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I agree with The Rainmaker and Deep Space
The adults are coming into the room and they are here to take control from the kids, over time of course
"Debt free, $6 million in cash left over to grow....good moves by the company."
They have applied for uplisting to get off the OTC:BB
"but Brad can still wreck the ship"
Not once they up list and get a new BOD
The BOD will keep him in check. The adults are slowly taking over the helm
JMO
I agree...No more toxic financing
The dilution is behind us and Pyatts pro rata share of the company ownership will be reduced by half
That is a good sign
From the Forbes article The current secondary offering by MusclePharm took some courage for Mr. Pyatt to stomach. It will ultimately increase outstanding common shares from just less than three million to likely six million fully-diluted shares outstanding. They are effectively trying to sell fifty percent of the company for approximately $12 million. Mr. Pyatt’s pro rata share of the company ownership will be reduced by half. It is a sagacious manager who can realize that it is better to own a smaller piece of something potentially very large versus a bigger part of a capital constrained smaller entity. And big this company may become. With revenue growth consistently in the double-or triple-digit range and 2013 sales likely to exceed $100 million
future offering to raise more capital?????
"Mr. Pyatt has made a commitment to avoid any future dilutive derivative transactions. Finally after an earlier reverse split, the company is eligible for and has applied to be listed on the NASDAQ exchange. The company believes, and I think rightly, that the NASDAQ will give them more exposure to institutions both as potential buyers of MSLP and to pick up research coverage creating much more publicity for the company."
Dr. Frost
This should be good news to the Pyatt haters
JMO
The current secondary offering by MusclePharm took some courage for Mr. Pyatt to stomach. It will ultimately increase outstanding common shares from just less than three million to likely six million fully-diluted shares outstanding. They are effectively trying to sell fifty percent of the company for approximately $12 million. Mr. Pyatt’s pro rata share of the company ownership will be reduced by half. It is a sagacious manager who can realize that it is better to own a smaller piece of something potentially very large versus a bigger part of a capital constrained smaller entity. And big this company may become. With revenue growth consistently in the double-or triple-digit range and 2013 sales likely to exceed $100 million
From the Forbes article
Thanks for the link dakotaben
Not if they cost average down
I was down 61% I cost averaged down to 38% and with the recent price appreciation I am down 18%
"Mr. Pyatt’s pro rata share of the company ownership will be reduced by half. It is a sagacious manager who can realize that it is better to own a smaller piece of something potentially very large versus a bigger part of a capital constrained smaller entity."
With more closings expected over the next several weeks for MusclePharm’s offering, I took things a step further and had conversations with company founder Brad Pyatt. It turns out Mr. Pyatt has recognized the exigencies of his situation and is acting proactively and taking a number of positive steps.
The current secondary offering by MusclePharm took some courage for Mr. Pyatt to stomach. It will ultimately increase outstanding common shares from just less than three million to likely six million fully-diluted shares outstanding. They are effectively trying to sell fifty percent of the company for approximately $12 million. Mr. Pyatt’s pro rata share of the company ownership will be reduced by half. It is a sagacious manager who can realize that it is better to own a smaller piece of something potentially very large versus a bigger part of a capital constrained smaller entity. And big this company may become. With revenue growth consistently in the double-or triple-digit range and 2013 sales likely to exceed $100 million, MusclePharm could quickly become a dominant player in the supplement market. The company’s distribution system to achieve these figures is already in place. Currently, MusclePharm products are sold in 120 countries and 10,000 U.S. retail outlets with a goal of reaching 20,000 in the next 16 to 24 month. Large national chains like GNC, Dick’s Sporting Goods, and Vitamin Shoppe as well as over 100 online stores such as Amazon.com, Bodybuilding.com, GNC.com, Vitacost.com, SupplementWarehouse.com, and LuckyVitamin.com to name but a few, all carry the a full line of the MusclePharm’s product line.
