Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 12, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | FITLIFE BRANDS, INC. | |
Entity Central Index Key | 0001374328 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 1,060,389 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | NV | |
Entity File Number | 000-52369 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
CURRENT ASSETS | ||
Cash | $ 2,218,000 | $ 265,000 |
Accounts receivable, net of allowance of doubtful accounts, $387,000 and $27,000 respectively | 1,362,000 | 2,366,000 |
Inventories, net of allowance for obsolescence of $75,000 and $130,000, respectively | 3,467,000 | 2,998,000 |
Income tax receivable | 40,000 | 0 |
Prepaid expenses and other current assets | 59,000 | 72,000 |
Total current assets | 7,146,000 | 5,701,000 |
Property and equipment, net | 113,000 | 136,000 |
Right of use asset, net of amortization, $251,000 and $226,000 respectively | 229,000 | 254,000 |
Goodwill | 225,000 | 225,000 |
Security deposits | 0 | 10,000 |
TOTAL ASSETS | 7,713,000 | 6,326,000 |
CURRENT LIABILITIES: | ||
Accounts payable | 1,635,000 | 2,010,000 |
Accrued expenses and other liabilities | 495,000 | 464,000 |
Product returns | 276,000 | 256,000 |
Lease liability - current portion | 46,000 | 46,000 |
Total current liabilities | 2,452,000 | 2,776,000 |
LONG-TERM LEASE LIABILITY, net of current portion | 183,000 | 208,000 |
PPP Loan | 450,000 | 0 |
TOTAL LIABILITIES | 3,085,000 | 2,984,000 |
STOCKHOLDERS' EQUITY: | ||
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none outstanding as of June 30, 2020 and December 31, 2019 | 0 | 0 |
Common stock, $.01 par value, 15,000,000 shares authorized; 1,060,033 and 1,054,516 issued and outstanding as of June 30, 2020 and December 31, 2019 respectively | 12,000 | 12,000 |
Treasury stock, 210,631 and 198,731 shares, respectively | (1,790,000) | (1,619,000) |
Additional paid-in capital | 32,176,000 | 32,055,000 |
Accumulated deficit | (25,770,000) | (27,106,000) |
Total stockholders' equity | 4,628,000 | 3,342,000 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 7,713,000 | $ 6,326,000 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 387,000 | $ 27,000 |
Allowance for obsolescence | 75,000 | 130,000 |
Right of use asset amortization | $ 251,000 | $ 226,000 |
STOCKHOLDERS' EQUITY: | ||
Preferred stock, par value per share | $ .01 | $ .01 |
Preferred stock, shares authorized | 1,000 | 1,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 15,000,000 | 15,000,000 |
Common stock, shares issued | 1,060,033 | 1,054,516 |
Common stock, shares outstanding | 1,060,033 | 1,054,516 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenue | $ 2,740,000 | $ 4,618,000 | $ 8,891,000 | $ 10,496,000 |
Cost of Goods Sold | 1,421,000 | 2,764,000 | 4,835,000 | 6,101,000 |
Gross Profit | 1,319,000 | 1,854,000 | 4,056,000 | 4,395,000 |
OPERATING EXPENSES: | ||||
General and administrative | 1,001,000 | 796,000 | 1,734,000 | 1,570,000 |
Selling and marketing | 435,000 | 616,000 | 1,106,000 | 1,166,000 |
Depreciation and amortization | 10,000 | 13,000 | 23,000 | 28,000 |
Total operating expenses | 1,446,000 | 1,425,000 | 2,863,000 | 2,764,000 |
OPERATING INCOME (LOSS) | (127,000) | 429,000 | 1,193,000 | 1,631,000 |
OTHER EXPENSES (INCOME) | ||||
Interest expense | 8,000 | 18,000 | 12,000 | 33,000 |
Interest income | (3,000) | 0 | (4,000) | 0 |
Gain on settlement | 0 | (142,000) | (70,000) | (142,000) |
Total other expenses (income) | 5,000 | (124,000) | (62,000) | (109,000) |
PRE-TAX INCOME (LOSS) | (132,000) | 553,000 | 1,255,000 | 1,740,000 |
PROVISION FOR INCOME TAXES | (40,000) | 6,000 | (81,000) | 6,000 |
NET INCOME (LOSS) | (92,000) | 547,000 | 1,336,000 | 1,734,000 |
PREFERRED STOCK DIVIDEND | 0 | (18,000) | 0 | (18,000) |
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ (92,000) | $ 529,000 | $ 1,336,000 | $ 1,716,000 |
NET INCOME (LOSS) PER SHARE AVAILABLE TO COMMON SHAREHOLDERS: | ||||
Basic | $ (0.09) | $ 0.51 | $ 1.27 | $ 1.59 |
Diluted | $ (0.09) | $ 0.43 | $ 1.19 | $ 1.36 |
Basic weighted average common shares | 1,060,033 | 1,047,447 | 1,055,893 | 1,079,517 |
Diluted weighted average common shares | 1,060,033 | 1,239,875 | 1,126,631 | 1,258,520 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) | Preferred Stock Series A | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2018 | 600 | 1,111,943 | ||||
Beginning balance, amount at Dec. 31, 2018 | $ 0 | $ 11,000 | $ 0 | $ 32,107,000 | $ (29,804,000) | $ 2,314,000 |
Fair value of common stock issued for services, shares | 2,415 | |||||
Fair value of common stock issued for services, amount | $ 0 | 39,000 | 39,000 | |||
Repurchase of common stock, shares | (99,238) | |||||
Repurchase of common stock, amount | $ 0 | (566,000) | (566,000) | |||
Dividends payments on preferred stock | (18,000) | (18,000) | ||||
Fair value of vested common shares and options issued for services | 71,000 | 71,000 | ||||
Net income | 1,734,000 | 1,734,000 | ||||
Ending balance, shares at Jun. 30, 2019 | 600 | 1,015,120 | ||||
Ending balance, amount at Jun. 30, 2019 | $ 0 | $ 11,000 | (566,000) | 32,199,000 | (28,070,000) | 3,547,000 |
Beginning balance, shares at Mar. 31, 2019 | 600 | 1,113,952 | ||||
Beginning balance, amount at Mar. 31, 2019 | $ 0 | $ 11,000 | 0 | 32,156,000 | (28,617,000) | 3,550,000 |
Fair value of common stock issued for services, shares | 406 | |||||
Fair value of common stock issued for services, amount | $ 0 | 16,000 | 16,000 | |||
Repurchase of common stock, shares | (99,238) | |||||
Repurchase of common stock, amount | $ 0 | (566,000) | (566,000) | |||
Dividends payments on preferred stock | (18,000) | (18,000) | ||||
Fair value of vested common shares and options issued for services | 45,000 | 45,000 | ||||
Net income | 547,000 | 547,000 | ||||
Ending balance, shares at Jun. 30, 2019 | 600 | 1,015,120 | ||||
Ending balance, amount at Jun. 30, 2019 | $ 0 | $ 11,000 | (566,000) | 32,199,000 | (28,070,000) | 3,547,000 |
Beginning balance, shares at Dec. 31, 2019 | 0 | 1,054,516 | ||||
Beginning balance, amount at Dec. 31, 2019 | $ 0 | $ 12,000 | (1,619,000) | 32,055,000 | (27,106,000) | $ 3,342,000 |
Repurchase of common stock, shares | 11,900 | |||||
