Q1 is gonna be a whole lot better than Q4.

Honestly, I think it is the upcoming proxy vote that is holding down the stock.

Some 10% cap on dilution in articles of corporation regarding next year employee equity compensation and throwing out of second part of current proposal up for vote and I think the stock will double.

Everybody wants the executives to have incentives to perform but within some predetermined limits.

The uncertainty regarding future dilution from equity employee compensation packages are hurting us so badly. Stock purchase plans are for big companies where the dilution for that purpose is minimal.
It is not a very good use of company stock imo.

He sold 100,000 shares to finance it....so, you pays your money and you takes your choice

Walgreens would be perfect outlet for Combat Crunch....Walgreens prices are relatively high on protein bars compared to other mass retailers...Musclepharm should price it's protein bar as high as Quest.

Musclepharm is still a bargain at $4.25 considering it sells for close to $200 million worth of products and considering it got limited debt.

I would love to hear some more about the biozone assets and when the protein RTD manufacturing takes off.

Protein RTD could become big for Musclepharm leveraging on the Combat product brand.

The company needs to change.....first of all the board and the top management need to understand that excessive dilution for stock grants to employees and athletes is what is killing the stock price.

It accomplishes nothing as
1) nobody wants to invest in a stock that is worth 20% less by year end....and worth 50% less after 2 years
2) the company can never post a profit when stock grants are accounted for.
3) the company got little flexibility to raise capital at reasonable costs.
4) the company's reputation is very bad because of 1), 2) and 3)

Had the dilution been half of what it is, the employees stock holdings would be worth much more, as the stock price would be $20.

I would rather own 500 stocks worth $20, than 1000 stocks worth $4.

I would rather see Musclepharm taking a sufficient loan or raising capital for financing than executives having to pledge their personal stock holdings. It is all a result of the excessive dilution policy of the company, where more and more stocks are issued for nonsensical purposes that don't create any value whatsoever.

Somebody probably had seen enough of that, and after reading the Bloomberg article, he/she just pulled the trigger.

Don't worry....companies have 2 days to file SEC Form 4...so, Musclepharm didn't do anything wrong.

The reason why it was done now was probably what I mentioned earlier:to reduce risk and to discipline Brad.

Brad did something that many executives do in many other companies, but that looks bad when there is a margin call.

Was this all against the interests of shareholders? Not entirely...it is somewhat argued by some that pledging of executives' stock is aligned with shareholders' interests.

I mean, it saves us some dilution and it gives the executive an incentive to work hard for higher stock price....as market cap appreciation doesn't do much to make 100,000 shares worth more.

Is the proxy's democratic employee stock purchase plan consistent with that? You tell me...I don't see that was gonna give Brad, Wynnefield or any of us any higher stock price in the short term.
It might be a good plan for the longer term, who knows, but for the stocks he pledged it seemed like a suicide indeed to start being the democratic boss, that wants to sell shares at a discount to employees that for the most part aren't interested in such a plan....but that typically look for 401k contribution matching, bonus, job security etc.

Brad needs a reality check....his interest is not to be the chairman of the board when the SEC and Wynnefield Capital recommends him to step down.

And, you can be as democratic as much you want to....but selling stocks at a discount to lower ranking employees, when you need a higher stock price....not so smart....unless you informed the market of stellar results Q1 results in advance.

The article didn't help, but most likely it was something that was planned to happen in case Musclepharm didn't seek financing before the Q1 earnings announcement.

I would have done the exact same thing....to reduce risk and to discipline Brad and Musclepharm's board.

I think it is very clear that the SEC has not been able to turn Musclepharm into some exemplary company.

This was a human decision.

ANB bank could have done the same thing with 800,000 plus shares....

Brad has not raised any capital, so my bet is that earnings are better than what we expect them to be....

Brad has never been more unpopular than now though....even if the pledging of stock sort of was aligned with shareholder interests. Raising the stock price as fast as possible must have been on top of his mind since the drop mid March.

me neither. This all comes down to the drop in the stock price and brad's lack of experience.

When you make these arrangements, it will always be like 30% to 50% loan to equity....and, it was 100,000 shares out of close to 1.1 million shares held by Brad....so not a biggie.