The most important take-away to come from my conversation with Mr. Pyatt was his plan to rapidly turn MSLP to a profitable enterprise. With sales that should exceed $100 million in 2013, Muscle Pharm has achieved enough scale to renegotiate supply deals with their manufacturers. In 2012, overall gross margins averaged 17%. More favorable terms in 2013 could easily raise this figure by over 50% adding millions to the company’s bottom line. Mr. Pyatt also has the opportunity to reduce executive salaries and otherwise begin the process of lowering costs to improve margins. Cutting salaries is a breath of fresh air that to me indicates management is aligning interests with shareholders. MSCP recently leased a 152,000 square foot distribution center in Tennessee located in proximity to their manufacturers, giving the company complete control over product fulfillment. Previously, the company was dependent on third party for deliveries which often led to bottlenecks resulting in inefficiencies. Ability to ship quicker, translates into faster sales cycles or more inventory turns resulting in lower costs and more product out the door.
The proceeds from this equity offering will restore MSLP to financial health. $7 million will be used to pay off all debt and accounts payable. The balance sheet, henceforth, will be in pristine condition. Other uses of funds will be for international expansion and to increase the US sales force. Any residual will be for working capital purposes. Other shareholder friendly measures have been completed. During 2012 99% of all outstanding warrants have been converted leaving less than $20,000 of these derivatives on the balance sheet. Fully diluted share count for year end 2012 should be about 3 million. Mr. Pyatt has made a commitment to avoid any future dilutive derivative transactions. Finally after an earlier reverse split, the company is eligible for and has applied to be listed on the NASDAQ exchange. The company believes, and I think rightly, that an apporved NASDAQ listing will give them more exposure to institutions both as potential buyers of MusclePharm stock and for research coverage.
So what could a company in a fragmented industry with few publicly traded companies available for comparison be worth? There has been one recent transaction that provides valuable data for reasonable assumptions. In November 2012, Schiff Nutrition International signed an agreement to be acquired by British based consumer-products maker Reckitt Benckiser Group for $1.4 billion, outbidding German drug and chemical maker Bayer AG. Latest twelve months revenues for Schiff were $285 million which equates to a purchase price of almost five times sales. This metric is probably not appropriate for Muscle Pharm at this time given its current lack of profitability. Schiff had five year average gross margins of just under 41%. Even more relevant they registered average five year pre-tax margins of 10.1% and net profit margins of 6.4%. If, and it means if, MSLP registers $120 million in 2013 and achieves a 6.4% after-tax margin that would translate to a profit of nearly $7.7 million. Pre-acquisition, for the trailing six years, Schiff Nutrition traded at an average P/E of 16 times. At that multiple MusclePharm would achieve a market cap of $123 million equating to a share price of $20.50 at a reasonable 1x sales. In the past week, it should be noted the stock rallied $$2.30 or over 57% to close at $6.30 on news of the success of the share raise and Dr. Frost expressing his optimism with his pocketbook.
It was from the Forbes article on MusclePharm
1/29/2013 @ 8:28AM. headline = Forbes Billionaire Pharmaceutical Entrepreneur Makes Bet On Fast Growing ...
If you google the headline you will see that Forbes removed the article a couple of days after it came out
"Mr. Pyatt has made a commitment to avoid any future dilutive derivative transactions. Finally after an earlier reverse split, the company is eligible for and has applied to be listed on the NASDAQ exchange. The company believes, and I think rightly, that the NASDAQ will give them more exposure to institutions both as potential buyers of MSLP and to pick up research coverage creating much more publicity for the company."
Dr. Frost
From the Article...worth reposting one more time
...The proceeds from this equity offering will restore MSLP to financial health. $7 million will be used to pay off all debt and accounts payable. The balance sheet, henceforth, will be in pristine condition. Other uses of funds will be for international expansion and to increase the US sales force. Any residual will be for working capital purposes. Other shareholder friendly measures have been completed. During 2012 99% of all outstanding warrants have been converted leaving less than $20,000 of these derivatives on the balance sheet. Fully diluted share count for year end 2012 should be about 3 million. Mr. Pyatt has made a commitment to avoid any future dilutive derivative transactions. Finally after an earlier reverse split, the company is eligible for and has applied to be listed on the NASDAQ exchange. The company believes, and I think rightly, that the NASDAQ will give them more exposure to institutions both as potential buyers of MSLP and to pick up research coverage creating much more publicity for the company.
What happened the Forbes article on MusclePharm?
1/29/2013 @ 8:28AM. headline = Billionaire Pharmaceutical Entrepreneur Makes Bet On Fast Growing ...
