Splitting a stock, whether forward or reverse, for a blue chip company generally garners widespread applause. However, cheers are generally not heard when micro-cap companies perform a reverse split because too many upstarts have used the restructuring tactic as a cash cow, a fact that has jaded the reverse split concept to most speculative investors. If a company is a solid growth story, though, a reverse split can indeed be a good thing, cleaning up outstanding shares and placing a higher value to them, while putting the company in a better position for favorable financing and a potential move to a senior exchange one day. For instance, a reverse split last September had a positive impact on
Bond Laboratories, Inc.(formerly "BNLB"), a manufacturer of over 50 different nutritional supplements sold primarily through GNC (NYSE:GNC) franchise stores under the brands NDS Nutritional Products, PMD, SirenLabs and CoreActive. In connection with the one-for-10 split, Bond changed its name and ticker to FitLife Brands, Inc. (OTCQB:FTLF) and eliminated some preferred stock to lower its total borrowing costs by about $200,000per year. As a result of the split, the new FitLife had about 8.6 million shares outstanding on a fully diluted basis. When the split was implemented, the stock price held around the $1.80mark, with one quick dip to a low of $1.20(which pulled back up to $1.73the same day). Since then, the stock has continued to rise, hitting a high of $3.28in late February, a sign of confidence in the company by investors. There seems to be reason for confidence, underscored by improving financial performance. When we first wrote about the company back in April 2010, then Bond Labsreported 2009 revenue of $8.7 million, which more than tripled 2008 sales. We circled back around to Bond last February, noting that sales in the third quarter of 2012 had improved to $4.6 million, up 43% from the year prior quarter. The company was in the black, with net income of $500,000for the quarter. On Wednesday, FitLife released its financial results for the first quarter ended March 31, 2014, once again showing year-over-year growth.The company posted record quarterly revenue of $6.3 million, up 4.5 percent from $6.1 millionin Q1 2013. Operating income rose by 53.6 percent to $900,000as operating margin climbed about 450 basis points to 14.6%. Net income for the quarter was also an all-time high of $1.0 million, or 12 centsper share, compared to $600,000, or seven centsper share, in the same quarter last year. "We saw strong domestic demand particularly in the last month of the quarter, a portion of which was attributable to the inventory build-up by some of our customers in advance of our planned transition to GNC's centralized distribution platform. The move to this distribution platform is consistent with GNC's established vendor policies, reflecting our strong growth trend established over the last several years," said John Wilson, FitLife's Chief Executive Officer, in a statement this morning. Considering FitLife reported $1.3 millionin adjusted net income for the full 2013, 2014 looks to be off to a good start. The fact that FTLF trades at a lower price/earnings ratio of 10.7 than larger peers, such as Herbalife's (NYSE: HLF) 12.2 ratio, also leaves room for upside. FitLife's P/E ratio will actually be much lower on a trailing-12-month basis with the latest earnings as well. Proper due diligence is, as always, encouraged.