Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 05, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | FITLIFE BRANDS, INC | |
Entity Central Index Key | 0001374328 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Jun. 30, 2021 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 | |
Entity Common Stock Shares Outstanding | 1,105,690 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-52369 | |
Entity Incorporation State Country Code | NV | |
Entity Tax Identification Number | 20-3464383 | |
Entity Address Address Line 1 | 5214 S | |
Entity Address Address Line 2 | 136th Street | |
Entity Address City Or Town | Omaha | |
Entity Address State Or Province | NE | |
Entity Address Postal Zip Code | 68137 | |
City Area Code | 402 | |
Local Phone Number | 991-5618 | |
Entity Interactive Data Current | Yes |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
CURRENT ASSETS | ||
Cash | $ 8,425,000 | $ 6,336,000 |
Accounts receivable, net of allowance of doubtful accounts of $59,000 and $51,000, respectively | 1,757,000 | 2,044,000 |
Inventories, net of allowance for obsolescence of $28,000 and $56,000, respectively | 4,834,000 | 3,401,000 |
Income tax receivable | 40,000 | 40,000 |
Prepaid expenses and other current assets | 228,000 | 52,000 |
Total current assets | 15,284,000 | 11,873,000 |
Property and equipment, net | 85,000 | 98,000 |
Right of use asset, net of amortization of $296,000 and $272,000, respectively | 183,000 | 208,000 |
IntangiblesIntangibles, net of amortization of $10,000 and $0, respectively | 212,000 | 0 |
Goodwill | 358,000 | 225,000 |
Deferred tax asset | 3,639,000 | 4,370,000 |
TOTAL ASSETS | 19,761,000 | 16,774,000 |
CURRENT LIABILITIES: | ||
Accounts payable | 3,542,000 | 3,246,000 |
Accrued expense and other liabilities | 635,000 | 498,000 |
Product returns | 326,000 | 335,000 |
Lease liability - current portion | 53,000 | 50,000 |
Total current liabilities | 4,556,000 | 4,129,000 |
Long-term lease liability, net of current portion | 131,000 | 158,000 |
PPP loan | 0 | 453,000 |
TOTAL LIABILITIES | 4,687,000 | 4,740,000 |
STOCKHOLDERS' EQUITY: | ||
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none outstanding as of June 30, 2021 and December 31, 2020 | 0 | 0 |
Common stock, $0.01 par value, 15,000,000 shares authorized; 1,105,690 and 1,060,818 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively | 12,000 | 12,000 |
Treasury stock, 219,654 and 210,631 shares, respectively | (2,050,000) | (1,790,000) |
Additional paid-in capital | 32,312,000 | 32,204,000 |
Accumulated deficit | (15,200,000) | (18,392,000) |
TOTAL STOCKHOLDERS' EQUITY | 15,074,000 | 12,034,000 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 19,761,000 | $ 16,774,000 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Allowance for doubtful accounts | $ 59,000 | $ 51,000 |
Right of use asset amortization | 296,000 | 272,000 |
Allowance for obsolescence | 28,000 | 56,000 |
Amortization of intangible assets | $ 10,000 | $ 0 |
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 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 | 1,105,690 | 1,060,818 |
Common stock, shares outstanding | 1,105,690 | 1,060,818 |
Treasury stock, shares | 219,654 | 210,631 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) | ||||
Revenue | $ 8,141,000 | $ 2,740,000 | $ 14,299,000 | $ 8,891,000 |
Cost of goods sold | 4,580,000 | 1,421,000 | 7,661,000 | 4,835,000 |
Gross profit | 3,561,000 | 1,319,000 | 6,638,000 | 4,056,000 |
OPERATING EXPENSES: | ||||
General and administrative | 917,000 | 1,001,000 | 1,774,000 | 1,734,000 |
Selling and marketing | 716,000 | 435,000 | 1,385,000 | 1,106,000 |
Depreciation and amortization | 15,000 | 10,000 | 23,000 | 23,000 |
Total operating expenses | 1,648,000 | 1,446,000 | 3,182,000 | 2,863,000 |
OPERATING INCOME (LOSS) | 1,913,000 | (127,000) | 3,456,000 | 1,193,000 |
OTHER EXPENSES (INCOME) | ||||
Interest expense (income) | 5,000 | 5,000 | 11,000 | 8,000 |
Gain on settlement | 0 | 0 | 0 | (70,000) |
Gain on debt forgiveness | 0 | 0 | (453,000) | 0 |
Total other expenses (income) | (5,000) | 5,000 | (464,000) | (62,000) |
PRE-TAX NET INCOME | 1,918,000 | (132,000) | 3,920,000 | 1,255,000 |
PROVISION (BENEFIT) FOR INCOME TAXES | 410,000 | (40,000) | 728,000 | (81,000) |
NET INCOME | $ 1,508,000 | $ (92,000) | $ 3,192,000 | $ 1,336,000 |
NET INCOME PER SHARE | ||||
Basic | $ 1.37 | $ (0.09) | $ 2.94 | $ 1.27 |
Diluted | $ 1.26 | $ (0.09) | $ 2.68 | $ 1.19 |
Basic weighted average common shares | 1,098,000 | 1,060,033 | 1,087,385 | 1,055,893 |
Diluted weighted average common shares | 1,194,880 | 1,060,033 | 1,189,069 | 1,126,631 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Total | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) |
Balance, shares at Dec. 31, 2019 | 1,054,516 | ||||
Balance, amount at Dec. 31, 2019 | $ 3,342,000 | $ 12,000 | $ (1,619,000) | $ 32,055,000 | $ (27,106,000) |
Fair value of common stock issued for services, shares | 417 | ||||
Fair value of common stock issued for services, amount | 26,000 | $ 0 | 0 | 26,000 | 0 |
Repurchase of common stock, shares | (11,900) | ||||
Repurchase of common stock, amount | (171,000) | $ 0 | (171,000) | 0 | 0 |
Exercise of stock options, shares | 17,000 | ||||
Exercise of stock options, amount | 71,000 | $ 0 | 0 | 71,000 | 0 |
Stock-based compensation, amount | 24,000 | 0 | 0 | 24,000 | 0 |
Net income | 1,336,000 | $ 0 | 0 | 0 | 1,336,000 |
Balance, shares at Jun. 30, 2020 | 1,060,033 | ||||
Balance, amount at Jun. 30, 2020 | 4,628,000 | $ 12,000 | (1,790,000) | 32,176,000 | (25,770,000) |
Balance, shares at Mar. 31, 2020 | 1,060,033 | ||||
Balance, amount at Mar. 31, 2020 | 4,698,000 | $ 12,000 | (1,790,000) | 32,154,000 | (25,678,000) |
Fair value of common stock issued for services, amount | 10,000 | 0 | 10,000 | 0 | |
Repurchase of common stock, amount | 0 | 0 | 0 | 0 | 0 |
Stock-based compensation, amount | 12,000 | 0 | 0 | 12,000 | 0 |
Net income | (92,000) | 0 | 0 | 0 | (92,000) |
Exercise of stock options | 0 | $ 0 | 0 | 0 | 0 |
Balance, shares at Jun. 30, 2020 | 1,060,033 | ||||
Balance, amount at Jun. 30, 2020 | 4,628,000 | $ 12,000 | (1,790,000) | 32,176,000 | (25,770,000) |
Balance, shares at Dec. 31, 2020 | 1,060,818 | ||||