Ending balance, shares at Mar. 31, 2020 | 0 | 1,060,033 | ||||
Ending balance, amount at Mar. 31, 2020 | $ 0 | $ 12,000 | (1,790,000) | 32,154,000 | (25,678,000) | $ 4,698,000 |
Beginning balance, shares at Dec. 31, 2019 | 0 | 1,054,516 | ||||
Beginning balance, amount at Dec. 31, 2019 | $ 0 | $ 12,000 | (1,619,000) | 32,055,000 | (27,106,000) | 3,342,000 |
Fair value of common stock issued for services, shares | 417 | |||||
Fair value of common stock issued for services, amount | $ 0 | 26,000 | $ 26,000 | |||
Repurchase of common stock, shares | (11,900) | 0 | ||||
Repurchase of common stock, amount | $ 0 | (171,000) | $ (171,000) | |||
Exercise of stock options, shares | 17,000 | |||||
Exercise of stock options, amount | $ 0 | 71,000 | 71,000 | |||
Fair value of vested common shares and options issued for services | 24,000 | 24,000 | ||||
Net income | 1,336,000 | 1,336,000 | ||||
Ending balance, shares at Jun. 30, 2020 | 0 | 1,060,033 | ||||
Ending balance, amount at Jun. 30, 2020 | $ 0 | $ 12,000 | (1,790,000) | 32,176,000 | (25,770,000) | 4,628,000 |
Beginning balance, shares at Mar. 31, 2020 | 0 | 1,060,033 | ||||
Beginning balance, amount at Mar. 31, 2020 | $ 0 | $ 12,000 | (1,790,000) | 32,154,000 | (25,678,000) | 4,698,000 |
Fair value of common stock issued for services, amount | 10,000 | 10,000 | ||||
Fair value of vested common shares and options issued for services | 12,000 | 12,000 | ||||
Net income | (92,000) | (92,000) | ||||
Ending balance, shares at Jun. 30, 2020 | 0 | 1,060,033 | ||||
Ending balance, amount at Jun. 30, 2020 | $ 0 | $ 12,000 | $ (1,790,000) | $ 32,176,000 | $ (25,770,000) | $ 4,628,000 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Cash Flows [Abstract] | ||
Net income | $ 1,336,000 | $ 1,734,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 23,000 | 28,000 |
Allowance for doubtful accounts | 360,000 | (161,000) |
Allowance for inventory obsolescence | (55,000) | 24,000 |
Common stock issued for services | 26,000 | 39,000 |
Fair value of options issued for services | 24,000 | 71,000 |
Right of use asset net of amortization and lease liability | 0 | 4,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable - trade | 643,000 | (1,626,000) |
Inventories | (414,000) | 787,000 |
Prepaid expenses | 13,000 | 127,000 |
Income tax receivable | (40,000) | 0 |
Security deposit | 10,000 | 0 |
Accounts payable | (375,000) | (3,000) |
Accrued interest | 1,000 | 33,000 |
Accrued liabilities and other liabilities | 31,000 | (69,000) |
Product returns | 20,000 | 0 |
Net cash provided by operating activities | 1,603,000 | 988,000 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Net cash provided by investing activities | 0 | 0 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of notes payable | 0 | 300,000 |
Proceeds from exercise of stock options | 71,000 | 0 |
Proceeds from PPP loan | 450,000 | 0 |
Dividend payments on preferred stock | 0 | (18,000) |
Repurchases of common stock | (171,000) | (472,000) |
Repayments of note payable | 0 | (140,000) |
Net cash used in financing activities | 350,000 | (330,000) |
INCREASE IN CASH | 1,953,000 | 658,000 |
CASH, BEGINNING OF PERIOD | 265,000 | 259,000 |
CASH, END OF PERIOD | 2,218,000 | 917,000 |
Supplemental disclosure operating activities | ||
Cash paid for interest | 7,000 | 33,000 |
Non-cash investing and financing activities | ||
Recording of lease asset and liability upon adoption of ASU-2016-02 | 0 | 343,000 |
Accrued liability for stock buyback | $ 0 | $ 94,000 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | Summary FitLife Brands, Inc. (the “ Company NDS Products iSatori 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 FitLife Brands is headquartered in Omaha, Nebraska. For more information on the Company, please go to www.fitlifebrands.com Common Stock Recent Developments Line of Credit Agreement Line of Credit Agreement Lender Line of Credit Maturity Date Advances drawn under the Line of Credit bear interest at an annual rate of the one-month LIBOR rate plus 2.75%, and each advance will be payable on the Maturity Date with the interest on outstanding advances payable monthly. The Company may, at its option, prepay any borrowings under the Line of Credit, in whole or in part at any time prior to the Maturity Date, without premium or penalty. The Line of Credit Agreement includes customary events of default. If any such event of default occurs, the Lender may declare all outstanding loans under the Line of Credit to be due and payable immediately. On March 20, 2020, the Company drew on the Line of Credit in an amount equal to $2.5 million (the " Advance COVID-19 Subsequent to the end of the quarter, on August 4, 2020, the Company and CIT Bank amended the Line of Credit Agreement to extend the Maturity Date to September 23, 2021. The amendment also added a LIBOR floor of 75 bps to the Line of Credit Agreement. All other terms of the Line of Credit remain unchanged. Repayment of Outstanding Notes On December 26, 2018, the Company issued a line of credit promissory note to Sudbury Capital Fund, LP (" Sudbury Sudbury Note Judd Note Notes The Notes matured on the earlier to occur of a Change in Control of the Company, as defined in the Notes, or December 31, 2019, and required monthly principal and interest payments beginning April 1, 2019, with a final payment of unpaid principal and interest due December 31, 2019. Proceeds from the sale of the Notes, along with existing cash balances, were used to retire all outstanding indebtedness under the terms of a previous credit agreement totaling approximately $590,000 at December 26, 2018. On September 24, 2019, the Company repaid all outstanding balances due on the Notes in the aggregate principal amount, including accrued but unpaid interest thereon, of $615,000. Mr. Judd is the managing partner of Sudbury. As a result of the repayment of the Notes, the Company terminated its line of credit entered into between the Company and Sudbury on December 26, 2018. Amendment of Share Repurchase Plan On August 16, 2019, the Company's Board of Directors (the " Board Share Repurchase Program Series A Preferred Warrants On November 6, 2019, the Company’s Board of Directors amended the previously approved Share Repurchase Program to