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MusclePharm Second Quarter Gross Sales Increased 51% to a Record $28.5 Million

MusclePharm Second Quarter Gross Sales Increased 51% to a Record $28.5 Million 
Wholesale Channel Helps Drive 14% Sequential Growth in Net Sales 
DENVER, CO -- (Marketwired) -- 08/14/13 --  MusclePharm Corporation
(OTCQB: MSLP), a fast growing company that develops and markets
sports nutritional supplements which address active lifestyles,
announced today its financial results for the second quarter ended
June 30, 2013 ("Q2 2013"). 
For Q2 2013, the Company reported record gross sales prior to
accounting for discounts and sales allowances of $28,515,483, an
increase of 51% as compared to $18,869,103 for the second quarter of
2012 ("Q2 2012"). Q2 2013gross sales grew sequentially by 14% as
compared to Q1 2013. For Q2 2013, the Company reported record net
sales of $25,480,059, an increase of 65% as compared to $15,429,340
for Q2 2012. Discounts and sales allowances in Q2 2013 decreased to
approximately $3 million, or 11% of gross sales as compared to
approximately $3.4 million, or 18% of gross sales in Q2 2012. The
increase in net sales was attributable to the Company's continuous
marketing and promotional activities of its MusclePharm brand, new
product introductions, expanding distribution channels, an increase
in sales and marketing personnel, and a rise in international sales,
which increased in Q2 2013 approximately $3.5 million or 56% to $9.8
million, as compared to $6.3 million in Q2 2012.  
For Q2 2013, prior to accounting for a non-cash, stock-based
compensation consulting expense of $3,037,636 associated with two
contracts that were satisfied in full in July 2013 ("consulting
expense"), the Company reported positive adjusted operating income of
$296,705*. After taking effect for the consulting expense, the
Company recorded a loss from operations of ($2,740,931) as compared
to a loss from operations of ($1,664,341) in Q2 2012.  
Commenting on the results, Brad Pyatt, MusclePharm's Founder & CEO,
stated, "We continue to record robust sales growth on both a
year-over-year and sequential basis. The results are consistent with
our near term strategic focus of aggressively growing sales and
increasing brand awareness."  
Mr. Pyatt continued, "Given our recently announced deals with Arnold
Schwarzenegger and Costco, as well as the ramp of our new FitMiss(TM)
women's line of supplements, we believe that our strong sales growth
will continue in both the second half of 2013 and throughout 2014. We
remain on track to meet our previous guidance for gross revenue to
exceed $100 million in 2013." 
Recent Company highlights include: 


 
--  In August, the Company announced an agreement with Costco Wholesale
    Corporation, the leading warehouse club operator, to carry
    MusclePharm's Combat Protein Powder(R) nationwide in all 430 Costco
    stores beginning late October 2013. This new distribution channel
    expands MusclePharm's reach beyond specialty health, nutrition and
    sports stores and online retailers to mass consumer channels. Costco
    will begin rolling out Combat in its international locations in the
    later part of 2014 and early 2015.
    
    
--  In July, the Company announced it signed a first-of-its-kind
    partnership with the Mr. Universe, Mr. World and Mr. Olympia title
    holder, actor, entrepreneur and former Governor of California, Arnold
    Schwarzenegger. As part of the collaboration, MusclePharm will launch
    the Arnold Series, an exclusive line of new nutritional supplements
    developed by Schwarzenegger and MusclePharm's world-renowned
    scientific team. The Arnold Series product line will initially launch
    with up to eight supplements supporting the four pillars of fitness:
    performance, power & strength, nutrient support and recovery. It
    will be available domestically and internationally at health and
    nutrition stores as well as online retailers in late September 2013.
    
    
--  In July, the Company announced it had earned 17 Bodybuilding.com
    Supplement Awards nominations. The Awards recognize superior products
    and brands in the fitness and supplement industry. Nominations are
    based on sales among the 9,900+ products carried by the site. In the
    past four years, MusclePharm has won 14 Bodybuilding.com Awards,
    including 2012 Brand of the Year.
    
    
--  In May, the Company named former Office Depot and Arbonne
    International executive, Richard Estalella, as its Chief Operating
    Officer. Estalella has over 30 years of proven operations, supply
    chain, retail, distribution and warehouse experience.