The lender felt that the risks of owning this past earnings call was too risky and he pulled the trigger. The expansive proxy and the bad press probably didn't help.

This is an opportunity for a change, because Wynnefield Capital, Frost and others will raise hell now. These are the kind of things that only amateurs do.

Musclepharm has had ample opportunity to live up to all the recommendations of the SEC with immediate effect and come up with proposals for 2015 compensation that will be accepted by 90% of shareholders.

When you are down, you need some effort to get up....other than some teenager's contrarian what-did-I-tell-ya-mentality. Yeah, you might start shipping a lot of products, and your stock might appreciate regardless of what we think is right, but I'm quite sure it helps being a little nicer to people.

brad did the right thing, but it doesn't mean he couldn't lose his job on this one.

It comes down to what choices he makes in the light of what happened.

A change is needed in corporate governance and in compensation, and that starts with the board working more closely with institutional investors like Wynnefield Capital and with proxy firms, and forget all about cheap Californian PR tricks.

The board and the management needs to be trusted by investors, to take this company to the next level.

A margin call happened to chairman of the board and founder of Green Mountain Coffee Roasters in 2012 and the stock is now 4 times higher than back then.

The chairman of the board of Green Mountain Coffee Roasters did lose his job for this mess though, even if the company was a multi billion dollar company at that time, with much less to prove the World than Musclepharm. He broke the internal insider trading rules, but he didn't break any securities laws as he never tried to stop the involuntary sale.

KISS: Keep It Simple Stupid!

This is really what Musclepharm needs. I'm not gonna tell anybody whether they should vote or what to vote when it comes to Musclepharm's proxy....but it strikes me that Musclepharm needs to use that many pages to explain it's compensation practices and board proposals.

I misunderstood everything to begin with as it was so freakin complicated. I mean, why is it that a relatively small company like Musclepharm needs so much complexity?

The same with pledging of executives' stocks....I mean, that is a deal that ultimately will go wrong. Musclepharm's stock is not marginable whatsoever....The company is under SEC investigation and most of it's shareholders are actively trading small investors and non trading insiders that have been granted stocks....What exactly good should come out of using these stock are security for a loan?

When Musclepharm needs money, it needs to go to the business or investment bank to get a loan, where it tries to maintain a good credit history by paying on time and not overstretching.....or alternatively Musclepharm raises capital by issuing stocks to investors.

There is nothing complex about this....pledging own stocks for obtaining loans is plain stupid imo.

Also, spending so much on compensation and endorsements, that it is almost impossible ever to post any profit no matter how much you sell for....is making things more complex than necessary.

It comes down to running a lean mean money making machine....not any of this nonsense.

The company has been out of touch with reality for a long time....hopefully this was the needed wakeup call to change the culture.

Today with all the attention on executive compensation from the media, institutional investors, Institutional Shareholder Services proxy firm, the SEC, the Department of Justice and the IRS....it is incredible that Musclepharm never considered closer dialogue with institutional investors.

I have a hard time figuring out what goes through the mind of these guys, as it is so far from my way of thinking.

I believe the customer comes first, and for a public company, the customer is the shareholder.

That's what I was trying to say.

Cap the employee equity dilution in the articles of corporation. 10% is a lot for a maturing company like Musclepharm, but a whole lot better than 15-20%, y over y.

Musclepharm's board needs to fix the issues of governance and compensation. It's ridiculous having a company that doesn't listen to institutional investors with aspirations to uplist to Nasdaq.

This whole margin call thing is just the culmination of everything that is wrong with Musclepharm's culture of excessive risk taking.

Dilution is not bad when it is primarily for value creating purposes like raising capital for growth and stability...actually, any attempts to minimise such dilution through pledging of insiders' stocks is a very silly game imo.

A 10% cap on employee equity dilution effective 2016 in the articles of corporation and an immediate separation of the board and the management would be clever moves by the board, right at this moment.

Furthermore, limitations to pledging of executives stocks as well as encouraging executives to diversity part of their wealth away from Musclepharm stocks.