increase the amount of authorized repurchases to $2.5 million. All other terms of the Share Repurchase Program remain unchanged. The Company intends to conduct its Share Repurchase Program in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. Repurchases may be made at management's discretion from time to time in the open market or through privately negotiated transactions. The Company may suspend or discontinue the Share Repurchase Program at any time, and may thereafter reinstitute purchases, all without prior announcement. During the three months ended June 30, 2020, the Company did not repurchase any shares of Common Stock. During the six months ended June 30, 2020, the Company repurchased 11,900 shares of Common Stock, or approximately 1% of the issued and outstanding shares of the Company, through private transactions, as follows: Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced programs Dollar value of shares that may yet be purchased First quarter ended March 31, 2020 11,900 $ 14.35 11,900 $ 1,110,917 Second quarter ended June 30, 2020 - - - 1,110,917 Subtotal 11,900 $ 14.35 11,900 $ 1,110,917 Conversion of Series A Preferred Stock On December 23, 2019, Sudbury voluntarily converted its 550 shares of Series A Preferred into Common Stock in accordance with the terms of the Series A Preferred Stock Certificate of Designations. In conjunction with the conversion, the Company issued to Sudbury a total of 123,222 shares of Common Stock and paid accrued dividends of $7,454. Following such conversion, no shares of Series A Preferred remain outstanding, and the Company has no further obligations under the Certificate of Designations, including the obligation to pay preferred dividends. COVID-19 Pandemic The current coronavirus (" COVID-19 CARES Act The Coronavirus Aid, Relief, and Economic Security Act (" CARES Act Lender SBA PPP Loan CARES Act Loan Agreement The CARES Act permits employers to defer payment of the employer portion of payroll taxes owed on wages paid through December 31, 2020 for a period of up to two years. Through June 30, 2020, the Company has deferred payment of $24,000, which amount has been expensed and is included in accrued liabilities. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2020 | |
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 six-month period ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. Although management of the Company believes the disclosures presented herein are adequate and not misleading, these interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the footnotes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission on March 30, 2020. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2020 | |
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 (“ GAAP Principles of Consolidation The condensed 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 GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net sales and expense recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates. These estimates and assumptions also affect the reported amounts of accounts receivable, inventories, goodwill, revenue, costs and expense and valuations of long-term assets, realization of 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 Basic and Diluted Income (Loss) Per Share Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Net income (loss) available to common shareholders $ (92,000 ) $ 529,000 $ 1,336,000 $ 1,716,000 Weighted average common shares - basic 1,060,033 1,047,447 1,055,893 1,079,517 Dilutive effect of outstanding warrants and stock options - 192,428 70,738 179,003 Weighted average common shares - diluted 1,060,033 1,239,875 1,126,631 1,258,520 Net income (loss) per common share: Basic $ (0.09 ) $ 0.51 $ 1.27 $ 1.59 Diluted $ (0.09 ) $ 0.43 $ 1.19 $ 1.36 Lease We lease certain corporate office space and office equipment under lease agreements with monthly payments over a period of 36 to 84 months. We determine if an arrangement is a lease at inception. Lease assets are presented as operating lease right-of-use assets and the related liabilities are presented as lease liabilities in our consolidated balance sheets. Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases Leases, Goodwill In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment. ASU 2017-04 removes Step 2 of the goodwill impairment test, which required a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This update also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The Company adopted ASU 2017-04 on January 1, 2020 and applied the requirements prospectively. While we have concluded that a triggering event did not occur during the quarter ended June 30, 2020, the prolonged duration and severity of the COVID-19 pandemic could result in future goodwill impairment charges. We will continue to monitor the effects of the COVID-19 pandemic’s impact on our business, and review for impairment indicators as necessary in the upcoming months. Customer Concentration Net sales to GNC during the three-month periods ended June 30, 2020 and 2019 were $1,213,000 and $3,486,000, respectively, representing 44% and 75% of total net revenue, respectively. Net sales to GNC during the six-month periods ended June 30, 2020 and 2019 were $5,910,000 and $8,350,000, respectively, representing 67% and 79% of total net revenue, respectively. Gross accounts receivable attributable to GNC as of June 30, 2020 and 2019 were $1,305,000 and $3,228,000 and 93% of the Company’s total accounts receivable balance, respectively. For the three months ended June 30, 2020 and 2019, online sales accounted for 41% and 13% of the Company’s net revenue, respectively. For the six months ended June 30, 2020 and 2019, online sales accounted for 22% and 11% of the Company’s net revenue, respectively. Revenue Recognition The Company’s revenue is comprised of sales of nutritional supplements to consumers, primarily through GNC stores. The Company accounts for revenues in accordance with Accounting Standards Codification (“ ASC Revenue from Contracts with Customers 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. For direct-to-consumer sales, the Company allows for returns within 30 days of purchase. Our wholesale customers, such as 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 U.S. Food and Drug Administration. 