FitLife Brands on upward course but misstated financial results could dim picture
FitLife Brands sells more than 130 different supplements under a number of brand names including NDS Nutrition, SirenLabs, Nutrology and others. The company sells its products in GNC franchise stores, other retail outlets and online and participates in the sports nutrition, weight loss and general wellness categories. Online sales now account for more than 20% of overall revenue.
Results from 2021, 2020 and 2019 are suspect
The company recently reported preliminary financial results for its fiscal year ending Dec. 31, 2021 that showed revenue ranging from $27.7 million to $27.9 million. The company could only give a range because at the same time notified the Securities and Exchange Commission that weaknesses have been found in its internal accounting procedures that will prevent it from filing an official year end financial report on time.
The company said it has begun an internal financial audit that will investigate “certain aspects of the Company's methods of revenue recognition for certain contractual arrangements of products when the performance obligation is satisfied upon delivery, and expensing of costs of inventory and related issues including the accounting treatment, financial reporting and internal controls related to such arrangements.”
The company reported $21. 7 million in revenue in 2020 and $19.5 million in revenue in 2019. FitLife claimed to have $9.9 million cash on hand at the end of 2021, compared to $6.3 million the year previously, though all of those figures may need to be restated once the accounting investigation is completed.
FitLife’s stormy financial history
FitLife hitched its star fully to the GNC wagon with a captive distribution deal it entered into in 2015. At the time the company’s annual revenues were hovering around $20 million, and the deal was seen as a way to boost profits through greater volume even as margins were squeezed.
But FitLife’s timing on the GNC move was unfortunate, and coincided with that company’s steep decline, which culminated in a bankruptcy sale to Chinese company Harbin.
But the GNC slide wasn’t the only issue. The company merged with Denver, CO-based sports nutrition brand iSatori in 2015 and by 2018 that move was avowed to have failed. Dayton Judd, a certified public accountant who is now listed as the board chairman, took over as interim CEO around the same time.
The company wrote off iSatori assets after sales declined by more than 40% in 2017 and set up a $1.1 million reserve fund to account for product returns. Despite the issues, iSatori products remain on the market. FitLife no longer breaks out sales figures by brand.