I don't want executives to get hurt, neither do I want non insider shareholders to get hurt. A culture of risk taking is great, as long as it is not excessive risk taking.

Also, I would encourage the board to have a deeper dialogue with institutional investors than just advisory votes in proxies. They voted against the plan last year, so perhaps it was time to listen more and come up with solutions that will be approved with 90% of non insider votes.

Musclepharm is getting the reputation by customers as well as investors as a company unwilling to listen to anybody...and a company with Californian PR guys telling you how to spin every situation.
A culture of honesty and fairness is what works.

Musclepharm needs a culture change, and tomorrow should be the day.

That's correct. Brad's case will even look better in the eyes of the SEC if the stock appreciates after earnings announcement.

To Brad, insider trading accusations are far more serious than losing these stocks or losing his job. You don't want to mess around with the SEC on that one.

Brad did the right thing.

Had he tried to prevent the involuntary sale it would have been insider trading.

I have studied similar cases and as I see it he will not go to jail for this, even if it technically was an insider sale.

All he probably could say was: "You are making a mistake!"

This whole thing comes down to one thing, and that is the decline in the stock price from October 15 till now.

Musclepharm has presumably improved financially over the last couple of months, but that is private information that the lender got no clue about. So, the lender did the right thing as well.

Most likely most of what was owed has been paid now (with 30 to 50% margin requirement)....unless this was disciplinary from ANB bank implicitly disapproving Brad in charge or the proxy sent out. Elements of the plan might have been considered being too expansive and dilutive, and thus prolonging shareholder resentment towards the stock, as well as draining cash liquidity too much in case the executives resign.

Banks are only interested in one thing and that is risk management. Musclepharm's board and it's executives on the other hand like to push things to the limit. Employee stock repurchase might be a good idea, but it might cost too much to administer, be too dilutive for further stock appreciation and too dilutive for executive stock holdings as well.

I'm not saying anything is good or bad....just that the board and the executives owe the World to have a better dialogue with institutional investors and creditors and come up with solutions that serve everybody's interests.

The total dilution will be 3.5 million shares.

It is 2 million shares for the incentives plan for 2015 and 1.5 mill for the stock purchase plan for 2015. The stock purchase plan is considered enough to fund stock purchases for 3 years, so further dilution until 2018 should not be expected for that purpose.

MUSCLEPHARM'S BOARD IS NOT REPRESENTING THE INTERESTS OF THE SHAREHOLDERS!

Hopefully I just made that trending.

Musclepharm misrepresents revenue guidance by pumping up high expectations when it got sufficient partial information and remains silent when it got perfect information.

Close to the end of Q1, Brad and Co. remained completely silent with close to complete knowledge of quarter's sales. This is what is referred to as "misrepresentation by silence" in common law.

Mid Q4, Brad and Co. had no problems giving guidance.

Institutional investors will never touch the Musclepharm stock with the current top management and the current board of directors.

Musclepharm got Wynnefield Capital in and Musclepharm screwed them....Brad fooled investors to believe in 2014 profitability, Nasdaq uplisting, $50 million Q4 revenue, closure of SEC investigation and independent board....and none of it happened.

As a matter of fact, Musclepharm just diluted the stock with 5 million shares at all time lows, with 1.5 million shares protecting executives' control, votes and ownership (special rights that as a rule are reserved for existing shareholders).

Revenues dropped sharply in second half of last year, so even with $75 million in Q1 revenue, Brad and the Board have lost all credibility imo.

Fact is that the stock has gone from $14 to $4, and that the top management and the board have no chance of ever earning the trust and respect of professional investors.

MSLP will remain to be a lottery ticket for daytraders to pump and dump, but never provide any guarantee of return for long term investors.

With such a board of directors, the stock is completely worthless.

Executives are not entitled to receive bonus stock grants when diluting a company's stock. That would be like asking shareholders to waive their basic rights and hand over their shares/titles to the executives.

Musclepharm's board is not living up to it's fiduciary duties to shareholders!

How on Earth can you dilute with 5 million shares for non value creating purposes when stock price is at all time lows at $4 and the company has liquidity issues?