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 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. In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration. Such elements of variable consideration include, but are not limited to, product returns and sales incentives, such as markdowns and margin adjustments. For these types of arrangements, the adjustments to revenue are recorded at the later of when (i) the Company recognizes revenue for the transfer of the related products to the customers, or (ii) the Company pays, or promises to pay, the consideration. Income Taxes As of December 31, 2019, the Company had federal net operating loss (“NOL”) carryforwards available to offset future taxable income of approximately $26.6 million, subject to Internal Revenue Service (“IRS”) statutory limitations. To the extent the Company reports federal taxable income for 2020, such income will be eliminated by net operating losses. This reduction in deferred tax assets would be offset by a corresponding reduction in the deferred tax asset valuation allowance resulting in no federal income tax expense. During the quarter ended March 31, 2020, the Company received a tax refund of $41,000 relating to a portion of the Company’s alternative minimum tax carryforward, which became refundable as a result of the 2017 Tax Cuts and Jobs Act. During the quarter ended June 30, 2020, the Company recorded an income tax benefit and an income tax receivable of $40,000 related to the Company's 2019 federal tax return. This amount represents the remainder of the Company's alternative minimum tax carryforward. The Company accounts for income taxes using the asset and liability method, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized before the Company is able to realize their benefits, or that future deductibility is uncertain. Authoritative guidance issued by the ASC Topic 740 – Income Taxes requires that a valuation allowance be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. As a result of the limitations related to Internal Revenue Code and the Company’s lack of a prolonged history of profitable operations, the Company recorded a 100% valuation allowance against its net deferred tax assets as of June 30, 2020 and December 31, 2019. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Recent Accounting Pronouncements 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 are not believed by management to have a material impact on the Company’s present or future financial statements. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | The Company’s inventories as of June 30, 2020 and December 31, 2019 were as follows: June 30, 2020 December 31, (unaudited) 2019 Finished goods $ 3,200,000 $ 2,688,000 Components 342,000 440,000 Allowance for obsolescence (75,000 ) (130,000 ) Total $ 3,467,000 $ 2,998,000 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | The Company’s fixed assets as of June 30, 2020 and December 31, 2019 were as follows: June 30, 2020 December 31, (unaudited) 2019 Equipment $ 902,000 $ 902,000 Accumulated depreciation (789,000 ) (766,000 ) Total $ 113,000 $ 136,000 Depreciation expense for the three months ended June 30, 2020 and 2019 was $10,000 and $13,000, respectively. Depreciation expense for the six months ended June 30, 2020 and 2019 was $23,000 and $28,000, respectively. |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2020 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | Notes Payable – Related Parties On December 26, 2018, the Company issued a line of credit promissory note to Sudbury Capital Fund, LP, an entity controlled by Dayton Judd, the Company’s Chief Executive Officer and Chair of the Board, in the principal amount of $600,000, with an initial advance to the Company in the amount of $300,000 which was outstanding at December 31, 2018. During the three months ended March 31, 2019, an additional $300,000 was advanced to the Company, resulting in aggregate borrowings of $600,000. In addition, on December 26, 2018, the Company also issued a promissory note to Mr. Judd in the principal amount of $200,000. On September 24, 2019, the Company repaid all outstanding balances due under the terms of the Notes in the aggregate principal amount, including accrued but unpaid interest thereon, of $615,000. As a result of the repayment of the Notes, the Company terminated its line of credit entered into between the Company and Sudbury on December 26, 2018. Line of Credit – Mutual of Omaha Bank On September 24, 2019, the Company entered into a Revolving Line of Credit Agreement (the " Line of Credit Agreement Lender Line of Credit Maturity Date Advances drawn under the Line of Credit bear interest at an annual rate of the one-month LIBOR rate plus 2.75%, and each advance will be payable on the Maturity Date with the interest on outstanding advances payable monthly. The Company may, at its option, prepay any borrowings under the Line of Credit, in whole or in part at any time prior to the Maturity Date, without premium or penalty. On March 20, 2020, the Lender advanced the Company $2.5 million under the Line of Credit, which amount was repaid on April 29, 2020. The advance was intended to provide the Company with additional liquidity given the uncertainty regarding the timing of collection of certain accounts receivable and in anticipation of an expected negative impact on sales to GNC and our other wholesale customers resulting from the COVID-19 outbreak. Subsequent to the end of the quarter, on August 4, 2020, the Company and CIT Bank amended the Line of Credit Agreement to extend the Maturity Date to September 23, 2021. The amendment also added a LIBOR floor of 75 bps to the Line of Credit Agreement. All other terms of the Line of Credit remain unchanged. Paycheck Protection Program Loan On April 27, 2020, the Company received proceeds from a loan in the amount of $449,700 from its lender, CIT Bank, N.A. (the “ Lender SBA PPP Loan CARES Act Loan Agreement |
RIGHT OF USE ASSETS AND LIABILI
RIGHT OF USE ASSETS AND LIABILITIES | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
