
OPERATING INCOME (LOSS) | 220,337 | (306,229) |
OTHER (INCOME) AND EXPENSES | ||
Interest expense | 3,473 | 26,661 |
Gain on sale of assets | (526) | 0 |
Total other expenses | 2,947 | 26,661 |
NET INCOME (LOSS) | $ 217,390 | $ (332,890) |
NET INCOME (LOSS) PER SHARE: | ||
Basic | $ .02 | $ (.03) |
Diluted | $ .02 | $ (.03) |
Basic weighted average common shares | 10,726,710 | 10,385,890 |
Diluted weighted average common shares | 10,726,710 | 10,385,890 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 3 months ended Mar. 31, 2018 - USD ($) | Common Stock | Treasury Stock [Member] | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, Shares at Dec. 31, 2017 | 10,681,710 | ||||
Beginning balance, Amount at Dec. 31, 2017 | $ 106,819 | $ 0 | $ 31,013,043 | $ (30,208,265) | $ 911,597 |
Common stock issued for services, Shares | 273,389 | ||||
Common stock issued for services, Amount | $ 2,734 | 0 | 79,767 | 0 | 8,250 |
Fair value of options issued for services | 0 | 0 | 10,461 | 0 | 10,461 |
Net loss | $ 0 | 0 | 0 | 217,390 | 217,390 |
Ending balance, Shares at Mar. 31, 2018 | 10,955,099 | ||||
Ending balance, Amount at Mar. 31, 2018 | $ 109,551 | $ 0 | $ 31,103,272 | $ (29,990,875) | $ 1,221,948 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Statement of Cash Flows [Abstract] | |||
Net income (loss) | $ 217,390 | $ (332,890) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 18,840 | 119,338 | |
Allowance for sales returns and doubtful accounts | (86,517) | 717,706 | $ 2,328,000 |
Allowance for inventory obsolescence | 32,794 | 0 | |
Common stock issued for services | 82,501 | 17,500 | |
Fair value of options issued for services | 10,460 | 11,584 | |
Gain on sale of assets | (526) | 0 | |
Changes in operating assets and liabilities: | |||
Accounts receivable | (427,052) | (2,477,923) | |
Inventory | 456,095 | 861,046 | |
Prepaid expenses and other current assets | 139,199 | 87,465 | |
Customer note receivable | 5,000 | 2,251 | |
Accounts payable | (265,944) | 849,445 | |
Accrued liabilities | (231,983) | 121,905 | |
Net cash provided by operating activities | (49,743) | (22,573) | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Proceeds from sale of assets | 2,025 | 0 | |
Net cash used in investing activities | 2,025 | 0 | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Repayment of line of credit | (1,950,000) | 0 | |
Repayment of term loan | (414,877) | (137,320) | |
Secured payable to factor | 1,715,434 | 0 | |
Net cash provided by (used in) financing activities | (649,443) | (137,320) | |
DECREASE IN CASH | (697,162) | (159,893) | |
CASH, BEGINNING OF PERIOD | 1,261,933 | 1,293,041 | 1,293,041 |
CASH, END OF PERIOD | 564,772 | 1,133,148 | $ 1,261,933 |
Supplemental disclosure operating activities | |||
Cash paid for interest | $ 3,473 | $ 26,661 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 3 Months Ended |
Mar. 31, 2018 | |
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. For more information on the Company, please go to http://www.fitlifebrands.com |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2018 | |
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-month period ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. 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, 2017, 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 | 3 Months Ended |
Mar. 31, 2018 | |
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 accounts receivable, inventories, goodwill revenues, costs and expenses and valuations of long term assets, allowance for deferred tax assets and fair value of 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. Basic and Diluted Income (loss) per share Our computation of earnings per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income (loss) available to common stockholders divided by the weighted average common shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution, using the treasury stock method, that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income (loss) of the Company as if they had been converted at the beginning of the periods presented, or issuance date, if later. In computing diluted income (loss) per share, the treasury stock method assumes that outstanding options and warrants are exercised and the proceeds are used to purchase common stock at the average market price during the period. Options and warrants may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants. Potential common shares that have an antidilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the respective periods. Basic and diluted (loss) per common share is the same for periods because all warrants and stock options outstanding are anti-dilutive. At March 31, 2018 and 2017, we excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock as their effect would have been anti-dilutive. March 31, 2018 March 31, 2017 Options 810,284 969,924 Warrants 43,300 60,620 Total 853,584 1,030,544 Goodwill The Company had goodwill of $225,000, as of March 31, 2018 