  
For Q2 2013, gross profit margin expanded to approximately 31% of net
sales as compared to a gross profit margin of 16% of net sales in Q2
2012. The increase in gross margin was a result of a reduction in
discounts and sales allowances, reduced cost of goods as a result of
lower raw product costs and more favorable pricing from the Company's
primary manufacturer, and a reduction in shipping costs. The gross
profit margin decreased sequentially from approximately 36% in Q1
2013 primarily due to the impact of an aggressive campaign to
close-out inventory of the Company's ASSAULT(TM) pre-work product in
advance of the launch of its new ASSAULT(TM) product formulation. 
For Q2 2013, general and administrative ("G & A") expenses increased
to approximately $10.7 million, or 42% of net sales as compared to
approximately $4.2 million, or 27% of net sales in Q2 2012. The
increase in G & A as a percentage of net sales was primarily due to
the non-cash consulting expense of approximately $3 million as well
as an increase in salary and wage expenses.  
For Q2 2013, the Company recorded other income of approximately
$319,000 as compared to other income of $7.8 million in Q2 2012. Q2
2013 other income included a positive change in the fair value of
derivatives liabilities associated with the Series D Preferred Shares
issued in February 2013 of approximately $272,681. Q2 2012 other
income included a positive change in fair value of derivative
liabilities of $9,854,045 as well as interest expense of $976,686. 
Income available to common stockholders for Q2 2013 was ($2,417,580)
or ($0.34) per diluted share as compared to income available to
common stockholders of $6,222,623 or $3.78 per diluted share in Q2
2012. The weighted average number of fully diluted shares outstanding
for Q2 2013 was 7,226,849. 
At the end of Q2 2013, the Company had approximately $8.7 million of
cash and cash equivalents, approximately $21.7 million in current
assets, and no long-term debt. Shareholders' equity at June 30, 2013
increased to $12.6 million as compared to ($9.8 million) at December
31, 2012. As of August 13, 2013, there were approximately 10.1
million shares of common stock outstanding and 145,000 shares of
Series D Convertible Preferred stock outstanding which are
convertible into a total of 290,000 shares of common stock. 
MusclePharm management will discuss these results during a conference
call to be broadcast live over the Internet today starting at 11:00
am EDT.  
Conference call particulars are as follows: 


 
--  Date - Wednesday, August 14, 2013
--  Time - 11:00 am EDT / 8:00 am PDT
--  Dial in number - (877) 407-9126 or (201) 493-6751 for international
    callers
--  Both the live Internet broadcast and replay can be accessed at:
    
    http://musclepharm.equisolvewebcast.com/q2-2013

  
Management will take a limited number of questions from analysts and
institutional investors follow the presentation.  
Non-GAAP
 Financial Measures* 
This release contains non-GAAP financial measures within the meaning
of Regulation G promulgated by the Securities and Exchange
Commission. Included in this release is a reconciliation of these
non-GAAP financial measures to the most directly comparable financial
measures calculated in accordance with GAAP. Management believes
presenting this non-GAAP measure provides useful information to
investors in assessing MusclePharm's normalized operating performance
as well as in evaluating the ongoing results of the Company's
business when comparing MusclePharm's operating performance to the
operating performance of other companies in similar businesses.  
ABOUT MUSCLEPHARM CORPORATION 
Founded in 2008 by former NFL player Brad Pyatt, MusclePharm is a
healthy lifestyle company that develops and manufactures scientific
and safe nutritional supplements. The company's products are designed
for Active Lifestyles who seek muscle building, weight maintenance
and general fitness through an internationally recognized daily
nutritional supplement regimen. The products are formulated through a
six-stage research process designed by leading nutritional scientists
at the MusclePharm Sports Science & Research Center in Denver.
MusclePharm's products are sold in more than 110 countries and
available in 10,500+ U.S. retail outlets, including Dick's Sporting
Goods, 24 Hour Fitness, Bally's, GNC, Vitamin Shoppe and Vitamin
World. MusclePharm products also are sold globally through more than
100 online channels, including Bodybuilding.com, Amazon.com and
Vitacost.com.  
For more information, visit www.MusclePharm.com. Follow the company
at www.Facebook.com/MusclePharm and www.Twitter.com/MusclePharm. 
FORWARD-LOOKING STATEMENTS 
This release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities and Exchange Act of 1934, as amended.
Statements that are not a description of historical facts constitute
forward-looking statements and may often, but not always, be
identified by the use of such words as "expects", "anticipates",
"intends", "estimates", "plans", "potential", "possible", "probable",
"believes", "seeks", "may", "will", "should", "could" or the negative
of such terms or other similar expressions. Actual results may differ
materially from those set forth in this release due to the risks and
uncertainties inherent in the Company's business. More detailed
information about the Company and the risk factors that may affect
the realization of forward-looking statements is set forth in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2012, the Company's Quarter Reports on Form 10-Q and
other filings submitted by the Company to the SEC, copies of which
may be obtained from the SEC's website at www.sec.gov. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. All
forward-looking statements are qualified in their entirety by this
cautionary statement and the Company undertakes no obligation to
revise or update this release to reflect events or circumstances
after the date hereof. 