RIGHT OF USE ASSETS AND LIABILITIES | In prior years, the Company entered into several non-cancellable leases for its office facilities and equipment. The lease agreements range from 36 months to 84 months, and require monthly payments ranging between $200 and $7,000 through October 2024. On January 1, 2019, the Company adopted Topic 842, Leases During the six months ended June 30, 2020, the Company made payments of $41,000 towards the lease liability. As of June 30, 2020, lease liability amounted to $229,000. Topic 842 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. Rent expense, including real estate taxes, for the six months ended June 30, 2020 was $19,000. The right-of-use asset at June 30, 2020 was $229,000, net of amortization of $251,000. Six months ended Lease Cost June 30, 2020 (unaudited) Operating lease cost (included in general and administrative in the Company's unaudited and condensed consolidated statement of operations) $ 41,000 Other information Cash paid for amounts included in the measurement of lease liabilities for the six months ended June 30, 2020 $ Weighted average remaining lease term - operating leases (in years) 4.33 Average discount rate - operating leases 9 % Operating leases At June 30, 2020 (unaudited) Long-term right-of-use assets $ 229,000 Short-term operating lease liabilities $ 46,000 Long-term operating lease liabilities 183,000 Total operating lease liabilities $ 229,000 Year ending Operating leases 2020 (remaining 6 months) $ 32,000 2021 67,000 2022 67,000 2023 61,000 2024 51,000 Less: Imputed interest/present value discount (49,000 ) Present value of lease liabilities $ 229,000 |
EQUITY
EQUITY | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
EQUITY | Common Stock a. Common Stock Issued for Services The Company is authorized to issue 15.0 million shares of Common Stock of which 1,060,033 shares of Common Stock were issued and outstanding as of June 30, 2020. In July 2018, in connection with the appointment of Mr. Dayton Judd as Chief Executive Officer, the Company granted Mr. Judd an aggregate of 45,000 shares of restricted Common Stock, which include vesting conditions subject to the achievement of certain market prices of the Company’s Common Stock. Such shares are also subject to forfeiture in the event Mr. Judd resigns from his position or is terminated by the Company. As the vesting of the 45,000 shares of restricted Common Stock is subject to certain market conditions, pursuant to current accounting guidelines, the Company determined the fair value to be $105,000, computed using Monte Carlo simulations on a binomial model with the assistance of a valuation specialist using a derived service period of nine years. During the six months ended June 30, 2020, the Company recorded compensation expense of $10,000 to amortize the fair value of these shares of restricted Common Stock based upon the prorated derived service period. During the six-month period ended June 30, 2019, the Company issued 2,415 shares of Common Stock with a fair value of $15,000 to directors for services rendered. The shares were valued at their respective dates of issuance. During the six-month period ended June 30, 2020, the Company issued 417 shares of Common Stock with a fair value of $4,000 to directors for services rendered. The shares were valued at their respective date of issuance. b. Share Repurchase Program On August 16, 2019, the Company's Board authorized management to repurchase up to $500,000 of the Company's Common Stock over the next 24 months, which Share Repurchase Program was previously reported on the Company's Current Report on Form 8-K filed August 20, 2019. On September 23, 2019, the Board approved an amendment to the Company’s share repurchase program to increase the repurchase of up to $1,000,000 of the Company's Common Stock, its Series A Preferred, and Warrants, over the next 24 months, at a purchase price, in the case of Common Stock, equal to the fair market value of the Company's Common Stock on the date of purchase, and in the case of Series A Preferred and Warrants, at a purchase price determined by management, with the exact date and amount of such purchases to be determined by management. On November 6, 2019, the Company’s Board of Directors amended the previously approved Share Repurchase Program to increase the amount of authorized repurchases to $2.5 million. All other terms of the Share Repurchase Program remain unchanged. During the six-month period ended June 30, 2020, the Company repurchased 11,900 shares of Common Stock, or approximately 1% of the issued and outstanding shares of the Company, through private transactions for the aggregate purchase price of $171,000. The Company is accounting for these shares as treasury stock. c. Reverse/Forward Split On April 11, 2019, the Company filed two Certificates of Change with the Secretary of State of the State of Nevada, the first to effect a reverse stock split of both the Company’s issued and outstanding and authorized Common The Company did not issue any fractional shares as a result of the Reverse/Forward Split. Holders of fewer than 8,000 shares of the Common Stock immediately prior to the Reverse/Forward Split received cash in lieu of fractional shares based on the 5-day volume weighted average price of the Company’s Common Stock immediately prior to the Reverse/Forward Split, which was $0.57 per pre-split share. As a result, such holders ceased to be stockholders of the Company. Holders of more than 8,000 shares of Common Stock immediately prior to the Reverse/Forward Split did not receive fractional shares; instead any fractional shares resulting from the Reverse/Forward Split were rounded up to the next whole share. As a result of the Reverse/Forward Split, the number of shares of Company Common Stock authorized for issuance under the Company’s Articles of Incorporation, as amended, was decreased from 150,000,000 shares to 15,000,000 shares. The Reverse/Forward Split did not affect the Company’s preferred stock, nor did it affect the par value of the Company’s Common Stock. The share and per share amounts included in these unaudited interim condensed consolidated financial statements and footnotes have been retroactively adjusted to reflect the 1-for-10 aspect of the