I mean, it's not like we don't notice that most popular flavors have been out of stock for more than a month at Bodybuilding.com during the most important Spring season for the industry.

Furthermore, issuing 1.5 million shares for company's treasury to secure stock grants againt dilution. WTF??? If dilution comes, ain't it suppose to be value creating dilution from endorsements or capital raises?

Hey, if diluting the stock is so bad, then why are you doing it? because of mismanagement, because you signed up an athlete with no value for company?

IF the company wanted to adjust for dilution, it should pay out a dividend in stocks to ALL SHAREHOLDERS every time NON VALUE CREATING dilution was done...

Executives are not entitled to a certain percentage of a company....They are agents to the principal and the only reason they are paid in stocks is to motivate them to perform.

If they started receiving extra stocks every time they raised capital or signed an endorser.....then why should they act responsibly?

Only risk taking venture capital and pipe deal investors can demand a certain percentage ownership....but what we are seeing here is basically theft of a business by agents, and not in any ways aligned with the interests of the principals = shareholders.

These kind of terms for executives tell me that we will end up in court one day.

"Hey let's go raise capital so we can buy this contract manufacturer....The money raised won't create any value to the shares, so we better secure that we keep our percentage of ownership by receiving more stocks"

FRAUD FRAUD FRAUD FRAUD!!!!

I'm disgusted by the addition of 1.5 million shares to amend eventual dilution of granted shares.

Do we really need to fully insure employee stock grants against capital raise dilution up to 37.5%????

Are you kidding me? This is a hedge financed by shareholders.

AS I see it, these guys have no other plan than to transfer ownership of the company from ordinary shareholders to private investors and to insiders....it is what it is.

These guys are making a joke out of public companies....The executives' ownership shares need to be protected against trouble, by granting more stocks than for prior years and by insuring stock grants against capital raises.

Where is my insurance, or assurance that you are not gonna fck me?

There is an incentive structure for executives NOT TO ALIGN their interests with shareholders' interests....but to build empires paid for by ordinary shareholders.

Low is objective, the executives have done nothing to earn my trust and there are thousands of other companies out there to invest in....

egos or not, I dumped 7,500 shares to reduce my risk.

This was purely the double down stocks, I bought these cheaper than what I sold them for.

Of course, it will take a higher stock price than $6.5 for me to break even, but I can live with that.

Risk management is a deed, and sometimes you just have to sell at low levels.

Normally, I'm quite convinced about my investments not to be forced to do that.....but in this case I'm convinced that reducing my risks is wise, no matter what this stock is gonna be worth next year...be it $15.

Stock price would probably be driven more by speculation than fundamentals to get there again.

It seems like the bank returned the stocks in escrow, according to number of outstanding shares reported.

Perhaps Musclepharm did get that building in California?

No matter what, what we need now to make some money here is a buyer of the company, a vote against dilutive equity plans or a lawsuit questioning the alignment of executives' interests with those of shareholders.

It's a positive that Musclepharm believes it can grow sales y-o-y....

Surely, the weakening of the US dollar most recently will help it.

Okay, so it grows market cap to $100 million again....but now $100 million market cap is $6.5 and not $8.5.

Anyways, I'll be happy with anything that makes me break even to be honest, so I would definitely take the $6.5.

The company is a bargain for a buyer of the entire company, not for shareholders.

We cannot predict whether an offer will be presented this Monday or not....but, I'm quite sure if it was, the SEC investigation would not be the issue. Brad has already made a deal, and the other employees got no other choice than to follow.

$8-11 and the company is yours. There is no need paying more for it than necessary, we will sign any price in this range for sure.

Eric Serrano and his team of people, dispersed all over America would stay. Cory Gregory would stay. Brad Pyatt would probably not stay as he would demand like $7 million yearly pay.

A company has to have a chance to make money and be a good investment for investors, otherwise it is a waste of time.

100% of non insider shareholders would vote for selling this company at any stock price in the range of $8 to $11....

So, a buyer should aggressively go after the company before too many shares are distributed to insiders.

The company has a broader scope than Dymatize, and stand alone or combined with Capstone Nutrition should create a lot of value to a buyer.