and December 31, 2017, respectively. The Company adopted ASC Topic 350 – Goodwill and Other Intangible Assets As of March 31, 2018 and December 31, 2017, there were no indicators of impairment for the recorded goodwill of $225,000, respectively. Customer Concentration Gross sales prior to reduction for vendor funded discounts and coupons to GNC during the period ended March 31, 2018 and 2017 were $4,389,177 and $6,726,554, respectively, representing 82% and 85% of total revenue, respectively. Gross accounts receivable attributable to GNC as of March 31, 2018 and March 31, 2017 were $3,128,286 and $4,557,806, respectively, representing 86% and 89% of the Company’s total accounts receivable balance, respectively. Revenue Recognition The Company’s revenue is comprised of sales of nutritional supplements to consumers, primarily through GNC stores. In September 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09 (ASU No. 2014-09) regarding revenue recognition. The new standard provides authoritative guidance clarifying the principles for recognizing revenue and developing a common revenue standard for U.S. generally accepted accounting principles. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods to customers in an amount that reflects the consideration to which the entity expects to be entitled in the exchange for those goods. The ASU became effective January 1, 2018. Due to the nature of the products sold by the Company, the adoption of the new standard has had no quantitative effect on the financial statements. However, the guidance requires additional disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The Company previously recognized revenue when risk of loss transferred to our customers and collection of the receivable was reasonably assured, which generally occurs when the product is shipped. A product is not shipped without an order from the customer and credit acceptance procedures performed. The Company allows for returns within 30 days of purchase from end-users. GNC may return purchased products to the Company under certain circumstances, which include expired or soon to be expired products located in GNC corporate stores or at any of its distribution centers, and products that are subject to a recall or that contain an ingredient or ingredients that are subject to a recall by the FDA. Under the new guidance, revenue is recognized when control of promised goods is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods. The Company reviews its sales transactions to identify contractual rights, performance obligations, and transaction prices, including the allocation of prices to separate performance obligations, if applicable. Revenue and costs of sales are recognized once products are delivered to the customer’s control and performance obligations are satisfied. All products sold by the Company are distinct individual products and consist of nutritional supplements and related supplies. The products are offered for sale solely as finished goods, and there are no performance obligations required post-shipment for customers to derive the expected value from them. Other than promotional activities, which can vary from time to time, but nevertheless are entirely within the Company’s control, contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time. Control of products we sell transfers to customers upon shipment from our facilities, and the Company’s performance obligations are satisfied at that time. Shipping and handling activities are performed before the customer obtains control of the goods and therefore represent a fulfillment activity rather than promised goods to the customer. Payment for sales are generally made by check, credit card, or wire transfer. Historically the Company has not experienced any significant payment delays from customers. We provide a 30-day right of return for our products. A right of return does not represent a separate performance obligation, but because customers are allowed to return products, the consideration to which the Company expects to be entitled is variable. Upon evaluation of returns, the Company determined that substantially less than 5% of products are returned, and therefore believes it is probable that such returns will not cause a significant reversal of revenue in the future. We assess our contracts and the reasonableness of our conclusions on a quarterly basis. Recent Accounting Pronouncements 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. |
MERCHANT AGREEMENT
MERCHANT AGREEMENT | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