The proceeds from this equity offering will restore MSLP to financial health. $7 million will be used to pay off all debt and accounts payable. The balance sheet, henceforth, will be in pristine condition. Other uses of funds will be for international expansion and to increase the US sales force. Any residual will be for working capital purposes. Other shareholder friendly measures have been completed. During 2012 99% of all outstanding warrants have been converted leaving less than $20,000 of these derivatives on the balance sheet. Fully diluted share count for year end 2012 should be about 3 million. Mr. Pyatt has made a commitment to avoid any future dilutive derivative transactions. Finally after an earlier reverse split, the company is eligible for and has applied to be listed on the NASDAQ exchange. The company believes, and I think rightly, that the NASDAQ will give them more exposure to institutions both as potential buyers of MSLP and to pick up research coverage creating much more publicity for the company.
Opko's Billionaire CEO Invests In MusclePharm
January 28, 2013
John H. Ford
Last October, I presented my analysis on why I thought Opko (OPK) provided a good investment opportunity. Since then, Opko has appreciated 48%.
One of the primary reasons I purchased shares in Opko was that Opko's CEO, Dr. Phillip Frost, was buying shares on a regular basis. For those of you who are not familiar with Dr. Frost, he made his mark when he sold drug manufacturer Ivax to Teva Pharmaceuticals (TEVA) for $7.6 billion in 2005. Since 2010, he has been the chairman of Teva, a $36 billion pharmaceutical company.
Here's another example that demonstrates Dr. Frost's investment skills: He bought the drug Rolapitant from Schering-Plough, developed it a little, and then licensed it to another company, receiving an upfront payment that covered what he paid for it in the first place. Starting this year, Opko should be receiving up to $100 million in milestone payments and royalties approaching 20%. This is for a drug that, at this point, has cost Opko absolutely nothing. Opko also ended up with shares in the licensing company.
Dr. Frost also took a large stake in Pershing Gold (PGLC.OB), which is up over 70% in the last few weeks. Another successful Frost investment is in a company I also invested in called Alliqua (ALQA.OB), which has risen 70% since Dec. 28, 2012. If you missed the run-up with Opko, you may want to take a look at one of Dr. Frost's newest investments, MusclePharm (MSLP.OB). In my opinion, MusclePharm could provide investors with at least a 3 times return.
High Level of Due Diligence
In November, I wrote an article stating why I thought that MusclePharm presented a phenomenal investment opportunity. I was pleased to learn that Dr. Frost also likes this company.
When Dr. Frost considered investing in MusclePharm, I believe he conducted a level of due diligence way beyond anything any of us could have accomplished. I'm sure he met with MusclePharm management and had his seasoned team go over this investment with a fine-tooth comb. As seems to be the case with all of his investments, he would not have taken a position unless the odds were stacked heavily in his favor.
Here's Why I Like MusclePharm
MusclePharm has about $75 million in annual sales, has been growing revenue at over 400% annually, and currently has a market cap of only $12 million. Right now, MusclePharm only has about 0.3% of the $25 billion sports nutrition market.
Contrast that with a company that I just shorted, MedBox (MDBX.PK), which has recently had a market cap of over $1 billion, with annual sales in the $5 million range. MusclePharm is extremely undervalued, and with Dr. Frost's endorsement, Wall Street heavyweights should begin participating.
What Is MusclePharm Worth?
The simplest way to calculate MusclePharm's value, is to look at recent buyouts of other sports nutrition companies. Over the past couple of years, there have been about a dozen buyouts for an average of 2.3 times sales. But this is a low figure compared to England-based Reckitt's recent offer to buy Schiff at about 4.5 times sales, or 28 times EBITDA. To keep things conservative in my MusclePharm analysis, I will stick with the 2.3 times sales figure.
If we take 2012's estimated $75 million revenue and multiply it by 2.3, we get a buyout figure of $172 million. I'm going to assume that after all financings are completed, the company will have about 6 million shares. This would give us a share price of $28. If we base it on my 2013 estimate of $110 million in revenue, we get a valuation of $253 million, or a share price of $42.
Do you see my point? If MusclePharm uses these financings to clean up the balance sheet and achieves profitability in 2013, the company should be fairly valued at $172 million, or $28 per share. But let's say the market still isn't willing to give MusclePharm a fair valuation and only values it at $14 a share. That's still more than three times today's share price.
Why Are MusclePharm Shares So Cheap?
