Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 2-May-14 | |
Document Information [Line Items] | ' | ' |
Entity Registrant Name | 'MusclePharm Corp | ' |
Entity Central Index Key | '0001415684 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Trading Symbol | 'MSLP | ' |
Entity Common Stock, Shares Outstanding | ' | 10,612,912 |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 31-Mar-14 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Document Fiscal Year Focus | '2014 | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Current Assets: | ' | ' |
Cash | $3,316,178 | $5,411,515 |
Cash - restricted | 2,500,630 | 2,500,014 |
Debt securities | 215,000 | 259,715 |
Accounts receivable - net | 19,634,074 | 13,741,180 |
Derivative instrument | 0 | 119,248 |
Inventory - net | 16,654,140 | 15,772,368 |
Prepaid giveaways | 1,290,751 | 1,177,539 |
Prepaid stock compensation | 3,064,230 | 3,023,717 |
Prepaid sponsorship fees | 455,111 | 1,145,161 |
Prepaid expenses | 1,606,235 | 1,335,218 |
Other assets | 262,579 | 40,805 |
Total current assets | 48,998,928 | 44,526,480 |
Property and equipment - net | 5,463,287 | 2,613,584 |
Prepaid stock compensation | 3,989,065 | 4,718,238 |
Intangible assets - net | 7,025,644 | 155,165 |
Other assets | 140,738 | 144,229 |
Total assets | 65,617,662 | 52,157,696 |
Current Liabilities: | ' | ' |
Accounts payable | 24,290,625 | 26,605,588 |
Accrued liabilities | 3,188,048 | 2,053,101 |
Debt - net | 59,600 | 62,502 |
Line of credit | 2,500,000 | 2,500,000 |
Derivative liabilities | 663,096 | 1,147,330 |
Total current liabilities | 30,701,369 | 32,368,521 |
Long Term Liabilities: | ' | ' |
Other | 118,277 | 54,639 |
Total Liabilities | 30,819,646 | 32,423,160 |
Commitments and Contingencies | ' | ' |
Stockholders' Equity: | ' | ' |
Common Stock, $0.001 par value; 100,000,000 shares authorized, 10,519,833 and 9,259,411 issued and 10,349,912 and 9,089,490 outstanding | 10,520 | 9,260 |
Treasury Stock, at cost; 169,921 and 169,921 shares | -1,498,298 | -1,498,298 |
Additional paid-in capital | 115,395,134 | 103,064,901 |
Accumulated deficit | -79,091,183 | -81,827,417 |
Accumulated other comprehensive loss | -18,289 | -14,042 |
Total Stockholders' Equity | 34,798,016 | 19,734,536 |
Total Liabilities and Stockholders' Equity | 65,617,662 | 52,157,696 |
Series D Convertible Preferred Stock [Member] | ' | ' |
Stockholders' Equity: | ' | ' |
Series D, Convertible Preferred Stock, $0.001 par value; 1,600,000 shares authorized, 1,500,000 shares issued and 131,500 outstanding | $132 | $132 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets [Parenthetical] (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Common Stock, par value (in dollars per share) | $0.00 | $0.00 |
Common Stock, shares authorized | 100,000,000 | 100,000,000 |
Common Stock, shares issued | 10,519,833 | 9,259,411 |
Common Stock, shares outstanding | 10,349,912 | 9,089,490 |
Treasury Stock, shares | 169,921 | 169,921 |
Series D Convertible Preferred Stock [Member] | ' | ' |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 1,600,000 | 1,600,000 |
Preferred stock, shares issued | 1,500,000 | 1,500,000 |
Preferred stock, shares outstanding | 131,500 | 131,500 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Sales - net | $50,209,454 | $22,561,167 |
Cost of sales | 32,336,385 | 14,396,406 |
Gross profit | 17,873,069 | 8,164,761 |
Advertising and promotion | 6,328,487 | 2,317,377 |
Salaries and benefits | 5,366,806 | 1,248,459 |
Selling, general, and administrative | 1,872,368 | 1,145,556 |
Research and development | 1,096,946 | 90,129 |
Professional fees | 784,574 | 4,084,720 |
Operating expenses | 15,449,181 | 8,886,241 |
Income (loss) from operations | 2,423,888 | -721,480 |
Other income (expense) | ' | ' |
Derivative expense | 0 | -96,913 |
Change in fair value of derivative liabilities | 484,234 | -6,044,643 |
Gain on settlement of accounts payable | 5,499 | 276,985 |
Interest expense | -39,373 | -780,320 |
Foreign currency transaction loss | -30,106 | -5,610 |
Interest income | 222,756 | 0 |
Unrealized loss on derivative instrument and debt securities | -386,103 | 0 |
Other income | 87,600 | 10,000 |
Total other income (expense) - net | 344,507 | -6,640,501 |
Net income (loss) before taxes | 2,768,395 | -7,361,981 |
Income tax provision | -32,161 | 0 |
Net income (loss) | 2,736,234 | -7,361,981 |
Other Comprehensive Income (Loss) | ' | ' |
Net change in Foreign currency translation | -4,247 | -6,068 |
Total other comprehensive income (loss) | -4,247 | -6,068 |
Total comprehensive income (loss) | $2,731,987 | ($7,368,049) |
Net income (loss) per share available to common stockholders - basic (in dollars per share) | $0.27 | ($1.78) |
Net income (loss) per share available to common stockholders - diluted (in dollars per share) | $0.23 | ($1.78) |
Weighted average number of common shares outstanding during the period - basic (in shares) | 10,307,350 | 4,128,679 |
Weighted average number of common shares outstanding during the period - diluted (in shares) | 11,951,923 | 4,128,769 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Cash Flows From Operating Activities: | ' | ' |
Net income (loss) | $2,736,234 | ($7,361,981) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ' | ' |
Depreciation | 313,934 | 161,341 |
Amortization of prepaid stock compensation | 795,318 | 121,253 |
Amortization of debt issue costs | 0 | 335,433 |
Amortization of prepaid sponsorships and endorsements | 1,657,652 | 678,206 |
Amortization of intangible assets | 285,183 | 0 |
Amortization of employee and executive stock awards | 2,376,136 | 36,978 |
Accretion of conversion option on convertible note receivable | -222,140 | 0 |
Gain on settlement of accounts payable | -5,499 | -276,985 |
Gain on disposal of equipment | -1,800 | 0 |
Derivative expense | 0 | 96,913 |
Change in fair value of derivative liabilities | -484,234 | 6,044,643 |
Unrealized loss on debt security | 60,000 | 0 |
Unrealized loss on derivative assets | 326,103 | 0 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -5,086,682 | -4,726,062 |
Prepaid and other | -879,450 | -13,280 |
Inventory and prepaid giveaways | -153,985 | 9,016 |
Increase (decrease) in: | ' | ' |
Accounts payable | -2,300,764 | 1,615,958 |
Accrued liabilities | -264,445 | 62,451 |
Other liabilities | 63,638 | 0 |
Net Cash Used In Operating Activities | -784,801 | -3,216,116 |
Cash Flows From Investing Activities: | ' | ' |
Purchase of property and equipment | -1,304,571 | -216,267 |
Proceeds from disposal of property and equipment | 1,800 | 1,694 |
Change in restricted cash balance | -616 | 9,147 |
Purchase of trademark | 0 | -20,000 |
Net Cash Used In Investing Activities | -1,303,387 | -225,426 |
Cash Flows From Financing Activities: | ' | ' |
Repayment of debt | -2,902 | -4,390,386 |
Repurchase of common stock (treasury stock) | 0 | -103,537 |
Proceeds from issuance of preferred stock | 0 | 12,000,000 |
Proceeds from issuance of common stock and warrants | 0 | 5,977,499 |
Stock issuance costs | 0 | -1,560,956 |
Net Cash (Used In) Provided by Financing Activities | -2,902 | 11,922,620 |
Effect of exchange rates on cash and cash equivalents | -4,247 | 1,849 |
Net (decrease) increase in cash | -2,095,337 | 8,482,927 |
Cash at beginning of period | 5,411,515 | 0 |
Cash at end of period | 3,316,178 | 8,482,927 |
Supplemental disclosures of cash flow information: | ' | ' |
Cash paid for interest | 35,821 | 501,165 |
Cash paid for taxes | 83,452 | 0 |
Supplemental disclosure of non-cash investing and financing activities: | ' | ' |
Stock issued for future services - third parties | 0 | 1,628,085 |
Warrants issued in conjunction with equity issuances | 0 | 8,175,459 |
Stock issued to settle accounts payable and accrued expenses- third parties | 0 | 5,364,947 |
Stock issued for asset purchase (See Note 16 - Biozone Acquisition) | 9,840,000 | 0 |
Stock issued for executive and board compensation | $115,358 | $114,912 |
Nature_of_Operations_and_Basis
Nature of Operations and Basis of Presentation | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Policies [Abstract] | ' |
Business Description and Basis of Presentation [Text Block] | ' |