MERCHANT AGREEMENT | In December 2017, the Company, through NDS and iSatori (together, the “ Subsidiaries Compass Factor Under the terms of the Merchant Agreement, all factored receivables are sold with recourse, which requires the Company to repurchase any receivables, if demanded, not paid on time causing such receivables to be accounted for as a secured financing arrangement and not as a sale of financial assets. Receivables are presented net of allowance for doubtful accounts with the recourse amount potentially due Compass in the event of untimely payment presented under current liabilities as a secured financing obligation. There were no invoices factored under this agreement during the year ended December 31, 2017. During the period ended March 31, 2018, the Company factored gross invoices totaling $5,037,146 for cash proceeds of $4,012,129, net of credit memos of $514,487 and the 20% factor hold back or due from factor of $510,530. In addition, the Company also incurred fees and interest of $17,400 as a result of this agreement. As of March 31, 2018, a total of $2,209,964 of the factored invoices have not yet been collected by the factor as these invoices were not yet due. As such, pursuant to current accounting guidelines, the Company reported the $2,209,964 as Accounts Receivable, Factored, the corresponding proceeds received from the factor of $1,715,434 as Secured Payable to Factor and the difference of $494,530 as an adjustment to due from factor. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | The Company’s inventories as of March 31, 2018 and December 31, 2017 were as follows: March 31, 2018 (unaudited) December 31, 2017 Finished goods $ 1,959,811 $ 2,511,260 Components 506,655 411,301 Allowance for obsolescence (81,524 ) (48,730 ) Total $ 2,384,942 $ 2,873,831 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | The Company’s fixed assets as of March 31, 2018 and December 31, 2017 were as follows: March 31, 2018 (unaudited) December 31, 2017 Equipment $ 967,321, $ 971,820 Accumulated depreciation (692,473 ) (676,633 ) Total $ 274,848 $ 295,187 Depreciation expense for the three months ended March 31, 2018 was $18,840 as compared to $13,389 for the three-month period ended March 31, 2017. |
NOTES PAYABLE
NOTES PAYABLE | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | The Company had previously obtained a line of credit (LOC) of $3 million and a separate term loan of $2.6 million with a financial institution, US Bank. Both loans were secured by the Company’s tangible and intangible assets, and had an average interest rate of 5% per annum. The LOC matured in December 2017, as amended, while the term loan did not mature until August 2018. As of December 31, 2017, outstanding balance of these notes payable totaled $2,364,877 and was deemed in default due to non-compliance with certain financial covenants. In January 2018, the Company paid US Bank a total of $2,364,877 to settle the outstanding balance of LOC and the term note payable. As of March 31, 2018, the LOC and Term Note payable had been fully paid. |
EQUITY
EQUITY | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
EQUITY | Common Stock The Company is authorized to issue 150.0 million shares of common stock, $0.01 par value, of which 10,955,099 common shares were issued and outstanding as of March 31, 2018. During the period ended March 31, 2018, the Company issued 273,389 shares of common stock with a fair value of $82,501 to employees and directors for services rendered. The shares were valued at their respective date of issuance. Preferred Stock The Company is authorized to issue 10.0 million 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 March 31, 2018 and December 31, 2017. Options As of March 31, 2018 and December 31, 2017, 810,284 and 870,284 options to purchase shares of common stock of the Company were issued and outstanding, respectively. Additional information regarding the March 31, 2018 options is as follows: Outstanding Exercise Price Issuance Date Expiration Date 212,074 $ 1.39 05/09/16 05/09/21 4,330 $ 1.44 09/29/15 09/29/25 40,000 $ 2.20 04/11/14 04/11/19 370,000 $ 2.30 02/23/15 02/23/20 93,503 $ 3.31 02/16/12 02/16/22 18,966 $ 4.62 05/13/15 05/13/25 4,330 $ 5.49 04/08/15 04/08/25 1,732 $ 5.81 03/05/15 03/05/25 32,331 $ 5.89 03/23/15 03/23/25 8,660 $ 12.13 09/17/13 09/17/23 7,038 $ 12.99 11/14/12 09/27/22 17,320 $ 14.43 01/16/13 11/30/22 810,284 During the three-month period ended March 31, 2018 and 2017, the Company recognized compensation expense of $10,460 and $11,584, 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 March 31, 2018, since the exercise prices of these options were greater than the March 31, 2018 closing stock price of $0.31 per share. Future unamortized compensation expense on the unvested outstanding options at March 31, 2018 amounted to $71,676, which will be recognized through April 2020. Warrants As of March 31, 2018 and December 31, 2017, warrants to purchase 43,300 shares of common stock and 60,620 shares of common stock of the Company were issued and outstanding, respectively, all of which were assumed by the Company in connection with the acquisition of iSatori. Additional information about the outstanding warrants as of March 31, 2018 is as follows: Outstanding Exercise Price Issuance Date Expiration Date 43,300 $ 12.99 07/16/13 07/16/18 43,300 There was no intrinsic value for all the outstanding warrants at March 31, 2018 since the exercise price of these warrants was greater than the March 31, 2018 closing stock price of $0.31 per share. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Legal Proceedings 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. 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 similar lawsuit that had been filed by the same lawyer who represents the plaintiffs in the Ryan matter. The United States Court of Appeals 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 issued a joint status report and that matter is again active. 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. |
