Muscle Pharm Corporation (MSLPQ)

[bellator_exec]

No common sense

If the WalMart/Sam's Club deal were such a wonderful coup (the ultimate positive outcome) then why did the MSLP Sales & Marketing Exec resign (or was likely fired according to Rhen) within days of securing such a wonderful retailer? That would make no sense. Hey Syd.....you just won the Super Bowl! You're not going to Disneyland because you're fired!

No, Syd likely resigned because it was a loser deal with the devil as I have stated several times on this board immediately upon the press release. Syd Rollock knows this and he has no acceptable answers for his other retailers objections over price and competition. Syd likely resigned because MSLP just made a fatal choice for both shareholders and earnings growth and he was now in an impossible situation to succeed.

There is a very clear pattern of failure for WalMart and Sam's competitors who cannot compete on price and location. They've made documentaries on how destructive WalMart is on competition and its vendors. MSLP had terrible margins BEFORE the WalMart/Sam's deal with $.67 cents of every dollar in sales eaten up by just the Cost of Goods. That is before a penny of SG&A which eats $.32+ cents. Remember those metrics are the old margins with GNC, Vitaminshoppe, bb.com, etc....I can only imagine the post WalMart/Sam's margins are going to look like in Q1 '15 and it's not likely going to be pretty.

GNC is retailing the 5lb Arnold Protein Powder for $84.99

WalMart and Sam's Club now sell the same product for $42.95

WalMart and Sam's Club are now RETAILING the same exact MSLP product for LESS than other retailers are paying WHOLESALE from MSLP.

The fact that the Arnold Line is subject to additional licensing fees payable to Marine MP makes the negative margins even more toxic.

MSLP management felt this deal with devil was the only remaining option as the SEC investigation has halted all NASDAQ uplisting potential and banishing MSLP to the OTC pink sheets for at least several years and the company needs "authentic" revenue with the SEC investigators combing over all the suspect financials, invoices and purchase orders with bodybuilding.com. It was uncovered that three MSLP executives and corporate "forgot" to report several million dollars worth of stock awards either on their W-2s or personal income taxes. What is going on with the piggy bank at corporate? Earnings will likely be VERY NEGATIVELY impacted in 2015.

LINGERING QUESTIONS exist on this topic:

Why is CEO Brad (using corporate funds and shareholder equity) taking on the financial responsibility to bail out the two DeLuca brothers and their $8,100,00 criminal fine for spiking supplements with synthetic anabolic steroids?

CEO Brad gave Jeremy DeLuca $2,947,342 in total compensation just weeks before Jeremy was due to report to prison for not paying restitution on his conviction. Of this total $225,000 was received as a salary, $225,000 was received as a bonus, $2,477,250 was awarded as stock and $20,092 came from other types of compensation.

CEO Brad continues to pay Ryan DeLuca $100,000 A MONTH for a couple years now for placement services on bodybuilding.com.

CEO Brad seems to be reimbursing the DeLuca brothers like he is being blackmailed. Is he? Was CEO Brad involved with something untoward with the DeLuca brothers that he feels the responsibility to not only pay the restitution but deliver "hush" money as well?

Or is CEO Brad just that generous to convicted criminals as it is close to his heart.

These are questions that must be asked by investors.

Sentencing details on the DeLuca brothers guilty finding here: http://www.justice.gov/usao/id/news/2012/aug/bodybuilding08012012.html