Note 1: Nature of Operations and Basis of Presentation | |
Nature of Operations | |
MusclePharm Corporation is a scientifically driven, performance lifestyle Company that develops, manufactures, markets and distributes branded nutritional supplements. We were incorporated in Nevada in 2006. As used in this report, the terms the “Company”, “we”, “our”, “MusclePharm”, or “MP” refer to MusclePharm Corporation and its predecessors, subsidiaries and affiliates, unless the context indicates otherwise. Our principal executive offices are located in Denver, Colorado. | |
Basis of Presentation | |
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), as amended for interim financial information. | |
The financial information as of December 31, 2013 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. The unaudited interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the audited financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, for the years ended December 31, 2013 and 2012. | |
Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The interim results for the three months ended March 31, 2014 are not necessarily indicative of results for the full fiscal year. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Significant Accounting Policies [Text Block] | ' | ||||||||
Note 2: Summary of Significant Accounting Policies | |||||||||
Principles of Consolidation | |||||||||
The consolidated financial statements include the accounts of MusclePharm Corporation and its wholly-owned subsidiaries MusclePharm Canada Enterprises Corp (“MusclePharm Canada”) and Biozone Laboratories, Inc. (“Biozone”). MusclePharm Canada began operations in April 2012, and Biozone began operations in January 2014. All intercompany accounts and transactions have been eliminated upon consolidation. | |||||||||
Use of Estimates | |||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. | |||||||||
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future non-conforming events. Accordingly, the actual results could differ significantly from estimates. | |||||||||
Risks and Uncertainties | |||||||||
The Company operates in an industry that is subject to rapid change and intense competition. The Company’s operations will be subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risks, including the potential risk of business failure. | |||||||||
Cash and Cash Equivalents | |||||||||
The Company considers all highly liquid instruments purchased with an original maturity of three months or less and money market accounts to be cash equivalents. At March 31, 2014 and December 31, 2013, the Company had no cash equivalents. | |||||||||
The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At March 31, 2014 and December 31, 2013, we had two bank accounts that exceeded the federally insured limit. | |||||||||
Restricted Cash | |||||||||
The Company segregates cash that is restricted in its use based on contractual provisions from unrestricted cash and cash equivalent balances. See Note 8(A) for further discussion on our March 31, 2014 restricted cash balance. | |||||||||
Accounts Receivable and Allowance for Doubtful Accounts | |||||||||
Accounts receivable represents trade obligations from customers that are subject to normal trade collection terms. The Company periodically evaluates the collectability of its accounts receivable and considers the need to establish an allowance for doubtful accounts based upon historical collection experience and specific customer information. Accordingly, the actual amounts could vary from the recorded allowances. There is also a review of customer discounts at the period end and an accrual made for discounts earned but not yet utilized by period end. | |||||||||
Management performs ongoing evaluations of the Company’s customers’ financial condition and generally does not require collateral. Some international customers are required to pay for their orders in advance of shipment. Management reviews accounts receivable quarterly and reduces the carrying amount by a valuation allowance that reflects management’s best estimate of amounts that may not be collectible. Allowances, if any, for uncollectible accounts receivable are determined based upon information available and historical experience. Bad debt expense recognized as a result of our valuation allowance is classified under General and administrative expense in the Consolidated Statement of Operations. | |||||||||
The Company does not charge interest on past due receivables. Receivables are determined to be past due based on the payment terms of the original invoices. The Company’s finance department contacts customers with past due balances to request payment. | |||||||||
Accounts receivable consisted of the following at March 31, 2014 and December 31, 2013: | |||||||||
As of March 31, | As of December 31, | ||||||||
2014 | 2013 | ||||||||
Accounts receivable | $ | 20,274,972 | $ | 14,830,487 | |||||
Less: allowance for discounts | -535,621 | -1,060,000 | |||||||
Less: allowance for doubtful accounts | -105,277 | -29,307 | |||||||
Accounts receivable – net | $ | 19,634,074 | $ | 13,741,180 | |||||
At March 31, 2014 and December 31, 2013, the Company had the following concentrations of accounts receivable with customers: | |||||||||
Customer | As of March 31, 2014 | As of December 31, 2013 | |||||||
A | 22 | % | 16 | % | |||||
Bodybuilding.com (related party – See Note 14) | 8 | % | 14 | % | |||||
C | 6 | % | 24 | % | |||||
Inventory | |||||||||
Inventory is valued at the lower of cost or market value. Product-related inventory for MusclePharm and MusclePharm Canada is maintained using the First-In First-Out method, and inventory for Biozone is maintained using the average cost method. To estimate any necessary obsolescence or lower-of-cost-or-market adjustments, various assumptions are made in regard to excess or slow-moving inventories, non-conforming inventories, expiration dates, current and future product demand, production planning and market conditions. | |||||||||
Prepaid Giveaways | |||||||||
Prepaid giveaways represent non-inventory sample items which are given away to aid in promotion of the brand. | |||||||||
Prepaid Sponsorship and Endorsement Fees | |||||||||
Prepaid sponsorship and endorsement fees represent fees paid in connection with Company sponsorships of certain events and trade shows as well as prepaid athlete endorsement fees, which are expensed over the period the fees are earned. A significant amount of the Company’s promotional expenses results from payments under endorsement and sponsorship contracts. Accounting treatment for endorsement and sponsorship payments is based upon specific contract provisions. Generally, endorsement payments are expensed straight-line over the term of the contract after giving recognition to periodic performance compliance provisions of the contract. Prepayments made under the contracts are included in either current or long-term prepaid expenses depending on the period for which the prepayment applies. | |||||||||
Prepaid Stock Compensation | |||||||||
Prepaid stock compensation represents amounts paid with stock for future contractual benefits to be received. The Company amortizes these contractual benefits over the life of the contracts using the straight-line method. | |||||||||
Prepaid Expenses | |||||||||
Prepaid expenses consist of various payments that the Company has made in advance for goods or services to be received in the future. These prepaid expenses include legal retainers, print advertising, insurance and service contracts requiring up-front payments. | |||||||||
Property and Equipment | |||||||||
Property and equipment are stated at cost and depreciated to their estimated residual value over their estimated useful lives. When assets are retired or otherwise disposed of, the assets and related accumulated depreciation are relieved from the accounts and the resulting gains or losses are included in the Statements of Operations. Repairs and maintenance costs are expensed as incurred. Depreciation is provided using the straight-line method for all property and equipment. We review our property and equipment for impairment when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We use an estimate of future undiscounted net cash flows of the related assets or groups of assets over their remaining lives in measuring whether the assets are recoverable. An impairment loss is calculated by determining the difference between the carrying values and the estimated fair values of these assets. We did not consider any of our property and equipment to be impaired during the three months ended March 31, 2014 or 2013. | |||||||||