SUMMARY OF SIGNIFICANT ACCOUN16
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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 accounts receivable, inventories, goodwill revenues, costs and expenses and valuations of long term assets, allowance for deferred tax assets and fair value of 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. |
Basic and Diluted Income (loss) per share | Our computation of earnings per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income (loss) available to common stockholders divided by the weighted average common shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution, using the treasury stock method, that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income (loss) of the Company as if they had been converted at the beginning of the periods presented, or issuance date, if later. In computing diluted income (loss) per share, the treasury stock method assumes that outstanding options and warrants are exercised and the proceeds are used to purchase common stock at the average market price during the period. Options and warrants may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants. Potential common shares that have an antidilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the respective periods. Basic and diluted (loss) per common share is the same for periods because all warrants and stock options outstanding are anti-dilutive. At March 31, 2018 and 2017, we excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock as their effect would have been anti-dilutive. March 31, 2018 March 31, 2017 Options 810,284 969,924 Warrants 43,300 60,620 Total 853,584 1,030,544 |
Goodwill | The Company had goodwill of $225,000, as of March 31, 2018 and December 31, 2017, respectively. The Company adopted ASC Topic 350 – Goodwill and Other Intangible Assets As of March 31, 2018 and December 31, 2017, there were no indicators of impairment for the recorded goodwill of $225,000, respectively. |
Customer Concentration | Gross sales prior to reduction for vendor funded discounts and coupons to GNC during the period ended March 31, 2018 and 2017 were $4,389,177 and $6,726,554, respectively, representing 82% and 85% of total revenue, respectively. Gross accounts receivable attributable to GNC as of March 31, 2018 and March 31, 2017 were $3,128,286 and $4,557,806, respectively, representing 86% and 89% of the Company’s total accounts receivable balance, respectively. |
Revenue Recognition | The Company’s revenue is comprised of sales of nutritional supplements to consumers, primarily through GNC stores. In September 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09 (ASU No. 2014-09) regarding revenue recognition. The new standard provides authoritative guidance clarifying the principles for recognizing revenue and developing a common revenue standard for U.S. generally accepted accounting principles. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in the exchange for those goods. The ASU became effective January 1, 2018. Due to the nature of the products sold by the Company, the adoption of the new standard has had no quantitative effect on the financial statements. However, the guidance requires additional disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The Company previously recognized revenue when risk of loss transferred to our customers and collection of the receivable was reasonably assured, which generally occurs when the product is shipped. A product is not shipped without an order from the customer and credit acceptance procedures performed. The Company allows for returns within 30 days of purchase from end-users. GNC may return purchased products to the Company under certain circumstances, which include, expired or soon to be expired products located in GNC corporate stores or at any of its distribution centers, and products that are subject to a recall or that contain an ingredient or ingredients that are subject to a recall by the FDA. Under the new guidance, revenue is recognized when control of promised goods is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods. The Company reviews its sales transactions to identify contractual rights, performance obligations, and transaction prices, including the allocation of prices to separate performance obligations, if applicable. Revenue and costs of sales are recognized once products