Balance, amount at Dec. 31, 2020 | 12,034,000 | $ 12,000 | (1,790,000) | 32,204,000 | (18,392,000) |
Repurchase of common stock, shares | (9,023) | ||||
Repurchase of common stock, amount | (260,000) | $ 0 | (260,000) | 0 | 0 |
Exercise of stock options, shares | 3,895 | ||||
Exercise of stock options, amount | 54,000 | $ 0 | 0 | 54,000 | 0 |
Stock-based compensation, amount | 238,000 | $ 0 | 0 | 238,000 | |
Net income | 3,192,000 | 0 | 3,192,000 | ||
Stock-based compensation, shares | 50,000 | ||||
Repurchase of options | (184,000) | $ 0 | 0 | (184,000) | |
Balance, shares at Jun. 30, 2021 | 1,105,690 | ||||
Balance, amount at Jun. 30, 2021 | 15,074,000 | $ 12,000 | (2,050,000) | 32,312,000 | (15,200,000) |
Balance, shares at Mar. 31, 2021 | 1,090,818 | ||||
Balance, amount at Mar. 31, 2021 | 13,849,000 | $ 12,000 | (1,790,000) | 32,335,000 | (16,708,000) |
Repurchase of common stock, shares | (9,023) | ||||
Repurchase of common stock, amount | (260,000) | $ 0 | (260,000) | 0 | 0 |
Exercise of stock options, shares | 3,895 | ||||
Exercise of stock options, amount | 54,000 | $ 0 | 0 | 54,000 | 0 |
Stock-based compensation, amount | 107,000 | 0 | 0 | 107,000 | 0 |
Net income | 1,508,000 | $ 0 | 0 | 0 | 1,508,000 |
Stock-based compensation, shares | 20,000 | ||||
Repurchase of options | (184,000) | $ 0 | 0 | (184,000) | 0 |
Balance, shares at Jun. 30, 2021 | 1,105,690 | ||||
Balance, amount at Jun. 30, 2021 | $ 15,074,000 | $ 12,000 | $ (2,050,000) | $ 32,312,000 | $ (15,200,000) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 3,192,000 | $ 1,336,000 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 23,000 | 23,000 |
Right of use asset amortization | 24,000 | 0 |
Allowance for doubtful accounts | 8,000 | 360,000 |
Allowance for inventory obsolescence | (27,000) | (55,000) |
Fair value of stock and options issued for services | 238,000 | 50,000 |
Forgiveness of PPP loan | (453,000) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable - trade | 406,000 | 643,000 |
Inventories | (1,358,000) | (414,000) |
Deferred tax asset | 731,000 | 0 |
Prepaid expense | (176,000) | 13,000 |
Income tax receivable | 0 | (40,000) |
Security deposit | 0 | 10,000 |
Accounts payable | 296,000 | (375,000) |
Lease liability | (24,000) | 0 |
Accrued interest | 0 | 1,000 |
Accrued liabilities and other liabilities | 137,000 | 31,000 |
Product returns | (9,000) | 20,000 |
Net cash provided by operating activities | 3,008,000 | 1,603,000 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Cash paid for acquisition | (529,000) | 0 |
Net cash used in investing activities | (529,000) | 0 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from exercise of stock options | 54,000 | 71,000 |
Proceeds from PPP loan | 0 | 450,000 |
Repurchases of common stock | (444,000) | (171,000) |
Net cash provided by (used in) financing activities | (390,000) | 350,000 |
CHANGE IN CASH | 2,089,000 | 1,953,000 |
CASH, BEGINNING OF PERIOD | 6,336,000 | 265,000 |
CASH, END OF PERIOD | 8,425,000 | 2,218,000 |
Supplemental disclosure operating activities | ||
Cash paid for interest | 0 | 7,000 |
Cash paid (refunded) for income taxes | $ (3,000) | $ 0 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 6 Months Ended |
Jun. 30, 2021 | |
DESCRIPTION OF BUSINESS | |
NOTE 1 - DESCRIPTION OF BUSINESS | NOTE 1 - DESCRIPTION OF BUSINESS Summary FitLife Brands, Inc. (the “ Company NDS Products iSatori Products GNC FitLife Brands is headquartered in Omaha, Nebraska. For more information on the Company, please go to www.fitlifebrands.com Common Stock Recent Developments Nutrology Asset Purchase On April 7, 2021, the Company purchased substantially all of the assets of Triple Impact Corporation, a New Jersey corporation doing business as Nutrology, a nutritional supplement company catering to consumers who prioritize all-natural and plant-based nutritional supplements. See Note 4 for additional detail regarding the acquisition. Tax Benefits Preservation Plan On February 26, 2021, the board of directors (the “ Board Right Record Date Series B Preferred Tax Benefits Preservation Plan Rights Agent The Company adopted the Tax Benefits Preservation Plan in order to protect shareholder value against a possible limitation on the Company’s ability to use its Net Operating Losses (“ NOLs IRC Share Repurchase Plan On February 1, 2021, the Board approved an additional amendment to the previously authorized share repurchase program initially approved by the Board of Directors (the " Board Share Repurchase Program Warrants Securities During the three months ended June 30, 2021, the Company repurchased 9,023 shares of Common Stock, or approximately 1% of the issued and outstanding shares of the Company under the Share Repurchase Program. The Company also repurchased and retired 12,710 dilutive in-the-money options from employees for total consideration of $186,000. Trade date 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, 2021 - $ - - $ 3,610,917 Second quarter ended June 30, 2021 9,023 $ 28.50 9,023 $ 3,169,917 Subtotal 9,023 $ 28.50 9,023 $ 3,169,917 COVID-19 Pandemic The COVID-19 pandemic has had an effect on the Company’s employees, business and operations and those of its customers, vendors and business partners. In this respect, the temporary or permanent closure of some of our retail partners’ store locations and the stay-at-home orders that occurred early in the pandemic negatively affected our results from operations, although much of the impact has been offset by an increase in revenue attributable to online sales, and increased sales during the more recent quarters. Our future financial position and operating results could be materially and adversely affected in the event that a resurgence of COVID-19 cases leads to new stay-at-home orders and/or disruptions in both our supply chain and manufacturing lead-times, which could lower demand for the Company’s products and/or prevent the Company from producing and delivering its products in a timely manner, although the extent of these effects cannot be determined at this time. The Company expects to continue to assess the evolving impact of the COVID-19 pandemic and intends to make adjustments to its business and operations accordingly. CARES Act The Coronavirus Aid, Relief, and Economic Security Act (" CARES Act PPP Lender SBA PPP Loan 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 December 31, 2020, the Company deferred payment of $77,000, which amount has been expensed and is included in accrued liabilities. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2021 | |