The SEC investigation is over in principle, so any attempt from insiders' side holding up the process of an acquisition would probably not be looked gently upon by the SEC.

Turokman, you are gonna lose money on this and I am gonna lose money on this....me more than you, because I invested more.

This stock will never reach the $6.5 average price I invested into it....it is not gonna happen.

The management is not worried about stock price or shareholders, they outright want the ownership of the entire company.

If anybody can present such a case in court, proving that the interests of executives are not aligned with shareholders whatsoever they are more than welcome.

In economics we have the concept of "fraudulent experts"....not referring to me, but referring to those car salesmen that try to sell a lemon.

Phillip Frost and Arnold Schwarzenegger are the bait here, and the IR is about giving false hope, promising more than what they can keep.

It is just disgusting, and I can only blame myself for looking up Phillip Frost's name after having participated in the groundbreaking of the Patricia and Phillip Frost Miami Museum of Science a few years back. The guy was sitting right across from me with his wife.

Big mistake looking up his name, big mistake.

These kind of public companies don't do anything else than making insiders rich and make close to 99% of the ordinary shareholders poor.

That is not what America is all about....that is not kosher Mr. Frost....hopefully, you will tell these guys off once and for all.

They keep on letting it wait with NASDAQ uplisting they promised in 2014.....and they keep on letting it wait with separating powers in the board room.

I mean, a marketing machine of giving promises of profitability, NASDAQ uplisting, no dilution, using celebrity endorsers like Frost and Schwarzenegger has been used....and we have been screwed relying on any of this.

If my view is regarded as incorrect by anybody here, please object as you please...I hate writing negative things about anybody, but what the hell am I suppose to say to this and remain honest?

IMO Musclepharm got the most opportunistic executives on the planet.

Frost and Schwarzenegger were used a bait to get us in....with no chance whatsoever of a return. Shame on them for participating in this and using their name on this!

If the executives are gonna dilute the stock at 20% each year....then what is left for shareholders with no profitability in sight and management that is unseasoned? None of these executives have ever been in charge of any important companies, and they have never managed to post positive earnings as they have never lived to up to their fiduciary duties imo (legal stuff).

Not only that, they trick us to stay in the stock when the price is high, by not communicating to us with shareholder letter, not facing us after conference call.

If Wynnefield Capital, that most definitely won't make any return whatsoever on it's investment, finds something questionable about this company and sues them successfully....thank you very much.

Wynnefield Capital bought with average cost of $8.90....and he saw Brad buying at the $11 t0 $13.5 level, read that Brad was against dilutive financing in past shareholder letters....so how should he expect the management was gonna dilute this stock down to below what he bought for?

It is like if you invest in rental building, that never returns you any money, and somebody else takes 20% each year, then tell me how you are gonna make money?

Wynnefield Capital can only get his money back by suing the company and hopefully winning the case.

If it can be established that the executives have failed on fiduciary duties there is a theoretically chance.

I believe pawning the entire business while spending excessively and diluting the company excessively at the same time are good examples of failure of living up to fiduciary duties.

In particular for a business where a certain level of liquidity is key and the credit history is not the greatest.

The entire plan will be like 2.5 million shares for this year....as the employee stock purchase plan is for 3 years.

So, it's less than 20% dilution for the year....

Somebody like Arnold Schwarzenegger and Phillip Frost may demand changes to the plan, but our votes will most likely not change much.

The employee stock purchase plan will provide the company's treasury with some money even if stock will be purchased at a discount to the market price.

The good thing about employee stock purchase plan is that it will concern lower employees the most as there is a 10,000 stock purchase limit per employee per open period.

The tensions between lower employees and higher employees are very likely to worsen though, given the incentive plan proposed....because, the pressure will be on the lower employees to deliver while the higher employees won't lead by example by spending wisely and being profitable enough to make everybody feel more at ease.

The executives clearly give me the impression that they are out to transfer most ownership from ordinary shareholders to insiders, at least cost possible, and fastest possible.

They don't seek any dialogue whatsoever with shareholders, because when the largest plan was due they avoided all dialogue and remained entirely silent.