Reverse/Forward Split as if it occurred as of the earliest period presented. Options Information regarding options outstanding as of June 30, 2020 is as follows: Number of Weighted Average Exercise Weighted Average Remaining Life Options Price (Years) Outstanding, December 31, 2018 154,521 $ 13.10 5.7 Issued 8,000 6.85 Exercised - Forfeited (13,236 ) 24.45 Outstanding, December 31, 2019 149,285 $ 11.76 5.0 Issued - Exercised (17,000 ) 4.20 Forfeited (36,500 ) 19.46 Outstanding, June 30, 2020 95,785 $ 10.17 6.3 Outstanding Exercisable Exercise Price per Share Total Number of Options Weighted Average Remaining Life (Years) Weighted Average Exercise Price Number of Vested Options Weighted Average Exercise Price $ 2.80 - 23.00 90,210 6.5 $ 5.23 66,710 $ 6.08 $ 23.10 - $144.34 5,575 3.3 $ 90.20 5,575 $ 90.20 95,785 6.3 $ 10.17 72,285 $ 12.57 During the six-month periods ended June 30, 2020 and 2019, the Company recognized compensation expense of $24,000 and $71,000, respectively, to account for the fair value of stock options that vested during the period. Total intrinsic value of outstanding stock options as of June 30, 2020 amounted to $532,000. Future unamortized compensation expense on the unvested outstanding options at June 30, 2020 amounted to $11,750, which will be recognized through October 2020. Warrants Total outstanding warrants to purchase shares of Company Common Stock as of June 30, 2020 and December 31, 2019 amounted to shares. Total intrinsic value as of June 30, 2020 amounted to $206,000. During the period ended June 30, 2020, no warrants were granted and no warrants expired unexercised. Outstanding Exercise Price Issuance Date Expiration Date Vesting 35,870 $ 4.60 11/13/18 11/13/23 Yes |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. 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 | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Subsequent to the end of the quarter, on August 4, 2020, the Company and CIT Bank amended the Line of Credit Agreement to extend the Maturity Date to September 23, 2021. The amendment also added a LIBOR floor of 75 bps to the Line of Credit Agreement. All other terms of the Line of Credit remain unchanged. In accordance with the Subsequent Events Topic of the FASB ASC 855, we have evaluated subsequent events, through the filing date and noted no further subsequent events that are reasonably likely to impact the Company’s financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | The condensed 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 GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net sales and expense recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates. These estimates and assumptions also affect the reported amounts of accounts receivable, inventories, goodwill, revenue, costs and expense and valuations of long-term assets, realization of 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 Basic and Diluted Income (Loss) Per Share Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Net income (loss) available to common shareholders $ (92,000 ) $ 529,000 $ 1,336,000 $ 1,716,000 Weighted average common shares - basic 1,060,033 1,047,447 1,055,893 1,079,517 Dilutive effect of outstanding warrants and stock options - 192,428 70,738 179,003 Weighted average common shares - diluted 1,060,033 1,239,875 1,126,631 1,258,520 Net income (loss) per common share: Basic $ (0.09 ) $ 0.51 $ 1.27 $ 1.59 Diluted $ (0.09 ) $ 0.43 $ 1.19 $ 1.36 |
Lease | We lease certain corporate office space and office equipment under lease agreements with monthly payments over a period of 36 to 84 months. We determine if an arrangement is a lease at inception. Lease assets are presented as operating lease right-of-use assets and the related liabilities are presented as lease liabilities in our consolidated balance sheets. Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases Leases, |
Goodwill | In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment. ASU 2017-04 removes Step 2 of the goodwill impairment test, which required a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This update also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The Company adopted ASU 2017-04 on January 1, 2020 and applied the requirements prospectively. While we have concluded that a triggering event did not occur during the quarter ended June 30, 2020, the prolonged duration and severity of the COVID-19 pandemic could result in future goodwill impairment charges. We will continue to monitor the effects of the COVID-19 pandemic’s impact on our business, and review for impairment indicators as necessary in the upcoming months. |
Customer Concentration | Net sales to GNC during the three-month periods ended June 30, 2020 and 2019 were $1,213,000 and $3,486,000, respectively, representing 44% and 75% of total net revenue, respectively. Net sales to GNC during the six-month periods ended June 30, 2020 and 2019 were $5,910,000 and $8,350,000, respectively, representing 67% and 79% of total net revenue, respectively. Gross accounts receivable attributable to GNC as of June 30, 2020 and 2019 were $1,305,000 and $3,228,000 and 93% of the Company’s total accounts receivable balance, respectively. For the three months ended June 30, 2020 and 2019, online sales accounted for 41% and 13% of the Company’s net revenue, respectively. For the six months ended June 30, 2020 and 2019, online sales accounted for 22% and 11% of the Company’s net revenue, respectively. |
Revenue Recognition | The Company’s revenue is comprised of sales of nutritional supplements to consumers, primarily through GNC stores. The Company accounts for revenues in accordance with Accounting Standards Codification (“ ASC Revenue from Contracts with Customers 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. For direct-to-consumer sales, the Company allows for returns within 30 days of purchase. Our wholesale customers, such as 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 U.S. Food and Drug Administration. 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 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. In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration. Such elements of variable consideration include, but are not limited to, product returns and sales incentives, such as markdowns and margin adjustments. For these types of arrangements, the adjustments to revenue are recorded at the later of when (i) the Company recognizes revenue for the transfer of the related products to the customers, or (ii) the Company pays, or promises to pay, the consideration. |