MusclePharm shares have been driven to this ridiculously low level primarily because the company has done a poor job with its financings, and the company's balance sheet is abysmal, although it is rapidly improving. This current round of financings should help clean up the balance sheet and in my opinion, MusclePharm's two newest members of the management team, CFO Gary Davis and COO John Bluher (Prudential Securities, Janus, Neuberger Berman), will continue to make improvements.
The company has also had a problem with exaggerated executive pay packages, but management's salaries and bonuses have been reduced from 12% of revenue down to 6% of revenue. Things are moving in the right direction.
Fortunately for us, the market doesn't yet realize the company is fixing its problems, and the share price has been knocked down to this extremely low level. That provides opportunity. Keep in mind, that it's not that difficult for a company like MusclePharm to clean up its balance sheet and reduce executive pay. If the company can improve its balance sheet and be left with only 6 million shares outstanding, that puts investors in a very good position. MusclePharm presents an ideal situation for investors because the company's problems are solvable, and management appears to be addressing them effectively.
Near-Term Catalysts
If I'm correct in my assumption that MusclePharm has been profitable for part of Q4 2012 and will be profitable in Q1 2013, the company could pre-release information, indicating some level of positive information. Next, the company will announce Q4 2012 results in the next few weeks, and I believe we will receive more detailed information, which could move the shares higher. Then, when the company reports Q1 2013 numbers in May, the shares could surge as a result of strong EPS numbers.
But as low as the shares are priced, a catalyst may not even be necessary for the shares to move higher. Once institutional investors realize Dr. Frost has a new investment, interest in MusclePharm could rise substantially.
MusclePharm Financing Offers Little Discount to Investors
Dr. Frost must really like this company, because he is buying shares for $4, while they are currently trading at $4.07 (Friday's closing price). There is absolutely no warrant coverage. Most of the time, deals like this give investors significant discounts and warrant coverage. The fact that MusclePharm was able to get terms like this, is another demonstration that the shares are probably trading at the absolute bottom.
Risks for Shareholders
I see three areas that could derail MusclePharm:
Sales growth stalls.
The company is unable to raise capital.
Management starts giving itself excessive bonuses again.
I believe that sales growth will certainly slow down from 400% annually. That's definitely unsustainable. But at this point, it appears the company is very close to profitability. Even if revenue growth were to slow to 30%, much of that revenue could still be applied to the bottom line. If sales growth were to stall completely, I would be concerned, and would probably liquidate my position. But I don't expect sales growth to go from 400% to 0% instantly. If that were to happen, it would take a long time.
I believe Dr. Frost's investment in MusclePharm eliminated most of the risk in terms of raising new capital. Most of the heavy hitters on Wall Street are aware of Dr. Frost's track record, and, in my opinion, any near-term financings will be easily oversubscribed -- mostly because of Dr. Frost's participation in this round.
I am concerned about management reversing its pay cut policy and re-instituting excessive pay packages. This could reduce the bottom line, and to some degree, negatively affect the share price. What could save shareholders is the fact that management also holds large number of shares, and it could ultimately be more profitable for management to profit as shareholders, rather than receiving gigantic pay packages. However, once MusclePharm becomes profitable, I wouldn't be surprised to see management reinstate large pay packages. But at that point, the share price should be well above $4, and investors who got in at this price could exit at a profit.
Conclusion
I liked MusclePharm before Dr. Frost became a shareholder. But his participation in the recent financing only confirms my belief that MusclePharm could be a multibagger. I believe this could be one of my best trades in 2013.
"This was supposedly happening months ago"
so was the filing to go to the Nasdaq!
May 4, 2012
John Bluher, chief operating officer of MusclePharm. "We are not only focused on growing our business but also moving as effectively as possible to qualify for listing on a national stock exchange. The recently announced retirement of all of our convertible notes, combined with the addition of several new customers and the Board's recent actions have rapidly moved the Company toward achieving our goals."
Mark E. Groussma joined the board in July as a consultant.
GLTY
"I see a 10 for one reverse split coming!"
I think you mean a 100 - 1 R/S, right?
"Added new board memeber and part of his compensation is 300K of MSLP stock"
The new board memeber is from a "speech recognition application software company."
What does he know about nutritional supplements for athletes?
The Company also confirmed the suspension of its stock repurchase plan announced in April 2012. Under the plan the Company bought back a total of 26,431,575 shares of common stock.