are delivered to the customer’s control and performance obligations are satisfied. All products sold by the Company are distinct individual products and consist of nutritional supplements and related supplies. The products are offered for sale as finished goods only, and there are no performance obligations required post-shipment for customers to derive the expected value from them. Other than promotional activities which can vary from time to time, but nevertheless entirely within the Company’s control, contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time. Control of products we sell transfers to customers upon shipment from our facilities, and the Company’s performance obligations are satisfied at that time. Shipping and handling activities are performed before the customer obtains control of the goods and therefore represent a fulfillment activity rather than promised goods to the customer. Payment for sales are generally made by check, credit card, or wire transfer. Historically the Company has not experienced any significant payment delays from customers. We provide a 30-day right of return for our products. A right of return does not represent a separate performance obligation, but because customers are allowed to return products, the consideration to which the Company expects to be entitled is variable. Upon evaluation of returns, the Company determined that substantially less than 5% of products are returned, and therefore believes it is probable that such returns will not cause a significant reversal of revenue in the future. We assess our contracts and the reasonableness of our conclusions on a quarterly basis. |
Recent Accounting Pronouncements | 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. |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Table) | 3 Months Ended |
Mar. 31, 2018 | |
Summary Of Significant Accounting Policies Policies | |
Dilutive shares included in EPS | March 31, 2018 March 31, 2017 Options 810,284 969,924 Warrants 43,300 60,620 Total 853,584 1,030,544 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Inventories Tables | |
Inventories | March 31, 2018 (unaudited) December 31, 2017 Finished goods $ 1,959,811 $ 2,511,260 Components 506,655 411,301 Allowance for obsolescence (81,524 ) (48,730 ) Total $ 2,384,942 $ 2,873,831 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property And Equipment Tables | |
PROPERTY AND EQUIPMENT | March 31, 2018 (unaudited) December 31, 2017 Equipment $ 967,321, $ 971,820 Accumulated depreciation (692,473 ) (676,633 ) Total $ 274,848 $ 295,187 |
EQUITY (Tables)
EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity Tables | |
Options issued and outstanding | Outstanding Exercise Price Issuance Date Expiration Date 212,074 $ 1.39 05/09/16 05/09/21 4,330 $ 1.44 09/29/15 09/29/25 40,000 $ 2.20 04/11/14 04/11/19 370,000 $ 2.30 02/23/15 02/23/20 93,503 $ 3.31 02/16/12 02/16/22 18,966 $ 4.62 05/13/15 05/13/25 4,330 $ 5.49 04/08/15 04/08/25 1,732 $ 5.81 03/05/15 03/05/25 32,331 $ 5.89 03/23/15 03/23/25 8,660 $ 12.13 09/17/13 09/17/23 7,038 $ 12.99 11/14/12 09/27/22 17,320 $ 14.43 01/16/13 11/30/22 810,284 |
Warrants issued and outstanding | Outstanding Exercise Price Issuance Date Expiration Date 43,300 $ 12.99 07/16/13 07/16/18 43,300 |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details Narrative) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Description of Business | ||
State of incorporation | Nevada | |
Date of incorporation | Jul. 26, 2005 | |
iSatori [Member] | ||
Description of Business | ||
Acquisition date | Oct. 1, 2015 |
SUMMARY OF SIGNIFICANT ACCOUN22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
NET INCOME PER SHARE | ||
Potential shares of common stock included in the number of shares outstanding | 853,584 | 1,030,544 |
Stock Option [Member] | ||
NET INCOME PER SHARE | ||
Potential shares of common stock included in the number of shares outstanding | 810,284 | 969,924 |
Warrant [Member] | ||
NET INCOME PER SHARE | ||
Potential shares of common stock included in the number of shares outstanding | 43,300 | 60,620 |
SUMMARY OF SIGNIFICANT ACCOUN23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies | ||||
Recovered bad debt and doubtful accounts | $ (86,517) | $ 717,706 | $ 2,328,000 | |
Sales receivable | 261,733 | $ 1,958,128 | 1,958,128 | |
Goodwill | $ 225,000 | $ 225,000 | $ 225,000 | |
Sales Revenue Net [Member] | ||||
Summary of Significant Accounting Policies | ||||
Sales revenue percent | 82.00% | 85.00% | ||
Receivable [Member] | ||||
Summary of Significant Accounting Policies | ||||
Sales revenue percent | 86.00% | 89.00% | ||
GNC [Member] | ||||
Summary of Significant Accounting Policies | ||||
Total sales revenue | $ 4,389,177 | $ 6,726,554 | ||
Sales receivable | $ 3,128,286 | $ 4,557,806 |
MERCHANT AGREEMENT (Details Nar
MERCHANT AGREEMENT (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