Income Taxes | As of December 31, 2019, the Company had federal net operating loss (“NOL”) carryforwards available to offset future taxable income of approximately $26.6 million, subject to Internal Revenue Service (“IRS”) statutory limitations. To the extent the Company reports federal taxable income for 2020, such income will be eliminated by net operating losses. This reduction in deferred tax assets would be offset by a corresponding reduction in the deferred tax asset valuation allowance resulting in no federal income tax expense. During the quarter ended March 31, 2020, the Company received a tax refund of $41,000 relating to a portion of the Company’s alternative minimum tax carryforward, which became refundable as a result of the 2017 Tax Cuts and Jobs Act. During the quarter ended June 30, 2020, the Company recorded an income tax benefit and an income tax receivable of $40,000 related to the Company's 2019 federal tax return. This amount represents the remainder of the Company's alternative minimum tax carryforward. The Company accounts for income taxes using the asset and liability method, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized before the Company is able to realize their benefits, or that future deductibility is uncertain. Authoritative guidance issued by the ASC Topic 740 – Income Taxes requires that a valuation allowance be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. As a result of the limitations related to Internal Revenue Code and the Company’s lack of a prolonged history of profitable operations, the Company recorded a 100% valuation allowance against its net deferred tax assets as of June 30, 2020 and December 31, 2019. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. |
Recent Accounting Pronouncements | 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 are not believed by management to have a material impact on the Company’s present or future financial statements. |
DESCRIPTION OF BUSINESS (Tables
DESCRIPTION OF BUSINESS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Shares repurchased | Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced programs Dollar value of shares that may yet be purchased First quarter ended March 31, 2020 11,900 $ 14.35 11,900 $ 1,110,917 Second quarter ended June 30, 2020 - - - 1,110,917 Subtotal 11,900 $ 14.35 11,900 $ 1,110,917 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Table) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Earnings per share | Basic and Diluted Income (Loss) Per Share Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Net income (loss) available to common shareholders $ (92,000 ) $ 529,000 $ 1,336,000 $ 1,716,000 Weighted average common shares - basic 1,060,033 1,047,447 1,055,893 1,079,517 Dilutive effect of outstanding warrants and stock options - 192,428 70,738 179,003 Weighted average common shares - diluted 1,060,033 1,239,875 1,126,631 1,258,520 Net income (loss) per common share: Basic $ (0.09 ) $ 0.51 $ 1.27 $ 1.59 Diluted $ (0.09 ) $ 0.43 $ 1.19 $ 1.36 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | June 30, 2020 December 31, (unaudited) 2019 Finished goods $ 3,200,000 $ 2,688,000 Components 342,000 440,000 Allowance for obsolescence (75,000 ) (130,000 ) Total $ 3,467,000 $ 2,998,000 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | June 30, 2020 December 31, (unaudited) 2019 Equipment $ 902,000 $ 902,000 Accumulated depreciation (789,000 ) (766,000 ) Total $ 113,000 $ 136,000 |
RIGHT OF USE ASSETS AND LIABI_2
RIGHT OF USE ASSETS AND LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Lease cost | Six months ended Lease Cost June 30, 2020 (unaudited) Operating lease cost (included in general and administrative in the Company's unaudited and condensed consolidated statement of operations) $ 41,000 Other information Cash paid for amounts included in the measurement of lease liabilities for the six months ended June 30, 2020 $ Weighted average remaining lease term - operating leases (in years) 4.33 Average discount rate - operating leases 9 % |
Lease liabilities | Operating leases At June 30, 2020 (unaudited) Long-term right-of-use assets $ 229,000 Short-term operating lease liabilities $ 46,000 Long-term operating lease liabilities 183,000 Total operating lease liabilities $ 229,000 |
Maturities of the Company's lease liabilities | Year ending Operating leases 2020 (remaining 6 months) $ 32,000 2021 67,000 2022 67,000 2023 61,000 2024 51,000 Less: Imputed interest/present value discount (49,000 ) Present value of lease liabilities $ 229,000 |
EQUITY (Tables)
EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Stock option activity | Number of Weighted Average Exercise Weighted Average Remaining Life Options Price (Years) Outstanding, December 31, 2018 154,521 $ 13.10 5.7 Issued 8,000 6.85 Exercised - Forfeited (13,236 ) 24.45 Outstanding, December 31, 2019 149,285 $ 11.76 5.0 Issued - Exercised (17,000 ) 4.20 Forfeited (36,500 ) 19.46 Outstanding, June 30, 2020 95,785 $ 10.17 6.3 |
Options issued and outstanding | Outstanding Exercisable Exercise Price per Share Total Number of Options Weighted Average Remaining Life (Years) Weighted Average Exercise Price Number of Vested Options Weighted Average Exercise Price $ 2.80 - 23.00 90,210 6.5 $ 5.23 66,710 $ 6.08 $ 23.10 - $144.34 5,575 3.3 $ 90.20 5,575 $ 90.20 95,785 6.3 $ 10.17 72,285 $ 12.57 |
Warrants issued and outstanding | Outstanding Exercise Price Issuance Date Expiration Date Vesting 35,870 $ 4.60 11/13/18 11/13/23 Yes |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Mar. 31, 2020 | Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Total number of shares purchased | 11,900 | 0 |
Average price paid per share | $ 14.35 | $ 0 |
Total number of shares purchased as part of publicly announced program | 11,900 | 0 |