Debt Securities | |||||||||
The Company classifies its investment securities as either held-to-maturity, available-for-sale or trading. The Company’s debt securities are classified as trading securities and are carried at fair value with changes recognized through net income. See Note 6 for further discussion of the Company’s debt securities. | |||||||||
Accrued Liabilities | |||||||||
Accrued liabilities consist of amounts estimated by management for future liability payments that relate to the current accounting period. Management reviews these estimates periodically to determine their reasonableness and fair presentation. | |||||||||
Debt | |||||||||
The Company defines short term debt as any debt payment due less than one year from the date of the financial statements. Long term debt is defined as any debt payment due more than one year from the date of the financial statements. Refer to Note 8 for further disclosure of debt liabilities. | |||||||||
Derivatives | |||||||||
Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in equity instruments and warrants granted, and measurement of their fair value. In determining the appropriate fair value, the Company uses Black-Scholes or lattice option-valuation models. In assessing the convertible equity instruments, management determines if the convertible equity instrument is conventional convertible equity and further if the beneficial conversion feature requires separate measurement. | |||||||||
Once derivative instruments are determined, they are adjusted to reflect fair value at the end of each reporting period. Any increase or decrease in the fair value is recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using a Black-Scholes or lattice option-pricing model. Once a derivative liability ceases to exist any remaining fair value is reclassified to additional paid-in capital if redeemed or through earnings if forfeited or expired. | |||||||||
Share-Based Payments | |||||||||
Generally, all forms of share-based payments, including stock option grants, warrants and restricted stock grants and stock appreciation rights are measured at their fair value on the awards’ grant date, based on estimated number of awards that are ultimately expected to vest. Share-based compensation awards issued to non- employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. | |||||||||
Revenue Recognition | |||||||||
The Company records revenue when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) product has been shipped or delivered, (3) the sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured. | |||||||||
Depending on individual customer agreements, sales are recognized either upon shipment of products to customers or upon delivery. For all of our Canadian sales, which represent 2% of total sales, recognition occurs upon shipment. | |||||||||
The Company has determined that advertising related credits that were granted to customers fell within the guidance of ASC No. 605-50-55 (“Revenue Recognition” – Customer Payments and Incentives). The guidance indicates that, absent evidence of benefit to the vendor, appropriate treatment requires netting these types of payments against revenues and not expensing as advertising expense. | |||||||||
The Company records sales allowances and discounts as a direct reduction of sales. The Company grants volume incentive rebates to certain customers based on contractually agreed upon percentages once certain thresholds have been met. These volume incentive rebates are recorded as a direct reduction to sales. | |||||||||
Sales for the three months ended March 31, 2014 and 2013 are as follows: | |||||||||
Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Gross Sales | $ | 56,705,286 | $ | 24,924,036 | |||||
Discounts | -6,495,832 | -2,362,869 | |||||||
Sales – Net | $ | 50,209,454 | $ | 22,561,167 | |||||
The Company has an informal 7-day right of return for products. There were nominal returns under the Company’s informal right of return policy for the three months ended March 31, 2014 and 2013. | |||||||||
Significant Customers | |||||||||
For the three months ended March 31, 2014 and 2013, the Company had the following concentrations of revenues with customers: | |||||||||
Three Months Ended March 31, | |||||||||
Customer | 2014 | 2013 | |||||||
Bodybuilding.com (related party – See Note 14) | 15 | % | 33 | % | |||||
B | 14 | % | 11 | % | |||||
A loss of either of these customers could have a material adverse impact on the Company. | |||||||||
Discounts and Sales Allowances | |||||||||
We offer various discounts and sales allowances for volume rebate programs, product promotions, early payment remittances, and other discounts and allowances. We accrue for sales discounts and allowances over the period they are earned. Because of the inherent uncertainty surrounding volume rebate programs and product promotions that are based on sales thresholds, actual results could generate liabilities greater or less than the recorded amounts. Sales discounts and allowances for the three months ended March 31, 2014 and 2013 were $6.5 million, or 11% of gross sales, and $2.4 million of 9% of gross sales, respectively. | |||||||||
Cost of Sales | |||||||||
Cost of sales for MusclePharm and MusclePharm Canada represent costs directly related to the production, manufacturing and freight of the Company’s products purchased from third party manufacturers. For products produced by Biozone, cost of sales consists of costs for raw material, direct labor, freight expenses, and other supply and equipment rental expenses used to manufacture products. | |||||||||
Significant Vendors | |||||||||
The Company uses four non-affiliated principal manufacturers for the components of our products. We have an agreement in place with our primary manufacturer, which is in place to support our growth and ensure consistency in production and quality. During the three months ended March 31, 2014, our primary manufacturer accounted for approximately 54% of our product purchases and the next largest manufacturer accounted for 44% of product purchases. For the three months ended March 31, 2013, our primary manufacturer accounted for 97% of our product purchases. | |||||||||
Shipping and Handling | |||||||||
We ship customer orders from our distribution center in Franklin, Tennessee. The facility is operated with the Company’s equipment and employees, and all inventory is owned by the Company. Shipments to customers from our distribution center are recorded as a component of cost of sales. | |||||||||
The Company also uses a manufacturer in New York to manufacture one of the Company’s products. These orders are typically large and heavy and are drop shipped directly to our customers at the time of order. Costs associated with these shipments are recorded in cost of sales. | |||||||||
For Canadian sales, the product is shipped from our Canadian warehouse to our customers. Costs associated with the shipments are recorded in cost of sales. | |||||||||
Advertising | |||||||||
Advertising and promotion expenses include digital and print advertising, trade show events, athletic endorsements and sponsorships, and promotional giveaways. Advertising expenses are recognized in the month that the advertising appears while costs associated with trade show events are expensed when the event occurs. For major trade shows, the expenses are recognized within the calendar year over the period in which we recognize revenue associated with sales generated at the trade show. Costs related to promotional giveaways are expensed when the product is either given out at a promotional event or shipped to the customer. | |||||||||