BASIS OF PRESENTATION | |
NOTE 2 - BASIS OF PRESENTATION | NOTE 2 - 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, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. 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, 2020, as filed with the Securities and Exchange Commission (" SEC |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 - 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, 2021 2020 2021 2020 Net income (loss) available to common shareholders $ 1,508,000 $ (92,000 ) $ 3,192,000 $ 1,336,000 Weighted average common shares - basic 1,098,000 1,060,033 1,087,385 1,055,893 Dilutive effect of outstanding warrants and stock options 96,880 - 101,684 70,738 Weighted average common shares - diluted 1,194,880 1,060,033 1,189,069 1,126,631 Net income (loss) per common share: Basic $ 1.37 $ (0.09 ) $ 2.94 $ 1.27 Diluted $ 1.26 $ (0.09 ) $ 2.68 $ 1.19 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 three or six months ended June 30, 2021, a worsening of the 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, 2021 and 2020 were $5,917,000 and $1,213,000, respectively, representing 73% and 44% of total net revenue, respectively. Net sales to GNC during the six-month periods ended June 30, 2021 and 2020 were $9,993,000 and $5,910,000, respectively, representing 70% and 67% of total net revenue, respectively. Gross accounts receivable attributable to GNC as of June 30, 2021 and 2020 were $1,315,000 and $1,305,000, respectively, representing 77% and 79% of the Company’s total accounts receivable balance, respectively. For the three months ended June 30, 2021 and 2020, online sales accounted for 21% and 41% of the Company’s net revenue, respectively. For the six months ended June 30, 2021 and 2020, online sales accounted for 23% and 22% 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. 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. Payments 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. The Company’s revenue recognition, sales, and returns policies and experience for Nutrology are consistent with those of the Company’s other brands. Income Taxes During the three months ended June 30, 2021, the Company recorded a federal income tax expense of $403,000 and a state income tax expense of $7,000 During the three months ended June 30, 2020, the Company recorded an income tax benefit and an income tax receivable of $40,000. During the fourth quarter of fiscal 2020, the Company determined that it is more likely than not that it will be able to utilize the majority of its net operating loss carryforwards. The release of a substantial portion of the reserve against the Company’s deferred tax assets resulted in an income tax benefit of $4,370,000 for 2020, and a corresponding increase in net income of the same amount. As of June 30, 2021, the Company had federal net operating loss (“ NOL 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, or that future deductibility is uncertain. 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 SEC are not believed by management to have a material impact on the Company’s present or future financial statements. |
BUSINESS COMBINATION
BUSINESS COMBINATION | 6 Months Ended |
Jun. 30, 2021 | |
BUSINESS COMBINATION | |
NOTE 4 - BUSINESS COMBINATION | NOTE 4 – BUSINESS COMBINATION On April 7, 2021, the Company closed on the purchase of substantially all of the assets of Triple Impact Nutrition (the “Acquisition”), a New Jersey corporation doing business as Nutrology, a nutritional supplement company catering to consumers who prioritize all-natural and plant-based nutritional supplements. Under the terms of the Asset Purchase Agreement (the “APA”), the Company agreed to pay cash consideration of $500,000, subject to certain working capital adjustments set forth in the APA. Total consideration paid, including the effects of the working capital adjustment, was $529,000. The Acquisition was accounted for as a business combination under the acquisition method of accounting. The purchase price of $529,000 was allocated to the tangible and intangible assets acquired based on their fair values on the acquisition date of April 7, 2021. The Company assumed no liabilities as part of the Acquisition, and no employees of Nutrology became employees of the Company. The excess of the purchase price over the net assets acquired is recorded as goodwill. The goodwill is attributable to synergies from leveraging Nutrology’s strong all-natural and plant-based nutritional supplements, customer relationships and website domain name to enter into new sales with consumers for future growth and expansion. The Company incurred transaction costs of approximately $49,000 related to the Acquisition, of which $30,000 was expensed as incurred during the second quarter of 2021 as part of general and administrative expenses on the Consolidated Statement of Operations. The remaining $19,000 of transaction costs will be expensed as incurred during the third quarter of 2021. Included in the Company’s Consolidated Statement of Operations from the acquisition date of April 7, 2021 for the period ended June 30, 2021 are revenue of $189,000 and gross profit of $85,000. Below is a summary of the preliminary fair value of assets assumed as of the date of acquisition. Assets Acquired: Fair Value Accounts receivable $ 48,000 Inventory 126,000 Intangibles 222,000 Goodwill 133,000 Fair value of assets acquired and consideration transferred $ 529,000 The preliminary fair values of acquired assets assumed represent management’s estimate of fair value utilizing a third-party appraiser and are subject to change if additional information becomes available. Goodwill will not be amortized but instead will be tested for impairment at least annually (or more frequently if indicators of impairment arise). In the event management determines that the goodwill has become impaired, the Company will