 
                                                                            
                                                                            
                                MUSCLEPHARM                                 
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                                                                            
                                                   June 30,    December 31, 
                                                     2013          2012     
                                                ------------- ------------- 
Assets                                                                      
  Current assets, net                           $  21,748,744 $   4,949,881 
  Fixed assets, net                                 1,329,047     1,356,364 
  Other non-current assets, net                       172,994       460,482 
                                                ------------- ------------- 
Total Assets                                    $  23,250,785 $   6,766,727 
                                                ============= ============= 
                                                                            
Liabilities and Stockholders' Equity                                        
  Current liabilities                           $  10,641,490 $  16,520,456 
  Long-term liabilities                                     0         4,523 
  Stockholders' equity                             12,609,295    (9,758,252)
                                                ------------- ------------- 
Total Liabilities and Equity                    $  23,250,785 $   6,766,727 
                                                ============= ============= 

 
The following table reconciles the SG&A information presented in this
press release to GAAP measures presented in the Quarterly Report on
Form 10-Q for the period June 30, 2013. 


 
                                                                            
                                                                            
                                MUSCLEPHARM                                 
               CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS               
                                                                            
                    Three Months Ended June 30,   Six Months Ended June 30, 
                         2013          2012          2013          2012     
                    -------------  ------------  ------------  ------------ 
Gross Sales         $  28,515,483  $ 18,869,103  $ 53,439,519  $ 38,171,872 
Sales Allowances       (3,035,424)   (3,439,763)   (5,398,293)   (6,181,852)
                    -------------  ------------  ------------  ------------ 
Net Sales              25,480,059    15,429,340    48,041,226    31,990,020 
Cost of Sales          17,566,718    12,942,605    31,963,124    25,837,767 
                    -------------  ------------  ------------  ------------ 
Gross Profit            7,913,341     2,486,735    16,078,102     6,152,253 
General and                                                                 
 Administrative                                                             
 Expense               10,654,272     4,151,076    19,540,512     8,543,887 
                    -------------  ------------  ------------  ------------ 
Loss From                                                                   
 Operations            (2,740,931)   (1,664,341)   (3,462,410)   (2,391,634)
Other Expense Net         319,123     7,846,245    (6,321,379)   (7,461,755)
                    -------------  ------------  ------------  ------------ 
Net Income (Loss)   $  (2,421,808) $  6,181,904  $ (9,783,789) $ (9,853,389)
                    =============  ============  ============  ============ 
Total Comprehensive                                                         
 Income (Loss)      $  (2,417,580) $  6,222,623  $ (9,
785,630) $ (9,812,670)
                    -------------  ------------  ------------  ------------ 
                                                                            
Net income (Loss)                                                           
 per common share -                                                         
 basic and diluted  $       (0.34) $       3.78  $      (1.72) $      (6.44)
                                                                            
Weighted average                                                            
 common share                                                               
 outstanding -                                                              
 basic and diluted      7,226,849     1,633,676     5,686,323     1,530,850 
                    -------------  ------------  ------------  ------------ 
                                                                            
Adjusted Operating                                                          
 Income*                                                                    
Loss From                                                                   
 Operations            (2,740,931)   (1,664,341)   (3,462,410)   (2,391,634)
                    -------------  ------------  ------------  ------------ 
Add Back Cost of                                                            
 Non-Cash and Non-                                                          
 Recurring                                                                  
 Consulting Expense     3,037,636                   6,591,816               
                    -------------                ------------               
Adjusted Operating                                                          
 Income*            $    296,705*                $ 3,129,406*               
                    =============                ============               

  
MusclePharm Company Contact: 
John H. Bluher
Executive V.P.
Telephone: 303-618-0902
john@musclepharm.com 
MusclePharm Investor Contact: 
The Del Mar Consulting Group, Inc.
Robert B. Prag
President
Telephone: 858-794-9500
Email: bprag@delmarconsulting.com 
or 
Alex Partners, LLC
Scott Wilfong
President
Telephone: 425-242-0891
Email: scott@alexpartnersllc.com