A significant amount of the Company’s promotional expenses results from payments under endorsement and sponsorship contracts. Accounting treatment for endorsement and sponsorship payments is based upon specific contract provisions. Generally, endorsement payments are expensed straight-line over the term of the contract after giving recognition to periodic performance compliance provisions of the contract. Prepayments made under the contracts are included in either current or long-term prepaid expenses depending on the period for which the prepayment applies. | |||||||||
Some of the contracts provide for contingent payments to endorsers or athletes based upon specific achievement in their sports (e.g. winning a championship). The Company records expense for these payments when the endorser achieves the specific achievement. | |||||||||
Advertising expense for the three months ended March 31, 2014 and 2013, are as follows: | |||||||||
Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Advertising and promotion | $ | 6,328,487 | $ | 2,317,377 | |||||
Income Taxes | |||||||||
Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Beginning with the adoption of Financial Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (included in FASB ASC Subtopic 740-10, Income Taxes — Overall), the Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely to be realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. | |||||||||
The Company records interest and penalties related to unrecognized tax benefits in income tax expense. There were no interest or penalties related to unrecognized tax benefits for the three months ended March 31, 2014 and 2013. | |||||||||
Earnings (Loss) Per Share | |||||||||
Basic net earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. | |||||||||
The Company uses the “treasury stock” method to determine whether there is a dilutive effect of outstanding option and warrant contracts. For the three months ended March 31, 2013 the Company reflected net loss and a dilutive net loss, and the effect of considering any common stock equivalents would have been anti-dilutive for the period. Therefore, separate computation of diluted earnings (loss) per share is not presented for the three months ended March 31, 2013. | |||||||||
The Company has the following common stock equivalents as of March 31, 2014 and 2013, respectively: | |||||||||
As of March 31, | |||||||||
2014 | 2013 | ||||||||
Stock options (exercise price – $425/share) | 472 | 670 | |||||||
Warrants (exercise price – $4 - $1,275/share) | 263,089 | 687,839 | |||||||
Employee and director unvested shares | 1,381,573 | 86,275 | |||||||
Total common stock equivalents | 1,645,134 | 774,784 | |||||||
The following is a reconciliation of the number of shares used in the calculation of basic and diluted earnings per share for the three months ended March 31, 2014 and 2013, respectively: | |||||||||
Three months ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Net income (loss) | $ | 2,736,234 | $ | -7,361,981 | |||||
Weighted average number of common shares outstanding | 10,307,350 | 4,128,679 | |||||||
Incremental shares from the assumed exercise of dilutive agreements | 1,644,573 | - | |||||||
Diluted common shares outstanding | 11,951,923 | 4,128,679 | |||||||
Earnings (loss) per shares - basic | $ | 0.27 | $ | -1.78 | |||||
Earnings (loss) per shares - diluted | $ | 0.23 | $ | -1.78 | |||||
Foreign Currency | |||||||||
MusclePharm began operations in Canada in April 2012. The Canadian Dollar was determined to be the functional currency as the majority of the transactions related to the day to day operations of the business are exchanged in Canadian Dollars. At the end of the period, the financial results of the Canadian operation are translated into the U.S. Dollar, which is the reporting currency, and added to the U.S. operations for consolidated company financial results. The revenue and expense items are translated using the average rate for the period and the assets and liabilities at the end of period rate. Transactions that have completed the accounting cycle and resulted in a gain or loss related to translation are recorded in realized gain or loss due to foreign currency translation under other income and expense on the income statement. Transactions that have not completed their accounting cycle but appear to have gain or loss due to the translation process are recorded as unrealized gain or loss due to translation and held in the equity section on the balance sheet until such date the accounting cycle of the transaction is complete and the actual realized gain or loss is recognized. | |||||||||
Reclassification | |||||||||
The Company has reclassified certain prior period amounts to conform to the current period presentation. These reclassifications were for presentation purposes and had no effect on the financial position, results of operations, or cash flows for the periods presented. | |||||||||
Recent Accounting Pronouncements | |||||||||
In March 2013, the FASB issued ASU 2013-05, which indicates that the entire amount of a cumulative translation adjustment (CTA) related to an entity’s investment in a foreign entity should be released when one of the following occur: | |||||||||
⋅ | Sale of a subsidiary or group of net assets within a foreign entity and the sale represents the substantially complete liquidation of the investment in the foreign entity. | ||||||||
⋅ | Loss of a controlling financial interest in an investment in a foreign entity | ||||||||
⋅ | Step acquisition for a foreign entity | ||||||||
The ASU does not change the requirement to release a pro rata portion of the CTA of the foreign entity into earnings for a partial sale of an equity method investment in a foreign entity. ASU 2013-5 is effective for fiscal years (and interim periods within those fiscal years) beginning on or after December 15, 2013. The adoption of this pronouncement did not have a material impact on our consolidated financial statements. | |||||||||
Property_and_Equipment
Property and Equipment | 3 Months Ended | |||||||||
Mar. 31, 2014 | ||||||||||
Property, Plant and Equipment [Abstract] | ' | |||||||||
Property, Plant and Equipment Disclosure [Text Block] | ' | |||||||||
Note 3: Property and Equipment | ||||||||||
Property and equipment consisted of the following at March 31, 2014 and December 31, 2013: | ||||||||||
As of March 31, 2014 | As of December 31, 2013 | Estimated Useful Life | ||||||||
Leasehold improvements | $ | 3,205,922 | $ | 619,159 | From 20 to 182 months | |||||
Furniture, fixtures and equipment | 2,059,778 | 1,849,462 | From 3 to 5 years | |||||||
Manufacturing and lab equipment | 1,183,168 | - | From 2 to 20 years | |||||||
Vehicles | 444,065 | 442,300 | From 2 to 5 years | |||||||
Displays | 33,683 | 33,683 | 5 years | |||||||
Website | 11,462 | 11,462 | 3 years | |||||||
Construction in process | 190,373 | 1,018,509 | ||||||||
Total | 7,128,451 | 3,974,575 | ||||||||
Less: Accumulated depreciation | -1,665,164 | -1,360,991 | ||||||||
$ | 5,463,287 | $ | 2,613,584 | |||||||
Inventory
Inventory | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
Inventory Disclosure [Text Block] | ' | |||||||
Note 4: Inventory | ||||||||
Inventory consisted of the following at March 31, 2014 and December 31, 2013: | ||||||||
March 31, 2014 | December 31, 2013 | |||||||
Raw materials inventory | $ | 661,026 | $ | - | ||||
Work in process inventory | 16,411 | - | ||||||
Finished goods inventory | 16,077,964 | 16,001,515 | ||||||
Inventory reserve | -101,261 | -229,147 | ||||||
Total inventory - net | $ | 16,654,140 | $ | 15,772,368 | ||||
Included in the table above is $16,039,948 of finished goods inventory that has been purchased from third party manufacturers. The Company reserves for obsolete and slow moving inventory based on the age of the product as determined by the expiration date. Products within one year of their expiration dates are considered for reserve purposes. Historically, we have had minimal returns, and any damaged packaging is sent back to the manufacturer for replacement. The Company recorded a reserve for obsolete and slow moving inventory of $101,261 and $229,147 as of March 31, 2014 and December 31, 2013. | ||||||||