incur an accounting charge for the amount of the impairment during the fiscal quarter in which the determination is made. Goodwill is deductible for tax purposes. Our preliminary estimate of intangible assets related to the Acquisition consists of non-contractual customer relationships, trademarks, formulations, and a website domain name. The value of the customer relationships was determined using the income approach, trademarks and formulations was determine using the relief from royalty method, and the website domain name was based on the replacement method cost approach. All methods are considered Level 3 fair value measurements. Intangible assets are amortized on a straight-line basis over their estimated useful lives. The following table sets forth the components of the identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition. Fair Value Useful Life Client relationships $ 80,000 4 years Formulations 70,000 4 years Trademarks 60,000 Indefinite Website 12,000 3 years Total identifiable assets $ 222,000 |
FAIR VALUE
FAIR VALUE | 6 Months Ended |
Jun. 30, 2021 | |
FAIR VALUE | |
NOTE 5 - FAIR VALUE | NOTE 5: FAIR VALUE The Company utilizes fair value measurements to record fair value adjustments to certain financial assets and to determine fair value disclosures. Fair Value Measurements and Disclosure · Level 1 - Quoted unadjusted prices for identical instruments in active markets. · Level 2 - Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all observable inputs and significant value drivers are observable in active markets. · Level 3 - Model-derived valuations in which one or more significant inputs or significant value drivers are unobservable, including assumptions developed by the Company. Some of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate fair value due to their short-term nature. Such financial assets and financial liabilities include cash, accounts receivable, certain other current assets, accounts payable and accrued expense and other liabilities. The Company does not hold or issue financial instruments for trading purposes. The Company’s non-financial assets which include goodwill, intangible assets, long-lived assets are not required to be measured at fair value on a recurring basis. The estimation of fair value for these assets and liabilities requires the use of significant unobservable inputs, and as a result, the Company classifies these assets and liabilities as Level 3 within the fair value hierarchy. During the three and six months ended June 30, 2021, the assets acquired in the business combination, including accounts receivable, inventory, and intangible assets, were measured at fair value on the date of the acquisition. The Company does not have any material financial liabilities that were required to be measured at fair value on a recurring basis at June 30, 2021. The fair values of the material non-financial assets acquired have been calculated using the following valuation techniques (Level 3 of fair value hierarchy): Assets acquired Valuation technique and Significant Assumptions Customer relationships Trademarks and Formulations Income approach – multi-period excess earnings model (“MPEEM”): Income approach – relief from royalty method: Website Cost approach – replacement method The Company exercised significant judgments in the accounting for the business combination. The most significant judgments related to the determination of fair values of intangible assets and their estimated useful lives. In determining of the fair values of the intangible assets management made assumptions on the timing and the amounts of the Company’s future cash flows, applicable growth rates and discount factors. There were no additional fair value measurements of these assets during the first half of 2021. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2021 | |
INVENTORIES | |
NOTE 6 - INVENTORIES | NOTE 6 – INVENTORIES The Company’s inventory is carried at the lower of cost or net realizable value using the first-in, first-out (“ FIFO Total allowance for expiring, excess and slow-moving inventory items as of June 30, 2021 and December 31, 2020 amounted to $28,000 and $56,000, respectively. The Company’s inventories as of June 30, 2021 and December 31, 2020 were as follows: June 30, December 31, 2021 2020 (unaudited) Finished goods $ 4,245,000 $ 2,789,000 Components 617,000 668,000 Allowance for obsolescence (28,000 ) (56,000 ) Total $ 4,834,000 $ 3,401,000 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2021 | |
PROPERTY AND EQUIPMENT | |
NOTE 7 - PROPERTY AND EQUIPMENT | NOTE 7 - PROPERTY AND EQUIPMENT The Company’s fixed assets as of June 30, 2021 and December 31, 2020 were as follows: June 30, December 31, 2021 2020 (unaudited) Property and equipment $ 902,000 $ 902,000 Accumulated depreciation (817,000 ) (804,000 ) Property and equipment, net $ 85,000 $ 98,000 Depreciation expense for the three months ended June 30, 2021 and 2020 was $5,000 and $10,000, respectively. Depreciation expense for the six months ended June 30, 2021 and 2020 was $13,000 and $23,000, respectively. |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2021 | |
NOTES PAYABLE | |
NOTE 8 - NOTES PAYABLE | NOTE 8 – NOTES PAYABLE Line of Credit – CIT Bank On September 24, 2019, the Company entered into a Revolving Line of Credit Agreement (the “ Line of Credit Agreement Lender Line of Credit 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, 2021, the Company and the Lender amended the Line of Credit Agreement to extend the Maturity Date to September 23, 2022. All other terms of the Line of Credit Agreement remain unchanged. Paycheck Protection Program Loan On April 27, 2020, the Company received proceeds from a loan in the amount of $449,700 from the PPP Lender, pursuant to approval by the SBA for the PPP Lender to fund the Company’s request for the PPP Loan created as part of the recently enacted CARES Act administered by the SBA. In accordance with the requirements of the CARES Act, the Company used the proceeds from the PPP Loan primarily for payroll costs, covered rent payments, and covered utilities during the eight-week period commencing on the date of loan approval. The PPP Loan was scheduled to mature on April 27, 2022, had a 1.0% interest rate, and was subject to the terms and conditions applicable to all loans made pursuant to the Paycheck Protection Program as administered by the SBA under the CARES Act. The Company was informed by the PPP Lender and the SBA that the full balance of the PPP Loan, including accrued interest, was forgiven on January 15, 2021. |