MERCHANT AGREEMENT | In December 2017, the Company, through NDS and iSatori (together, the “ Subsidiaries Compass Factor Under the terms of the Merchant Agreement, all factored receivables are sold with recourse, which requires the Company to repurchase any receivables, if demanded, not paid on time causing such receivables to be accounted for as a secured financing arrangement and not as a sale of financial assets. Receivables are presented net of allowance for doubtful accounts with the recourse amount potentially due Compass in the event of untimely payment presented under current liabilities as a secured financing obligation. There were no invoices factored under this agreement during the year ended December 31, 2017. During the period ended March 31, 2018, the Company factored gross invoices totaling $5,037,146 for cash proceeds of $4,012,129, net of credit memos of $514,487 and the 20% factor hold back or due from factor of $510,530. In addition, the Company also incurred fees and interest of $17,400 as a result of this agreement. As of March 31, 2018, a total of $2,209,964 of the factored invoices have not yet been collected by the factor as these invoices were not yet due. As such, pursuant to current accounting guidelines, the Company reported the $2,209,964 as Accounts Receivable, Factored, the corresponding proceeds received from the factor of $1,715,434 as Secured Payable to Factor and the difference of $494,530 as an adjustment to due from factor. | |
Accounts receivable, Factored | $ 2,209,964 | $ 0 |
LIBOR | 1.80% | |
Increase in factored receivables | $ 5,037,146 | |
Net proceeds from factored receivables | 4,012,129 | |
Maximum [Member] | ||
Accounts receivable, Factored | $ 5,000,000 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Inventories | ||
Finished goods | $ 1,959,811 | $ 2,511,260 |
Components | 506,655 | 411,301 |
Allowance for obsolescence | (81,524) | (48,730) |
Total | $ 2,384,942 | $ 2,873,831 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
PROPERTY AND EQUIPMENT | ||
Equipment | $ 967,321 | $ 971,820 |
Accumulated depreciation | (692,473) | (676,633) |
Total | $ 274,848 | $ 295,187 |
PROPERTY AND EQUIPMENT (Detai27
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Property and Equipment | ||
Depreciation and amortization expense | $ 18,840 | $ 13,389 |
NOTE PAYABLES (Details Narrativ
NOTE PAYABLES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
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 | $ 2,364,877 |
EQUITY (Details)
EQUITY (Details) | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Options Issued | 810,284 |
Equity Option [Member] | |
Options Issued | 212,074 |
Exercise price | $ / shares | $ 11.39 |
Issuance Date | May 9, 2016 |
Expiration Date | May 9, 2021 |
StockOption2Member | |
Options Issued | 4,330 |
Exercise price | $ / shares | $ 1.44 |
Issuance Date | Sep. 29, 2015 |
Expiration Date | Sep. 29, 2025 |
StockOption3Member | |
Options Issued | 40,000 |
Exercise price | $ / shares | $ 2.20 |
Issuance Date | Apr. 11, 2014 |
Expiration Date | Apr. 11, 2019 |
StockOption4Member | |
Options Issued | 370,000 |
Exercise price | $ / shares | $ 2.30 |
Issuance Date | Feb. 23, 2015 |
Expiration Date | Feb. 23, 2020 |
StockOption5Member | |
Options Issued | 93,503 |
Exercise price | $ / shares | $ 3.31 |
Issuance Date | Feb. 16, 2012 |
Expiration Date | Feb. 16, 2022 |
StockOption6Member | |
Options Issued | 18,966 |
Exercise price | $ / shares | $ 4.62 |
Issuance Date | May 13, 2015 |
Expiration Date | May 13, 2025 |
StockOption7Member | |
Options Issued | 4,330 |
Exercise price | $ / shares | $ 5.49 |
Issuance Date | Apr. 8, 2015 |
Expiration Date | Apr. 8, 2025 |
StockOption8Member | |
Options Issued | 1,732 |
Exercise price | $ / shares | $ 5.81 |
Issuance Date | Mar. 5, 2015 |
Expiration Date | Mar. 5, 2025 |
StockOption9Member | |
Options Issued | 32,331 |
Exercise price | $ / shares | $ 5.89 |
Issuance Date | Mar. 23, 2015 |
Expiration Date | Mar. 23, 2025 |
StockOption10Member | |
Options Issued | 8,660 |
Exercise price | $ / shares | $ 12.13 |
Issuance Date | Sep. 17, 2013 |
Expiration Date | Sep. 17, 2023 |
StockOption11Member | |
Options Issued | 7,038 |
Exercise price | $ / shares | $ 12.99 |
Issuance Date | Nov. 14, 2012 |
Expiration Date | Sep. 27, 2022 |
StockOption12Member | |
Options Issued | 17,320 |
Exercise price | $ / shares | $ 14.43 |
Issuance Date | Jan. 16, 2013 |
Expiration Date | Nov. 30, 2022 |
EQUITY (Details 1)
EQUITY (Details 1) - $ / shares | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Warrants Issued | 43,300 | 60,620 |
Warrants1member | ||
Warrants Issued | 43,300 | |
Exercise price | $ 12.99 | |
Issuance Date | Jul. 16, 2013 | |
Expiration Date | Jul. 16, 2018 |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 | |
Common Stock, Shares, Issued | 10,955,099 | 10,681,710 | |
Common Stock, Shares, Outstanding | 10,955,099 | 10,681,710 | |
Common Stock, Par Value Per Share | $ .01 | $ .01 | |
Compensation expense | $ 10,460 | $ 11,584 | |
Warrants Issued | 43,300 | 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 |