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Fair Value Disclosures [Abstract] | ' | |||||||
Fair Value Disclosures [Text Block] | ' | |||||||
Note 5: Fair Value of Financial Instruments | ||||||||
The Company measures assets and liabilities at fair value based on an expected exit price which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. | ||||||||
The following are the hierarchical levels of inputs to measure fair value: | ||||||||
⋅ | Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. | |||||||
⋅ | Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. | |||||||
⋅ | Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. | |||||||
The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following are the major categories of assets and liabilities measured at fair value on a recurring basis as of March 31, 2014 and December 31, 2013, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3): | ||||||||
As of March 31, | As of December 31, | |||||||
2014 | 2013 | |||||||
Assets | ||||||||
Debt securities – FUSE convertible notes (Level 2) | $ | 215,000 | $ | 259,715 | ||||
Derivative instruments – FUSE warrants (Level 2) | - | 119,248 | ||||||
215,000 | 378,963 | |||||||
Liabilities | ||||||||
Derivative liabilities - Series D shares (Level 2) | $ | 663,096 | $ | 1,147,330 | ||||
The Company’s remaining financial instruments consisted primarily of accounts receivable, accounts payable and accrued liabilities, and debt. The Company’s debt approximates fair value based upon current borrowing rates available to the Company for debt with similar maturities. The carrying amounts of the Company’s financial instruments generally approximated their fair values as of March 31, 2014 and December 31, 2013, respectively, due to the short-term nature of these instruments. | ||||||||
Debt_Securities
Debt Securities | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Investments, Debt and Equity Securities [Abstract] | ' | ||||
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block] | ' | ||||
Note 6: Debt Securities | |||||
On November 7, 2013, the Company purchased, for an aggregate $200,000, a senior secured convertible promissory note from Fuse Science Inc. (“Fuse”) (OTC:DROP) that matures 90 days from the date of issuance, and certain derivative instruments (Note 7), the value of which was recorded as a discount to the note to be accreted over the note’s term. The promissory note bears interest at a rate of 10% per annum and is convertible at any time prior to the maturity date into 3,076,923 shares of Fuse common stock at the conversion rate of $0.065 per share. The Company’s ability to convert into Fuse common stock is restricted by a beneficial ownership limitation of 9.99% of the number of the common stock outstanding after giving effect to the issuance of common stock issuable upon conversion. On December 11, 2013, the Company amended the Fuse note and funded an additional $75,000 under the original terms of the note. | |||||
On January 3, 2014, the Company renewed the combined $275,000 senior secured convertible promissory note from Fuse with a new maturity date of January 3, 2019 and convertible into 13,750,000 shares at a conversion rate $0.02 per share. | |||||
The Company has classified this note as a Level 2 trading security and has used a Black-Scholes valuation model to determine the value of the conversion option and detachable derivative instrument. Changes in the reported value of the note will be included as a component of net income. Values of $206,855 and $174,574 attributable to the conversion option and derivative instruments, respectively, have been recorded as a discount to be accreted as interest income over the stated maturity of the note. As of March 31, 2014, the entire discount has been accreted to interest income. See Note 18 for subsequent events related to the Fuse convertible note. | |||||
The following table summarizes the Company’s debt securities activity for the three months ended March 31, 2014: | |||||
Fuse Note | |||||
Balance – December 31, 2013 | $ | 259,715 | |||
Redemption of note | -275,000 | ||||
Renewal of note | 275,000 | ||||
Discount for value of conversion option | -206,855 | ||||
Accretion of net discount | 222,140 | ||||
Unrealized loss on debt security | -60,000 | ||||
Balance – March 31, 2014 | $ | 215,000 | |||
Derivative_Instruments
Derivative Instruments | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||
Derivative Instruments and Hedging Activities Disclosure [Text Block] | ' | ||||
Note 7: Derivative Instruments | |||||
In conjunction with the purchase of the Fuse convertible promissory note as amended and discussed in Note 6, the Company received callable warrants to purchase up to 9,165,750 shares of Fuse at an exercise price of $0.065 per share with expiration dates of 5 years from the date of issuance. The initial value of the warrants was $174,574 and was recorded as a discount against the note. Upon renewal of the convertible note as discussed in Note 6, the Company recognized the conversion option of the convertible note as a derivative instrument with an initial value of $206,855, which was recorded as a discount against the note. | |||||
The Company has classified the warrant and conversion option as a Level 2 fair value measurement, and used a Black-Scholes model to value the warrant and conversion option. This model considers price volatility, time and risk. | |||||
The following table summarizes the Company’s derivative asset activity for the three months ended March 31, 2014: | |||||
Balance – December 31, 2013 | $ | 119,248 | |||
Fair value of conversion option at renewal | 206,855 | ||||
Unrealized loss | -326,103 | ||||
Balance – March 31, 2014 | $ | - | |||
See Note 18 for subsequent events related to the Fuse warrants. | |||||
Debt
Debt | 3 Months Ended | |||||||||
Mar. 31, 2014 | ||||||||||
Debt Disclosure [Abstract] | ' | |||||||||
Debt Disclosure [Text Block] | ' | |||||||||
Note 8: Debt | ||||||||||
At March 31, 2014 and December 31, 2013, debt consists of the following: | ||||||||||
As of March 31, 2014 | As of December 31, 2013 | |||||||||
Revolving line of credit | $ | 2,500,000 | $ | 2,500,000 | ||||||
Auto loan - secured | - | 2,902 | ||||||||
Unsecured debt | 59,600 | 59,600 | ||||||||
Total debt | 2,559,600 | 2,562,502 | ||||||||
Less: current portion | -2,559,600 | -2,562,502 | ||||||||
Long term debt | $ | - | $ | - | ||||||
Debt in default of $59,600 and $59,600 at March 31, 2014 and December 31, 2013, respectively, is included as a component of short-term debt. Debt in default is related to certain convertible notes issues in 2012 and prior where the notes were never converted to common stock or principal repaid. The Company is in the process of contacting the note holders and negotiating settlement of the notes. | ||||||||||
(A) | Revolving Line of Credit | |||||||||
On December 24, 2013, the Company entered into a revolving line of credit with U.S. Bank, N.A. in the amount of $2,500,000. The line of credit matures on September 15, 2014 and accrues interest at prime plus 2%, which is payable monthly. The interest rate at March 31, 2014 was 5.25%. The note is secured by a $2,500,000 savings account held at U.S. Bank, N.A. and is shown as restricted cash in the Consolidated Balance Sheets. | ||||||||||
(B) Unsecured Debt | ||||||||||
Unsecured debt consisted of the following activity and terms: | ||||||||||
Balance - December 31, 2013 | $ | 59,600 | ||||||||
Repayments | - | |||||||||
Balance – March 31, 2014 | $ | 59,600 | ||||||||
(C) Vehicle Loan | ||||||||||
Vehicle loan account consisted of the following activity and terms: | ||||||||||
Interest Rate | Maturity | |||||||||
Balance - December 31, 2013 | $ | 2,902 | 6.99 | % | 3 payments of $1,008 | |||||
Repayments | -2,902 | |||||||||
Balance – March 31, 2014 | $ | - | ||||||||
Derivative_Liabilities
Derivative Liabilities | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||
Derivatives and Fair Value [Text Block] | ' | ||||||||
Note 9: Derivative Liabilities | |||||||||