RIGHT OF USE ASSETS AND LIABILI
RIGHT OF USE ASSETS AND LIABILITIES | 6 Months Ended |
Jun. 30, 2021 | |
RIGHT OF USE ASSETS AND LIABILITIES | |
NOTE 9 - RIGHT OF USE ASSETS AND LIABILITIES | NOTE 9 - 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, 2021, the Company made payments resulting in a $24,000 reduction in the lease liability. As of June 30, 2021, lease liability amounted to $184,000. 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 three months ended June 30, 2021 was $41,000. The right-of-use asset at June 30, 2021 was $183,000, net of amortization of $296,000. Six months ended Lease Cost June 30, 2021 Operating lease cost (included in general and administrative in the Company's unaudited and consolidated statement of operations) $ 41,000 Other information Cash paid for amounts included in the measurement of lease liabilities for the third quarter of 2021 $ 0 Weighted average remaining lease term - operating leases (in years) 3.3 Average discount rate - operating leases 9 % The supplemental balance sheet information related to leases for the period is as follows: Operating leases At June 30, 2021 Long-term right-of-use assets $ 183,000 Short-term operating lease liabilities $ 53,000 Long-term operating lease liabilities 131,000 Total operating lease liabilities $ 184,000 Maturities of the Company's lease liabilities are as follows (in thousands): Year ending Operating leases 2021 (remaining 6 months) $ 33,000 2022 67,000 2023 61,000 2024 51,000 Less: Imputed interest/present value discount (28,000 ) Present value of lease liabilities $ 184,000 |
EQUITY
EQUITY | 6 Months Ended |
Jun. 30, 2021 | |
EQUITY | |
NOTE 10 - EQUITY | NOTE 10 - EQUITY Common Stock a. Common Stock Issued for Services The Company is authorized to issue 15.0 million shares of Common Stock of which 1,105,690 shares of Common Stock were issued and outstanding as of June 30, 2021. 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, 2021, the Company recorded compensation expense of $3,000 to amortize the fair value of these shares of restricted Common Stock based upon the prorated derived service period. As of June 30, 2021, there was no unearned compensation to be amortized as a compensation cost associated with the grant of these shares. In February 2021, the Company granted Mr. Judd an aggregate of 40,000 restricted share units (“ RSUs 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, and on February 1, 2021, the Company’s Board of Directors amended previously approved Share Repurchase Program to increase the amount of authorized repurchases to purchase up to $5.0 million. All other terms of the Share Repurchase Program remain unchanged. During the six-month period ended June 30, 2021, the Company repurchased 9,023 shares of Common Stock. The Company is accounting for repurchased shares as treasury stock. The Company also repurchased and retired 12,710 dilutive in-the-money options from employees for total consideration of $186,000. Options Information regarding options outstanding as of June 30, 2021 is as follows: Number of Weighted Average Exercise Weighted Average Remaining Life Options Price (Years) Outstanding, December 31, 2019 149,285 $ 11.76 5.0 Issued - - Exercised (17,000 ) 4.20 Forfeited (36,500 ) 19.46 Outstanding, December 31, 2020 95,785 $ 10.17 5.8 Issued 32,000 20.13 Exercised (4,000 ) 13.90 Forfeited (3,000 ) 13.90 Repurchased (12,710 ) 13.90 Outstanding, June 30, 2021 108,075 $ 12.44 6.8 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 $ 2.80-23.00 102,500 7.0 $ 8.21 78,500 $ 4.57 $ 23.10-144.34 5,575 2.3 $ 90.20 5,575 $ 90.20 108,075 6.8 $ 12.44 84,075 $ 10.25 During the six-month periods ended June 30, 2021 and 2020, the Company recognized compensation expense of $12,000 and $24,000, 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, 2021 amounted to $3,161,000. As of June 30, 2021 there is $104,000 of unamortized compensation expense. Warrants Total outstanding warrants to purchase shares of Company Common Stock as of June 30, 2021 and December 31, 2020 amounted to 35,870 shares. Total intrinsic value as of June 30, 2021 amounted to $1,234,000. During the period ended June 30, 2021, 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, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
NOTE 11 - COMMITMENTS AND CONTINGENCIES | NOTE 11 – 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, 2021 | |
SUBSEQUENT EVENTS | |
NOTE 12 - SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS Subsequent to the end of the quarter, on August 4, 2021, the Company amended its Line of Credit Agreement to extend the Maturity Date to September 23, 2022. All other terms of the Line of Credit Agreement 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, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
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, 2021 2020 2021 2020 Net income (loss) available to common shareholders $ 1,508,000 $ (92,000 ) $ 3,192,000 $ 1,336,000 Weighted average common shares - basic 1,098,000 1,060,033 1,087,385 1,055,893 Dilutive effect of outstanding warrants and stock options 96,880 - 101,684 70,738 Weighted average common shares - diluted 1,194,880 1,060,033 1,189,069 1,126,631 Net income (loss) per common share: Basic $ 1.37 $ (0.09 ) $ 2.94 $ 1.27 Diluted $ 1.26 $ (0.09 ) $ 2.68 $ 1.19 |