Like somebody said after they didn't answer questions after conference call: "The company executives' act like tyrants"

If you claim you are doing so fantastically and that you align your interests with shareholders, tell me what you have done for me!?

The worst thing about this is that they claim they have been open about this to shareholders and that they are doing everything to align compensation with the interests of shareholders.

Yeah, the chairman of the board and the ceo that every year sent out shareholder letters and answered questions from shareholders after quarterly conference calls just didn't do that this time.....

So, what happened to the ongoing dialogue if we may ask?

Shareholder alignment means higher stock price, earnings and market cap growth....and it means that the board and executives don't take unnecessary risks but provide security for money invested.

Issuing more stocks than ever after having failed to make money, and failed to make the stock price rise....basing compensation on all time low stock price levels....tell me, what has that got to do with alignment of shareholder interests?

There is not a single sentence in that compensation plan that is aligning compensation with shareholders' interests.

I'm disappointed that Arnold Schwarzenegger is part of this, just very disappointed. I have always respected him dearly.

Why should Wynnefield Capital agree to any of this?

He is probably gonna raise hell at AGM because the executives didn't talk after Q4 conference call, driving the stock price down 50% and now they are demanding a raise?

First you drive down the stock, and then you demand more stocks because that hurt the stock.....it seems like common sense, that is not gonna be received well anywhere.

Last year there were lots of votes against the compensation plan, so you would have expected the company had gotten the message and not be demanding more stocks this year.

positives:

Europa Sport, Musclepharm and GNC must have been buying lots of products from Musclepharm.....and Musclepharm must independently have sold lots of products internationally.....Perhaps some major vendor in Brazil or Germany made a huge order or something.

Question:
Is any of this sustainable.....and what happened in Q3 and Q4....Did the company experience theft from warehouse, or what exactly happened that made sales decline?

I mean, employees that have all their compensation tied in stocks, that don't deliver encouraging news whatsoever for quite a while, and bring down the stock price to $4 and $50 market cap.....they need to answer some questions to shareholders before they ask for more stocks than last year.

I bet that the plan is gonna be voted down, the shareholders are few and they are not gonna agree to this.

This is an increase in tangible assets, and thus an increase in equity for Musclepharm.

Yesterday, $1.54 million was forwarded in stocks (350,000 shares x $4.4) for a building worth 4 times more....I presume that was what it paid towards final settlement according to the numbers disclosed.

We are informed that 1,200,000 shares were paid to Cococrystal and no cash....so, the $2.5 million paid for the 250,000 shares in escrow last year should counts for 250,000 shares. Meaning the 350,000 shares were forwarded back to Cocrystal...and Cocrystal gave up on objecting the deal.

Much hassle but really not too bad a deal for Musclepharm. The real estate and the manufacturing assets cost it 950,000 shares and
$2.5 million.

No reason to bitch over Musclepharm repurchasing stocks last year with the credit line from bank, because it got a fully equipped manufacturing facility in the end, that more than secured the $2.5 million paid.

If indeed Musclepharm gets the title to the manufacturing facility in California, it is positive news regardless of how badly this acquisition was handled.

Has anybody more specifics about the transaction and the final settlement with Cocrystal? Apparently, negotiations have been ongoing until now, and the escrow activity was not the end of it.


If Musclepharm paid $10 for the 250,000 shares last year....that would mean that 350,000 shares were given back to Cocrystal....hell, $1.5 million for securing manufacturing facility.....this is a great deal!

I guess Phillip Frost forced Cocrystal to let Musclepharm have the real estate for 600,000 shares, and let Musclepharm suffer $2.5 million loss on the stock repurchase last year.

It was a mess of a deal, but presumably the real estate is worth some millions of dollars as Cocrystal agreed to lose at least $1 million, rather than receiving at least $6 million for real estate when stock price was above $10.

It had 600,000 shares in escrow, and it agreed to give back 350,000 shares to Musclepharm and sell 250,000 shares to Musclepharm for $10.

Penalty for breach of contract or not, this real estate gotta be worth at least $5 million.

I hate to see another bargain gain on this transaction, but I guess Brad will entertain us with another one.