The Company identified conversion features embedded within Series D Preferred Stock issued in 2013. The Company has determined that the features associated with the embedded conversion option should be accounted for at fair value as a derivative liability as the Company could not determine if a sufficient number of shares would be available to settle all transactions. | |||||||||
The fair value of the conversion feature is summarized as follows: | |||||||||
Derivative liability - December 31, 2013 | 1,147,330 | ||||||||
Fair value mark to market adjustment for equity instruments | -484,234 | ||||||||
Derivative liability – March 31, 2014 | $ | 663,096 | |||||||
The Company recorded the day one value of derivative contracts associated with the Series D preferred stock issuance against gross proceeds raised, and expensed immediately the remaining value of the derivative as it exceeded the gross proceeds of the offering. The Company recorded a derivative expense of $0 and $96,913 for the three months ended March 31, 2014 and 2013, respectively. | |||||||||
The fair values at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions as of March 31, 2014: | |||||||||
Commitment Date | Re-measurement Date | ||||||||
Expected dividends | 0 | % | 0 | % | |||||
Expected volatility | 120 | % | 40 | % | |||||
Expected term: | 1 year | 1 year | |||||||
Risk free interest rate | 0.14 | % | 0.13 | % | |||||
Restricted_Stock_Units
Restricted Stock Units | 3 Months Ended |
Mar. 31, 2014 | |
Schedule Of Share Based Compensation Restricted Stock and Restricted Stock Units [Abstract] | ' |
Compensation and Employee Benefit Plans [Text Block] | ' |
Note 10: Restricted Stock Units | |
In November 2012, the Company granted 129,413 restricted stock units through restricted stock unit agreements to certain executives. Each restricted stock unit represents a contingent right to receive one share of the Company’s common stock upon vesting. The value of this award at the grant date was $449,900 and will be amortized over the vesting periods such that each tranche of restricted stock units will be fully amortized at the date of vesting. The restricted stock units vest in one tranche of 43,137 on January 1, 2013 and two tranches of 43,138 shares on January 1, 2014 and December 1, 2014. As of March 31, 2014, 86,275 restricted stock units have vested and the unamortized portion of this award is $112,989. | |
In June 2013, the Company approved a restricted stock award to certain key employees, officers and directors for 1,550,000 cumulative shares. The awarded shares were issued upon the award’s approval with ownership rights to be conveyed upon vesting. The value of this award at the grant date was $17,065,500. Of these shares, the Company estimates that 1,500,200 shares will fully vest for a total value of $16,517,202. This amount will be amortized over the vesting periods such that each tranche’s estimated shares of restricted stock will be fully amortized at the dates of vesting. The Company will periodically review this estimate for reasonableness and make adjustments as appropriate. The award vests in two tranches with 17% vesting December 31, 2013 and the remaining 83% vesting December 31, 2015 with the exception of certain executives under employment agreements that terminate prior to December 31, 2015. These awards will be amortized over the remaining term of their employment agreements. As of March 31, 2014, 263,500 shares have vested and the unamortized portion of this award is $11,342,915. | |
In December 2013, the Company granted the independent members of the Board of Directors a restricted stock grant of 19,364 shares as part of the annual director’s compensation plan. The awarded shares were issued upon the award’s approval with ownership rights to be conveyed upon vesting. The value of this award at the grant date was $152,000, and will be amortized over the vesting periods. The restricted stock award will vest in three equal tranches on July 1, 2014, July 1, 2015, and July 1, 2016. As of March 31, 2014, no shares have vested and the unamortized portion of the awards was $113,998. | |
On March 17, 2014, the Company granted the independent members of the Board of Directors a restricted stock grant of 48,856 shares as part of the annual director’s compensation plan. The awarded shares were issued upon the award’s approval with ownership rights to be conveyed upon vesting. The value of this award at the grant date was $320,007, and will be amortized over the service period, which is January 1 – December 31, 2014. The restricted stock award will vest in three equal tranches on March 17, 2014, March 17, 2015, and March 17, 2016. As of March 31, 2014, 16,284 shares have vested and the unamortized portion of the awards is $240,000. | |
Total compensation expense for these awards recognized during the three months ended March 31, 2014 was $2,402,435 and is included in operating expenses. | |
Stockholders_Equity
Stockholders' Equity | 3 Months Ended | |||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||
Stockholders' Equity Note [Abstract] | ' | |||||||||||||||||
Stockholders' Equity Note Disclosure [Text Block] | ' | |||||||||||||||||
Note 11: Stockholders’ Equity | ||||||||||||||||||
(A) Series D Convertible Preferred Stock | ||||||||||||||||||
In January 2013, the Board of Directors authorized 1,600,000 shares of Series D convertible preferred stock. Between January 16, 2013 and February 4, 2013, the Company entered into separate subscription agreements with certain investors in connection with the offering, pursuant to which the Company sold an aggregate of 1,500,000 shares of Preferred Stock for aggregate gross proceeds of approximately $12 million. Pursuant to the Certificate of Designation of the Series D Convertible Preferred Stock filed with the Nevada Secretary of State on January 11, 2013 (the “Certificate of Designation”), each share of Preferred Stock is convertible into two shares of common stock, subject to adjustment as set forth in the Certificate of Designation. During the three months ended March 31, 2014, no shares of Series D convertible preferred stock were converted into common stock. See Note 18 for subsequent events related to Series D stock conversion. | ||||||||||||||||||
The shares of Series D have the following provisions: | ||||||||||||||||||
⋅ | Voting rights based on number of common shares of conversion option; | |||||||||||||||||
⋅ | Initially no rights to dividends; | |||||||||||||||||
⋅ | Liquidation rights entitle the receipt of net assets on a pro-rata basis; and | |||||||||||||||||
⋅ | Convertible into 2 shares of common stock, subject to adjustment. | |||||||||||||||||
(B) Common Stock | ||||||||||||||||||
During the three months ended March 31, 2014, the Company issued the following common stock: | ||||||||||||||||||
Transaction Type | Quantity | Valuation | Range of Value | |||||||||||||||
(#) | ($) | per Share | ||||||||||||||||
($) | ||||||||||||||||||
Executive/board of director compensation | 60,422 | 265,325 | 3.48 – 8.70 | |||||||||||||||
Stock issued for Biozone asset purchase | 1,200,000 | 9,840,000 | 8.2 | |||||||||||||||
Total | 1,260,422 | 10,105,325 | 3.48 – 8.70 | |||||||||||||||
The fair value of all stock issuances above is based upon the quoted closing trading price on the date of issuance. See Note 16 for further details of the Biozone asset purchase. | ||||||||||||||||||
(C) Stock Options | ||||||||||||||||||
There was no stock option activity for the three months ended March 31, 2014. | ||||||||||||||||||
(D) Stock Warrants | ||||||||||||||||||
A summary of warrant activity for the Company for the three months ended March 31, 2014 is as follows: | ||||||||||||||||||
Number of Warrants | Weighted Average Exercise Price | |||||||||||||||||
Balance at December 31, 2013 | 263,089 | 4.43 | ||||||||||||||||
Granted | - | - | ||||||||||||||||
Exercised | - | - | ||||||||||||||||
Converted | - | - | ||||||||||||||||
Balance at March 31, 2014 | 263,089 | 4.43 | ||||||||||||||||
Warrants Outstanding | Warrants Exercisable | |||||||||||||||||
Range of | Number | Weighted Average | Weighted Average | Number | Weighted | Intrinsic Value | ||||||||||||
Exercise Prices | Outstanding | Remaining | Exercise Price | Exercisable | Average | |||||||||||||