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 three or six months ended June 30, 2021, a worsening of the 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, 2021 and 2020 were $5,917,000 and $1,213,000, respectively, representing 73% and 44% of total net revenue, respectively. Net sales to GNC during the six-month periods ended June 30, 2021 and 2020 were $9,993,000 and $5,910,000, respectively, representing 70% and 67% of total net revenue, respectively. Gross accounts receivable attributable to GNC as of June 30, 2021 and 2020 were $1,315,000 and $1,305,000, respectively, representing 77% and 79% of the Company’s total accounts receivable balance, respectively. For the three months ended June 30, 2021 and 2020, online sales accounted for 21% and 41% of the Company’s net revenue, respectively. For the six months ended June 30, 2021 and 2020, online sales accounted for 23% and 22% 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. 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. Payments 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. The Company’s revenue recognition, sales, and returns policies and experience for Nutrology are consistent with those of the Company’s other brands. |
Income Taxes | During the three months ended June 30, 2021, the Company recorded a federal income tax expense of $403,000 and a state income tax expense of $7,000 During the three months ended June 30, 2020, the Company recorded an income tax benefit and an income tax receivable of $40,000. During the fourth quarter of fiscal 2020, the Company determined that it is more likely than not that it will be able to utilize the majority of its net operating loss carryforwards. The release of a substantial portion of the reserve against the Company’s deferred tax assets resulted in an income tax benefit of $4,370,000 for 2020, and a corresponding increase in net income of the same amount. As of June 30, 2021, the Company had federal net operating loss (“ NOL 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, or that future deductibility is uncertain. |
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 SEC 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, 2021 | |
DESCRIPTION OF BUSINESS | |
Shares repurchased | Trade date 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, 2021 - $ - - $ 3,610,917 Second quarter ended June 30, 2021 9,023 $ 28.50 9,023 $ 3,169,917 Subtotal 9,023 $ 28.50 9,023 $ 3,169,917 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Table) | 6 Months Ended |
Jun. 30, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Earnings per share | Basic and Diluted Income (Loss) Per Share Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020 Net income (loss) available to common shareholders $ 1,508,000 $ (92,000 ) $ 3,192,000 $ 1,336,000 Weighted average common shares - basic 1,098,000 1,060,033 1,087,385 1,055,893 Dilutive effect of outstanding warrants and stock options 96,880 - 101,684 70,738 Weighted average common shares - diluted 1,194,880 1,060,033 1,189,069 1,126,631 Net income (loss) per common share: Basic $ 1.37 $ (0.09 ) $ 2.94 $ 1.27 Diluted $ 1.26 $ (0.09 ) $ 2.68 $ 1.19 |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
BUSINESS COMBINATION | |
Schedule of fair value of net assets | Assets Acquired: Fair Value Accounts receivable $ 48,000 Inventory 126,000 Intangibles 222,000 Goodwill 133,000 Fair value of assets acquired and consideration transferred $ 529,000 |
Schedule of estimated useful life of asset | Fair Value Useful Life Client relationships $ 80,000 4 years Formulations 70,000 4 years Trademarks 60,000 Indefinite Website 12,000 3 years Total identifiable assets $ 222,000 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
INVENTORIES | |
Inventories | June 30, December 31, 2021 2020 (unaudited) Finished goods $ 4,245,000 $ 2,789,000 Components 617,000 668,000 Allowance for obsolescence (28,000 ) (56,000 ) Total $ 4,834,000 $ 3,401,000 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
PROPERTY AND EQUIPMENT | |
Property and equipment | June 30, December 31, 2021 2020 (unaudited) Property and equipment $ 902,000 $ 902,000 Accumulated depreciation (817,000 ) (804,000 ) Property and equipment, net $ 85,000 $ 98,000 |
RIGHT OF USE ASSETS AND LIABI_2
RIGHT OF USE ASSETS AND LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
RIGHT OF USE ASSETS AND LIABILITIES | |
Lease cost | Six months ended Lease Cost June 30, 2021 Operating lease cost (included in general and administrative in the Company's unaudited and consolidated statement of operations) $ 41,000 Other information Cash paid for amounts included in the measurement of lease liabilities for the third quarter of 2021 $ 0 Weighted average remaining lease term - operating leases (in years) 3.3 Average discount rate - operating leases 9 % |
Lease liabilities | Operating leases At June 30, 2021 Long-term right-of-use assets $ 183,000 Short-term operating lease liabilities $ 53,000 Long-term operating lease liabilities 131,000 Total operating lease liabilities $ 184,000 |
Maturities of the Company's lease liabilities | Year ending Operating leases 2021 (remaining 6 months) $ 33,000 2022 67,000 2023 61,000 2024 51,000 Less: Imputed interest/present value discount (28,000 ) Present value of lease liabilities $ 184,000 |
EQUITY (Tables)
EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
EQUITY | |
Schedule of total outstanding warrants | Outstanding Exercise Price Issuance Date Expiration Date Vesting 35,870 $ 4.60 11/13/18 11/13/23 Yes |
Stock option activity | Number of Weighted Average Exercise Weighted Average Remaining Life Options Price (Years) Outstanding, December 31, 2019 149,285 $ 11.76 5.0 Issued - - Exercised (17,000 ) 4.20 Forfeited (36,500 ) 19.46 Outstanding, December 31, 2020 95,785 $ 10.17 5.8 Issued 32,000 20.13 Exercised (4,000 ) 13.90 Forfeited (3,000 ) 13.90 Repurchased (12,710 ) 13.90 Outstanding, June 30, 2021 108,075 $ 12.44 6.8 |
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 $ 2.80-23.00 102,500 7.0 $ 8.21 78,500 $ 4.57 $ 23.10-144.34 5,575 2.3 $ 90.20 5,575 $ 90.20 108,075 6.8 $ 12.44 84,075 $ 10.25 |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Mar. 31, 2021 | Jun. 30, 2021 | |
Total number of shares purchased | 9,023 | |
Average price paid per share | $ 0 | $ 28.50 |
Total number of shares purchased as part of publicly announced program | 9,023 | |
Dollar value of shares that may yet be purchased under the program | $ 3,610,917 | $ 3,169,917 |
Subtotal [Member] | ||
Total number of shares purchased | 9,023 | |
Average price paid per share | $ 28.50 | |
Total number of shares purchased as part of publicly announced program | 9,023 | |
Dollar value of shares that may yet be purchased under the program | $ 3,169,917 |
DESCRIPTION OF BUSINESS (Deta_2