MusclePharm Corporation v. Fuse Science, Inc ., United States District Court for the Southern District of Florida.
The case was dismissed
"The 10Q was fine"
It was better than the last 10Q
Less debt and less liability increase in sales
The negative is the S/O count
Baby steps
The increase in sales was primarily attributable to increased brand awareness
Sales
Sales increased approximately $25,558,000 or 397%, to approximately $31,990,000 for the six months ended June 30, 2012, as compared to approximately $6,432,000 for the six months ended June 30, 2011. The increase in sales was primarily attributable to increased brand awareness, and the Company’s continued efforts to expand sales by adding more customers. Since inception, the Company has focused on an aggressive marketing plan to penetrate the market. As such, new promotional efforts have been made to increase sales by adding new customers and expanding our product line. The Company has continued to add new products to meet our customer’s needs. The inclusion of new Gel squeeze tubes in various flavors has increased sales and more customers are now adding the Muscle Gel to their shelf line. The Company has added new sales staff familiar with international sales, and this effort is now beginning to show results through increased sales in the international markets. Overall, as a direct result of the aggressive marketing plan, our products are currently being offered in more retail stores, both domestic and international, and our products are receiving better shelf placement, all of these efforts have increased sales.
Cost of Sales
The cost of sales for the six months ended June 30, 2012, was approximately $25,838,000 compared to approximately $4,914,000 for the same period last year 2011. Cost of sales as a percent of revenue increased from 76% for the six months ended June 30, 2011 to 81% of revenue for the six months ended June 30, 2012. This increase in cost of sales was the result of adding Canadian shipping, and product cost for the second quarter of 2012 that had not previously existed, and an overall increase in shipping costs. There was also a slight increase in product damages in 2012 over the same period in 2011.
Gross Profit
Gross profit for the six months ended June 30, 2012, is approximately $6,152,000 and increased approximately $4,635,000 over the six months ended June 30, 2011. Meanwhile the gross profit percentage decreased to approximately 19% during the six months ended June 30, 2012 from 24% for the same period ended June 30, 2011, mainly the result of providing deeper discounts for customer’s purchases in the second quarter of 2012.
June 30, 2012 Total Current Liabilities 15,738,941 Down from
December 31, 2011 18,017,340
---------------------------------------
June 30, 2012 Total Assets 4,725,828
down from December 31, 2011 5,046,128
A little better
--------------------------------------
Long term Debt 114,682 down from 307,240
A little better
-------------------------------------
Total Stockholders' Deficit June 30, 2012 (11,013,113)
Total Stockholders' Deficit December 31, 2011 (12,971,212 )
A little better
--------------------------------------
Weighted average number of common shares outstanding during the period – basic and diluted 1,301,222,184
2011 174,365,323
Time for a R/S
JMO
Too many people here trade on emotion
JMO
GLTY
Good luck to you but I would not have seold until after earnings report
"Are you saying down from 55 to 4?"
Citigroup was trading at $55 and crashed down to below $4 after that they did a R/S
I went long MSLP at 0.180 in April
I am holding throught earnings
"When was the last time that right before a rs happened was a good time to buy?"
Priceline.com
E*Trade
Move Inc.
Laboratory Corporation of America
Coeur d'Alene Mines
and AIG!
To name a few
"one for six is a lot different then a 100 to one."
Not when you look at it as a percentage wise
Citigroup did a 1-for-10 reverse stock at at $4. That was down from $55
You can't keep spending the same amount you sell.
Groupon has not yet made a $1 of profit
The stock is at $7.40
GLTY
"Established companies r/s when the pps is too high and want to bring it down to attract new investors and make more money for everyone."
You have it backwards. That's a Foward split.
Citigroup was at $5 and E*trade was around $1.40
In most cases penny stocks drop after a R/S but if the plan is to get listed on "national stock exchange" the stock could move up
It's a gamble dude
BK??
Dont be silly
Added Bluher, "The board additions represent an important step in our corporate restructuring. The expansion is part of our positioning to qualify for and eventually list the company's securities on a national stock exchange."
Citigroup had 29 billion outstanding shares
FYI...priceline.com did a 1-for-6 reverse split in 2003.
The stock is up 250% since then
Move, Inc.1-for-4 reverse stock split at $1.54
Today it hit $9.45
E*Trade and Citigroup both did a reverse stock split 2 years ago