Contractual Life (in | Exercise Price | |||||||||||||||||
years) | ||||||||||||||||||
$ | $4 - 1,275 | 263,089 | 1 | $ | 4.43 | 263,089 | $ | 4.43 | $ | 518,295 | ||||||||
See Note 18 for subsequent events related to conversion of Series D warrants. | ||||||||||||||||||
(E) Stock Repurchase Plan | ||||||||||||||||||
On December 10, 2013, the Board of Directors approved a one year, $5 million stock repurchase plan allowing for the repurchase of up to $5,000,000 of MusclePharm common stock over a one year period. During the three month period ended March 31, 2014, no shares were repurchased under this plan. | ||||||||||||||||||
Commitments_Contingencies_and_
Commitments, Contingencies and Other Matters | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||||||||||||||
Commitments and Contingencies Disclosure [Text Block] | ' | ||||||||||||||||
Note 12: Commitments, Contingencies and Other Matters | |||||||||||||||||
(A) Operating Lease | |||||||||||||||||
The Company accounts for leases as operating or capital based on the criteria set forth in ASC 840-10-25-1. The Company has various non-cancelable operating leases with terms expiring through 2029. | |||||||||||||||||
Future minimum annual lease payments for the above leases are approximately as follows: | |||||||||||||||||
Years Ending December 31, | |||||||||||||||||
2014 (9 months) | $ | 967,816 | |||||||||||||||
2015 | 868,844 | ||||||||||||||||
2016 | 355,916 | ||||||||||||||||
2017 | 291,528 | ||||||||||||||||
2018 | 291,528 | ||||||||||||||||
Thereafter | 3,206,808 | ||||||||||||||||
Total minimum lease payments | $ | 5,982,440 | |||||||||||||||
Rent expense for the three months ended March 31, 2014 and 2013, was $297,497 and $151,219, respectively. | |||||||||||||||||
(B) Capital Leases | |||||||||||||||||
The Company accounts for leases as operating or capital based on the criteria set forth in ASC 840-10-25-1. As of March 31, 2014, the Company had $206,917 in leased assets classified as Furniture, fixtures, and equipment and Manufacturing and lab equipment under Property and equipment in the Consolidated Balance Sheets. The accumulated depreciation on leased assets as of March 31, 2014 was $6,068. Short term capital lease liabilities of $68,094 are included as a component of current liabilities, and the long-term capital lease liabilities of $118,277 are included as a component of long term liabilities in our Consolidated Balance Sheets. Included in our capital lease liabilities as of March 31, 2014 are leases acquired during the Biozone acquisition of $112,705. | |||||||||||||||||
As of March 31, 2014 and December 31, 2013, the Company had an outstanding balance on capital leases of $186,371 and $81,292, respectively. Future minimum lease payments are as follows: | |||||||||||||||||
Years Ending December 31, | |||||||||||||||||
2014 (9 months) | $ | 60,650 | |||||||||||||||
2015 | 80,867 | ||||||||||||||||
2016 | 69,017 | ||||||||||||||||
2017 | 4,155 | ||||||||||||||||
Total minimum lease payments | 214,689 | ||||||||||||||||
Less amounts representing interest | -28,318 | ||||||||||||||||
Present value of minimum lease payments | $ | 186,371 | |||||||||||||||
(C) Legal Matters | |||||||||||||||||
From time to time, the Company is or may become involved in various legal proceedings that arise in the ordinary course of business or otherwise. Legal proceedings are subject to inherent uncertainties as to timing, outcomes, costs, expenses and time expenditures by the Company’s management and others on behalf of the Company. Although there can be no assurance, based on information currently available, the Company’s management believes that the outcome of legal proceedings that are pending or threatened against the Company will not have a material effect on the Company’s financial condition. However, the outcome of any of these matters is neither probable nor reasonably estimable. | |||||||||||||||||
As of and for the three months ended March 31, 2014, the Company was not a party to any material litigation, and there were no lawsuits settled during the period. | |||||||||||||||||
On March 27, 2014, Plaintiff 580 Garcia Properties, LLC, filed a lawsuit for unlawful detainer in California Superior Court in Contra Costa County, Case No. PS14-0407, against Defendants Biozone Laboratories, Inc., a California corporation, and Biozone Pharmaceuticals, Inc., a Nevada corporation (together, “Biozone”), represented by Paul Sievers of Manly, Stewart & Finaldi, and also against Defendants MusclePharm Corporation (“MPC”) and Biozone Laboratories, Inc., a Nevada corporation (“BLI-NV”), represented by King Parret & Droste LLP. The lawsuit seeks judicial determination of lease termination based on the landlords’ refusal to consent to lease assignment as well as incidental damages for alleged rental value even though rent payments are current, and attorney’s fees. On March 21, 2014 the Company received an eviction notice for our Biozone facility at 580 Garcia Avenue, Pittsburg, CA. The Company believes that this legal action is without merit and intends to defend this cause of action. However, if this matter is adversely determined against us, the Company is unable to quantify the amount of damages it would incur, including without limitation, moving expenses. The Company is entitled to indemnification from Biozone pursuant to the Asset Purchase Agreement, dated November 12, 2013, by and among MusclePharm Corporation, a Nevada corporation, Biozone Laboratories, Inc., a Nevada corporation, Biozone Pharmaceuticals, Inc., a Nevada corporation, Biozone Laboratories, Inc., a California corporation, Baker Cummins Corp. a Nevada corporation, and an indemnity agreement executed by Biozone in favor of the Company. The Company is entitled to bring indemnity claims against Biozone for this cause of action as well as other potential claims on or before the date which is nine months from January 2, 2014. | |||||||||||||||||
(D) Product Liability | |||||||||||||||||
As a manufacturer of nutritional supplements and other consumer products that are ingested by consumers, the Company may be subject to various product liability claims. Although we have not had any material claims to date, it is possible that current and future product liability claims could have a material adverse effect on our business or financial condition, results of operations or cash flows. The Company currently maintains product liability insurance with a deductible/retention of $10,000 per claim with an aggregate cap on retained loss of $5,000,000. At March 31, 2014, the Company had not recorded any accruals for product liabilities. | |||||||||||||||||
(E) Sponsorship and Endorsement Contract Liabilities | |||||||||||||||||
The Company has various non-cancelable endorsement and sponsorship agreements with terms expiring through 2017. The total value of outstanding payments as of March 31, 2014 was $14,536,916. The total outstanding payments are as follows: | |||||||||||||||||
Outstanding Payments | 2014 | 2015 | 2016 | 2017 | Total | ||||||||||||
Endorsement | $ | 1,461,000 | $ | 2,455,833 | $ | 853,333 | $ | - | $ | 4,770,166 | |||||||
Sponsorship | 3,521,250 | 4,832,500 | 1,125,000 | 100,000 | 9,578,750 | ||||||||||||
Service | 128,000 | 60,000 | - | - | 188,000 | ||||||||||||
Total | $ | 5,110,250 | $ | 7,348,333 | $ | 1,978,333 | $ | 100,000 | $ | 14,536,916 | |||||||
(F) SEC Investigation | |||||||||||||||||
In July 2013, the Company received a formal order of investigation of the Company from the Denver Regional Office of the Securities and Exchange Commission. As a result of that formal order, the Company is conducting a review of its internal controls, disclosures of related party transactions, settlements of claims including share issuance, executive compensation, and disclosure of perquisites for the periods of 2010, 2011, and 2012. There can be no assurance that these are the only subject matters of concern, what the nature or amounts in question will be, or that these are the only periods under review | |||||||||||||||||
Defined_Contribution_Plan
Defined Contribution Plan | 3 Months Ended |
Mar. 31, 2014 | |
Compensation and Retirement Disclosure [Abstract] | ' |