DESCRIPTION OF BUSINESS (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Apr. 27, 2020 | Jun. 30, 2021 | Dec. 31, 2020 | Feb. 26, 2021 | Feb. 01, 2021 | Sep. 23, 2019 | Aug. 16, 2019 | |
Total number of shares purchased | 9,023 | ||||||
Preferred stock, par value per share | $ 0.01 | $ 0.01 | |||||
Employees [Member] | |||||||
Consideration value | $ 2,186,000 | ||||||
Treasury stock | 12,710 | ||||||
Series B Junior Participating Preferred Stock [Member] | |||||||
Preferred stock, par value per share | $ 0.01 | ||||||
Exercise price | $ 100 | ||||||
Share Repurchase Program [Member] | |||||||
Total number of shares purchased | 9,023 | ||||||
Share Repurchase Program [Member] | Maximum [Member] | |||||||
Stock Repurchase Program, Authorized Amount | $ 5,000,000 | $ 1,000,000 | $ 500,000 | ||||
Paycheck Protection Program Loan | |||||||
Proceeds from loan | $ 449,700 | ||||||
Debt instrument interest rate | 1.00% | ||||||
Deferred accrued liabilities | $ 77,000 | ||||||
Debt instrument maturity date, descriptions | April 27, 2022 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Net income | $ 1,508,000 | $ (92,000) | $ 3,192,000 | $ 1,336,000 |
Weighted average common shares - basic | 1,098,000 | 1,060,033 | 1,087,385 | 1,055,893 |
Dilutive effect of outstanding warrants and stock options | 96,880 | 101,684 | 70,738 | |
Weighted average Shares - diluted | 1,194,880 | 1,060,033 | 1,189,069 | 1,126,631 |
Net income (loss) per common share: | ||||
Basic | $ 1.37 | $ (0.09) | $ 2.94 | $ 1.27 |
Diluted | $ 1.26 | $ (0.09) | $ 2.68 | $ 1.19 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Federal net operating loss | $ 18,400,000 | $ 18,400,000 | |||
Valuation allowance | 537,000 | 537,000 | |||
Federal net operating loss carryforward | 3,600,000 | 3,600,000 | |||
Deferred tax asset | 3,639,000 | 3,639,000 | $ 4,370,000 | ||
Income tax receivable | 40,000 | 40,000 | $ 40,000 | ||
Federal income tax expense | 403,000 | ||||
State income tax expense | 7,000 | ||||
Operating lease right-of-use assets | 480,000 | ||||
Lease liabilities for operating leases | 480,000 | ||||
Total sales revenue | 8,141,000 | $ 2,740,000 | $ 14,299,000 | $ 8,891,000 | |
Minimum [Member] | |||||
Lease term | 36 years | ||||
Maximum [Member] | |||||
Lease term | 84 years | ||||
GNC | Sales Revenue Net | |||||
Total sales revenue | $ 5,917,000 | $ 1,213,000 | $ 9,993,000 | $ 5,910,000 | |
Concentration risk | 73.00% | 44.00% | 70.00% | 67.00% | |
GNC | Receivable | |||||
Concentration risk | 77.00% | 79.00% | |||
Accounts receivable | $ 1,315,000 | $ 1,305,000 | $ 1,315,000 | $ 1,305,000 | |
Online Sales | Sales Revenue Net | |||||
Concentration risk | 21.00% | 41.00% | 23.00% | 22.00% |
BUSINESS COMBINATION (Details)
BUSINESS COMBINATION (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Assets Acquired: | ||
Inventory | $ 4,834,000 | $ 3,401,000 |
Intangibles | 212,000 | 0 |
Goodwill | 358,000 | $ 225,000 |
Client relationships [Member] | ||
Assets Acquired: | ||
Accounts receivable | 48,000 | |
Inventory | 126,000 | |
Intangibles | 222,000 | |
Goodwill | 133,000 | |
Fair value of assets acquired and consideration transferred | $ 529,000 |
BUSINESS COMBINATION (Details 1
BUSINESS COMBINATION (Details 1) | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Client relationships [Member] | |
Fair value of assets acquired | $ 80,000 |
Estimated useful life of intangible assets | 4 years |
Formulations [Member] | |
Fair value of assets acquired | $ 70,000 |
Estimated useful life of intangible assets | 4 years |
Trademark [Member] | |
Fair value of assets acquired | $ 60,000 |
Estimated useful life of intangible assets | Indefinite |
Website [Member] | |
Fair value of assets acquired | $ 12,000 |
Estimated useful life of intangible assets | 3 years |
Total identifiable assets [Member] | |
Fair value of assets acquired | $ 222,000 |
BUSINESS COMBINATION (Details N
BUSINESS COMBINATION (Details Narrative) - USD ($) | Apr. 07, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Sep. 30, 2021 |
Revenue | $ 8,141,000 | $ 2,740,000 | $ 14,299,000 | $ 8,891,000 | ||
Gross profit | 3,561,000 | $ 1,319,000 | 6,638,000 | $ 4,056,000 | ||
Assets Purchase Agreement [Member] | ||||||
Cash consideration payable | $ 500,000 | |||||
Working capital adjustment | 529,000 | |||||
Fair value of tangible and intangible assets acquired | 529,000 | |||||
Transaction cost of business acquisition | $ 49,000 | $ 30,000 | 30,000 | $ 19,000 | ||
Revenue | 189,000 | |||||
Gross profit | $ 85,000 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
INVENTORIES | ||
Finished goods | $ 4,245,000 | $ 2,789,000 |
Components | 617,000 | 668,000 |
Allowance for obsolescence | (28,000) | (56,000) |
Total | $ 4,834,000 | $ 3,401,000 |
INVENTORIES (Details Narrative)
INVENTORIES (Details Narrative) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
INVENTORIES | ||
Allowance for obsolescence | $ 28,000 | $ 56,000 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
PROPERTY AND EQUIPMENT | ||
Property and equipment | $ 902,000 | $ 902,000 |
Accumulated depreciation | (817,000) | (804,000) |
Property and equipment, net | $ 85,000 | $ 98,000 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
PROPERTY AND EQUIPMENT | ||||
Depreciation and amortization expense | $ 5,000 | $ 10,000 | $ 13,000 | $ 23,000 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | ||
Apr. 27, 2020 | Mar. 20, 2020 | Sep. 24, 2019 | Jun. 30, 2021 | |
Paycheck Protection Program Loan | ||||
Proceeds from loan amount | $ 449,700 | |||
Debt instrument maturity date | Apr. 27, 2022 | |||
Debt instrument interest rate | 1.00% | |||
Line of Credit - CIT Bank | ||||
Proceeds from Lines of Credit | $ 2,500,000 | |||
Line of Credit annual bear interest rate, LIBOR rate percentage | 2.75% | |||
Line of credit | $ 2,500,000 |
RIGHT OF USE ASSETS AND LIABI_3
RIGHT OF USE ASSETS AND LIABILITIES (Details) | 6 Months Ended |
Jun. 30, 2021USD ($) | |
RIGHT OF USE ASSETS AND LIABILITIES | |
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 third quarter of 2021 | $ 0 |
Average discount rate - operating leases | 9.00% |
Weighted average remaining lease term - operating leases (in years) | 3 years 3 months 18 days |
RIGHT OF USE ASSETS AND LIABI_4