Dollar value of shares that may yet be purchased under the program | $ 110,917 | $ 110,917 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Accounting Policies [Abstract] | ||||
Net Income | $ (92,000) | $ 547,000 | $ 1,336,000 | $ 1,734,000 |
Weighted average common shares - basic | 1,060,033 | 1,047,447 | 1,055,893 | 1,079,517 |
Dilutive effect of outstanding warrants, stock options, and preferred stock | 0 | 192,428 | 70,738 | 179,003 |
Weighted average Shares - diluted | 1,060,033 | 1,239,875 | 1,126,631 | 1,258,520 |
Net income per common share: | ||||
Basic | $ (0.09) | $ 0.51 | $ 1.27 | $ 1.59 |
Diluted | $ (0.09) | $ 0.43 | $ 1.19 | $ 1.36 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Goodwill | $ 225,000 | $ 225,000 | $ 225,000 | ||
Total sales revenue | 2,740,000 | $ 4,618,000 | 8,891,000 | $ 10,496,000 | |
GNC | Sales Revenue Net | |||||
Total sales revenue | $ 1,213,000 | $ 3,486,000 | $ 5,910,000 | $ 8,350,000 | |
Concentration risk | 44.00% | 75.00% | 67.00% | 79.00% | |
GNC | Receivable | |||||
Concentration risk | 79.00% | 93.00% | |||
Sales receivable | $ 1,305,000 | $ 3,228,000 | $ 1,305,000 | $ 3,228,000 | |
GNC | Allowance Doubtful Accounts | |||||
Allowance for doubtful accounts | $ 354,000 | $ 354,000 | $ 0 | ||
Online Sales | Sales Revenue Net | |||||
Concentration risk | 41.00% | 13.00% | 22.00% | 11.00% |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 3,200,000 | $ 2,688,000 |
Components | 342,000 | 440,000 |
Allowance for obsolescence | (75,000) | (130,000) |
Total | $ 3,467,000 | $ 2,998,000 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Abstract] | ||
Equipment | $ 902,000 | $ 902,000 |
Accumulated depreciation | (789,000) | (766,000) |
Total | $ 113,000 | $ 136,000 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation and amortization expense | $ 10,000 | $ 13,000 | $ 23,000 | $ 28,000 |
NOTE PAYABLES (Details Narrativ
NOTE PAYABLES (Details Narrative) | Dec. 31, 2018USD ($) |
Notes Payable [Abstract] | |
Notes payable - related parties | $ 300,000 |
RIGHT OF USE ASSETS AND LIABI_3
RIGHT OF USE ASSETS AND LIABILITIES (Details) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Leases [Abstract] | |
Operating lease cost (included in general and administrative in the Company's unaudited and consolidated statement of operations) | $ 41,000 |
Cash paid for amounts included in the measurement of lease liabilities for the first quarter 2019 | $ 0 |
Weighted Average remaining lease term - operating leases (in years) | 4 years 3 months 29 days |
Average discount rate - operating leases | 9.00% |
RIGHT OF USE ASSETS AND LIABI_4
RIGHT OF USE ASSETS AND LIABILITIES (Details 1) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Long-term right-of-use assets | $ 229,000 | |
Short-term operating lease liabilities | 46,000 | $ 46,000 |
Long-term operating lease liabilities | 183,000 | $ 208,000 |
Total operating lease liabilities | $ 229,000 |
RIGHT OF USE ASSETS AND LIABI_5
RIGHT OF USE ASSETS AND LIABILITIES (Details 2) | Jun. 30, 2020USD ($) |
Leases [Abstract] | |
2020 (remaining 6 months) | $ 32,000 |
2021 | 67,000 |
2022 | 67,000 |
2023 | 61,000 |
2024 | 51,000 |
Less: Imputed interest/present value discount | (49,000) |
Present value of lease liabilities | $ 229,000 |
EQUITY (Details)
EQUITY (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Equity [Abstract] | ||
Number of options outstanding, beginning | 149,285 | 154,521 |
Number of options issued | 0 | 8,000 |
Number of options exercised | (17,000) | 0 |
Number of options forfeited | (36,500) | (13,326) |
Number of options outstanding, ending | 95,785 | 149,285 |
Weighted average exercise price outstanding, beginning | $ 11.76 | $ 13.10 |
Weighted average exercise price issued | .00 | 6.85 |
Weighted average exercise price exercised | 4.20 | .00 |
Weighted average exercise price forfeited | 19.46 | 24.45 |
Weighted average exercise price outstanding, ending | $ 10.17 | $ 11.76 |
Weighted average remaining life outstanding, beginning | 5 years | 5 years 8 months 8 days |
Weighted average remaining life outstanding, ending | 6 years 3 months 18 days | 5 years |
EQUITY (Details 1)
EQUITY (Details 1) - $ / shares | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Number of options outstanding | 95,785 | 149,285 | 154,521 |
Weighted average remaining contractual life (in years) | 6 years 3 months 18 days | 5 years | |
Weighted average exercise price outstanding | $ 10.17 | ||
Number of vested options | 72,285 | ||
Weighted average exercise price exercisable | $ 12.57 | ||
Stock Option 1 | |||
Exercise price range | $2.80 - $23.00 | ||
Number of options outstanding | 90,210 | ||
Weighted average remaining contractual life (in years) | 6 years 6 months | ||
Weighted average exercise price outstanding | $ 5.23 | ||
Number of vested options | 66,710 | ||
Weighted average exercise price exercisable | $ 6.08 | ||
Stock Option 2 | |||
Exercise price range | $23.10 - $144.34 | ||
Number of options outstanding | 5,575 | ||
Weighted average remaining contractual life (in years) | 3 years 3 months 18 days | ||
Weighted average exercise price outstanding | $ 90.20 | ||
Number of vested options | 5,575 | ||
Weighted average exercise price exercisable | $ 90.20 |
EQUITY (Details 2)
EQUITY (Details 2) - $ / shares | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Equity [Abstract] | ||
Outstanding | 35,870 | 35,870 |
Exercise price | $ 4.60 | |
Issuance date | 11/13/18 | |
Expiration date | 11/13/23 | |
Vesting | Yes |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - USD ($) | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Equity [Abstract] | |||
Common stock, shares authorized | 15,000,000 | 15,000,000 | |
Common stock, shares issued | 1,060,033 | 1,054,516 | |
Common stock, shares outstanding | 1,060,033 | 1,054,516 | |
Common stock, par value per share | $ 0.01 | $ 0.01 | |
Preferred stock, par value per share | $ .01 | $ .01 | |
Preferred stock, shares authorized | 1,000 | 1,000 | |
Preferred stock, shares issued | 0 | 0 | |
Preferred stock, shares outstanding | 0 | 0 | |
Compensation expense | $ 24,000 | $ 71,000 | |
Intrinsic value of outstanding stock options | 532,000 | ||
Unamortized compensation expense | $ 11,750 | ||
Warrants issued and outstanding | 35,870 | 35,870 | |
Intrinsic value of warrants | $ 206,000 |