RIGHT OF USE ASSETS AND LIABILITIES (Details 1) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
RIGHT OF USE ASSETS AND LIABILITIES | ||
Long-term right-of-use assets | $ 183,000 | |
Short-term operating lease liabilities | 53,000 | $ 50,000 |
Long-term operating lease liabilities | 131,000 | $ 158,000 |
Total operating lease liabilities | $ 184,000 |
RIGHT OF USE ASSETS AND LIABI_5
RIGHT OF USE ASSETS AND LIABILITIES (Details 2) | Jun. 30, 2021USD ($) |
RIGHT OF USE ASSETS AND LIABILITIES | |
2021 (remaining 6 months) | $ 33,000 |
2022 | 67,000 |
2023 | 61,000 |
2024 | 51,000 |
Less: imputed interest/present value discount | (28,000) |
Present value of lease liabilities | $ 184,000 |
RIGHT OF USE ASSETS AND LIABI_6
RIGHT OF USE ASSETS AND LIABILITIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | |
Lease liabilities for operating leases | $ 480,000 | ||
Payments towards lease liability | 24,000 | ||
Operating lease right-of-use assets | 480,000 | ||
Lease liability | $ 184,000 | 184,000 | |
Rent expense | 41,000 | ||
Right-of-use asset | $ 183,000 | 183,000 | $ 208,000 |
Right-of-use asset amortization | $ 296,000 | ||
Discount rate | 9.00% | ||
Monthly payment, description | require monthly payments ranging between $200 and $7,000 through October 2024 | ||
Minimum [Member] | |||
Lease term | 36 years | ||
Maximum [Member] | |||
Lease term | 84 years |
EQUITY (Details)
EQUITY (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
EQUITY | ||
Number of options outstanding, beginning balance | 95,785 | 149,285 |
Number of options issued | 32,000 | |
Number of options exercised | (4,000) | (17,000) |
Number of options forfeited | (3,000) | (36,500) |
Number of options repurchased | (12,710) | |
Number of options outstanding, ending balance | 108,075 | 95,785 |
Weighted average exercise price outstanding, beginning | $ 10.17 | $ 11.76 |
Weighted average exercise price issued | 20.13 | 0 |
Weighted average exercise price forfeited | 13.90 | 19.46 |
Weighted average exercise price exercised | 13.90 | 4.20 |
Weighted average exercise price repurchased | 13.90 | |
Weighted average exercise price outstanding, ending | $ 12.44 | $ 10.17 |
Weighted average remaining life outstanding, beginning | 5 years 9 months 18 days | 5 years |
Weighted average remaining life outstanding, ending balance | 6 years 9 months 18 days | 5 years 9 months 18 days |
EQUITY (Details 1)
EQUITY (Details 1) | 6 Months Ended |
Jun. 30, 2021$ / sharesshares | |
Number of options outstanding, beginning | shares | 108,075 |
Weighted average remaining contractual life (in years) | 6 years 9 months 18 days |
Weighted average exercise price outstanding | $ / shares | $ 12.44 |
Number of vested options | shares | 84,075 |
Weighted average exercise price exercisable | $ / shares | $ 10.25 |
Stock Option 1 | |
Number of options outstanding, beginning | shares | 102,500 |
Weighted average remaining contractual life (in years) | 7 years |
Weighted average exercise price outstanding | $ / shares | $ 8.21 |
Number of vested options | shares | 78,500 |
Weighted average exercise price exercisable | $ / shares | $ 4.57 |
Exercise price range | 2.80-23.00 |
Stock Option 2 | |
Number of options outstanding, beginning | shares | 5,575 |
Weighted average remaining contractual life (in years) | 2 years 3 months 18 days |
Weighted average exercise price outstanding | $ / shares | $ 90.20 |
Number of vested options | shares | 5,575 |
Weighted average exercise price exercisable | $ / shares | $ 90.20 |
Exercise price range | 23.10-144.34 |
EQUITY (Details 2)
EQUITY (Details 2) | 6 Months Ended |
Jun. 30, 2021$ / sharesshares | |
EQUITY | |
Warrants outstanding | shares | 35,870 |
Exercise price | $ / shares | $ 4.60 |
Issuance date | 11/13/18 |
Expiration date | 11/13/23 |
Vesting | Yes |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||
Feb. 28, 2021 | Jul. 31, 2018 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Feb. 01, 2021 | Dec. 31, 2020 | Sep. 23, 2019 | Aug. 16, 2019 | |
Common stock, issued | 1,105,690 | 1,105,690 | 1,060,818 | ||||||
Common stock, outstanding | 1,105,690 | 1,105,690 | 1,060,818 | ||||||
Intrinsic value of outstanding options | $ 3,161,000 | $ 3,161,000 | |||||||
Unamortized compensation expense | $ 104,000 | 104,000 | |||||||
Compensation expense | $ 12,000 | $ 24,000 | |||||||
Total number of shares purchased | 9,023 | 9,023 | |||||||
Warrants outstanding | 35,870 | 35,870 | |||||||
Warrant [Member] | |||||||||
Intrinsic value of outstanding options | $ 1,234,000 | $ 1,234,000 | |||||||
Warrants outstanding | 35,870 | 35,870 | 35,870 | ||||||
Share Repurchase Program [Member] | |||||||||
Total number of shares purchased | 9,023 | 9,023 | |||||||
Share Repurchase Program [Member] | Maximum [Member] | |||||||||
Stock Repurchase Program, Authorized Amount | $ 5,000,000 | $ 1,000,000 | $ 500,000 | ||||||
Employees [Member] | |||||||||
Treasury stock | 12,710 | ||||||||
Consideration value | $ 2,186,000 | ||||||||
Chief Executive Officer [Member] | |||||||||
Unamortized compensation expense | $ 508,000 | 508,000 | |||||||
Compensation expense | $ 3,000 | ||||||||
Restricted common stock, granted | 40,000 | 45,000 | |||||||
Fair value of restricted shares granted | $ 666,000 | $ 105,000 | |||||||
Restricted common stock, vesting | 45,000 | ||||||||
Restricted Stock Units (RSUs) 1 | |||||||||
Restricted common stock, granted | 10,000 | ||||||||
Weighted average price of common stock | $ 36 | ||||||||
Weighted average period of common stock vested | 30 days | ||||||||
Restricted Stock Units (RSUs) 2 | |||||||||
Restricted common stock, granted | 10,000 | ||||||||
Weighted average price of common stock | $ 42 | ||||||||
Weighted average period of common stock vested | 30 years | ||||||||
Restricted Stock Units (RSUs) 3 | |||||||||
Restricted common stock, granted | 10,000 | ||||||||
Weighted average price of common stock | $ 48 | ||||||||
Weighted average period of common stock vested | 30 years | ||||||||
Restricted Stock Units (RSUs) | |||||||||
Compensation expense | $ 95,000 | ||||||||
Restricted common stock, granted | 10,000 | ||||||||
Weighted average price of common stock | $ 30 | ||||||||
Weighted average period of common stock vested | 30 years |