Pension and Other Postretirement Benefits Disclosure [Text Block] | ' |
Note 13: Defined Contribution Plan | |
The Company established a 401(k) Plan (the “401(k) Plan”) for eligible employees of the Company. Generally, all employees of the Company who are at least twenty-one years of age and who have completed six months of entry service are eligible to participate in the 401(k) Plan. The 401(k) Plan is a defined contribution plan that provides that participants may make voluntary salary deferral contributions, on a pretax basis, of up to $17,500 for 2014 (subject to make-up contributions) in the form of voluntary payroll deductions. The Company may make discretionary contributions. During the three months ended March 31, 2014 and 2013, the Company’s matching contribution were $55,534 and $12,791, respectively. | |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2014 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions Disclosure [Text Block] | ' |
Note 14: Related Party Transactions | |
Ryan DeLuca, the Chief Executive Officer of one of our major customers, Bodybuilding.com, is the brother of Jeremy DeLuca, MusclePharm’s President of Sales and Marketing. We maintained a business relationship with Bodybuilding.com prior to hiring Mr. DeLuca. We do not offer preferential pricing of our products to Bodybuilding.com based on these relationships. Sales of products to Bodybuilding.com were $8,223,456 and $8,019,335 for the three months ended March 31, 2014 and 2013, respectively. Bodybuilding.com owed the Company approximately $1,684,995 and $2,051,265 in trade receivables as of March 31, 2014 and December 31, 2013, respectively. The Company purchased marketing services from Bodybuilding.com during the three months ended March 31, 2014 in the amount of $349,998. | |
We lease our office and warehouse facility in Hamilton, Ontario, Canada from 2017275 Ontario Inc., which is a company owned by Renzo Passaretti, VP and General Manager of MusclePharm Canada Enterprises Corp, our wholly owned Canadian subsidiary. For the three months ended March 31, 2014 and 2013, we paid rent of $18,064 and $19,502, respectively. The lease expires March 31, 2016. | |
On October 16, 2013, the Company entered into an Office Lease Agreement with Frost Real Estate Holdings, LLC, a Florida limited liability company owned by Dr. Phillip Frost, one of our significant shareholders. Pursuant to the lease, the Company rents 1,437 square feet of office space for an initial term of three years, with an option to renew the lease for an additional three year term. For the three months ended March 31, 2014, we paid rent of $22,781. | |
During the three months ended March 31, 2014, the Company purchased split dollar life insurance policies on certain key executives. These policies provide a split of 50% of the death benefit proceeds to the Company and 50% to the officer’s designated beneficiaries | |
Endorsement_Agreement
Endorsement Agreement | 3 Months Ended |
Mar. 31, 2014 | |
Endorsement Agreement [Abstract] | ' |
Endorsement Agreement [Text Block] | ' |
Note 15: Endorsement Agreement | |
On July 26, 2013, the Company entered into an Endorsement Licensing and Co-Branding Agreement by and among, the Company, Arnold Schwarzenegger, Marine MP, LLC, and Fitness Publications, Inc. Under the terms of the Agreement, Mr. Arnold Schwarzenegger will co-develop a special Arnold Schwarzenegger product line and will be co-marketed under Mr. Schwarzenegger’s name and likeness. | |
In connection with this agreement, the Company also issued Marine MP, LLC fully vested restricted shares of common stock. As of March 31, 2014 and December 31, 2013, the amount of unamortized stock compensation expense related to this agreement was $6,598,800 and $7,300,800, respectively. The shares are being amortized over the original three year term of the agreement. The current and non-current portions of this unamortized stock compensation are included as a component of Prepaid Stock Compensation in the Consolidated Balance Sheets. | |
Biozone_Acquisition
Biozone Acquisition | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Business Combinations [Abstract] | ' | |||||||
Business Combination Disclosure [Text Block] | ' | |||||||
Note 16: Biozone Acquisition | ||||||||
On January 2, 2014, the Company closed the transactions contemplated in the Asset Purchase Agreement (the “APA”) dated November 12, 2013 with BioZone Pharmaceuticals, Inc. (“BioZone”) and its subsidiaries, BioZone Laboratories, Inc., and Baker Cummins Corporation (collectively, the “Seller”). At closing, the Company acquired substantially all of the operating assets of BioZone, including all assets associated with QuSomes, HyperSorb and EquaSomes drug delivery technologies and the name “Biozone”, “Biozone Laboratories” and similar names and domain names (and excluding certain assets including cash on hand). | ||||||||
The base purchase price under the APA was 1.2 million shares of the Company’s common stock of which 600,000 shares were placed into escrow for a period of nine months to cover indemnification obligations and which shares are also subject to repurchase from the escrow for $10.00 per share in cash during the nine-month escrow period. The remaining 600,000 non-escrowed shares were issued to Biozone upon closing and are subject to a lockup agreement which permits private sales (subject to the lockup and certain leak out provisions). The total consideration paid by MSLP was $9,840,000 in common stock based on the stock price as of January 2, 2014. As of March 31, 2014 and the date of this report, the Company is still evaluating the extent to which there will be adjustments against the purchase price of the Biozone assets and liabilities as a result of certain claims that the Company may assert against Biozone pursuant to the indemnification provision under the APA and the 580 Garcia Lease indemnity agreement. | ||||||||
All assets acquired from BioZone are now held in BioZone Laboratories, Inc., a wholly owned subsidiary of MusclePharm Corporation. Biozone is a developer, manufacturer, and marketer of over-the-counter drugs and preparations, cosmetics, and nutritional supplements. | ||||||||
(A) | Assets and Liabilities Acquired | |||||||
The Biozone acquisition is considered the acquisition of a business and was accounted for under the purchase method of accounting. The acquired assets and liabilities have been recognized at their estimated fair value. MusclePharm contracted a third party valuation firm to determine the fair value at the date of purchase of all identifiable tangible and intangible assets purchased in the acquisition. | ||||||||
The following reflects the allocation of the consideration to the net tangible and identifiable intangible assets of the Seller, based upon their estimated fair values: | ||||||||
Assets and Liabilities at Fair Value | ||||||||
Assets | ||||||||
Intangible assets | ||||||||
Patents | $ | 5,869,874 | ||||||
Trademarks | 656,160 | |||||||
Customer Lists | 629,607 | |||||||
Domain Name | 21 | |||||||
Total intangible assets | 7,155,662 | |||||||
Property & equipment | 1,859,066 | |||||||
Receivables | 806,212 | |||||||
Inventory | 840,999 | |||||||
Other assets | 577,453 | |||||||
Total assets acquired | 11,239,392 | |||||||
Liabilities | ||||||||
Factoring payable | 795,031 | |||||||
Trade payables | 327,038 | |||||||
Equipment leases | 122,766 | |||||||
Employee vacation liability | 78,134 | |||||||
Other | 76,423 | |||||||
Total liabilities assumed | 1,399,392 | |||||||
Total stock consideration | $ | 9,840,000 | ||||||
(B) | Receivables | |||||||
We acquired various receivables as part of the asset acquisition of Biozone. The table below reflects the estimated fair value and the contractual value of the receivables as of the transaction date. As of the date of the acquisition we did not determine that any of the receivables would ultimately become uncollectible. | ||||||||
Receivables | Estimated Fair | Contractual | ||||||
Value | Value | |||||||
Trade receivables | $ | 806,212 | $ | 807,240 | ||||
Factoring receivable | 150,702 | 151,016 | ||||||
Asset sale receivable | 399,814 | 400,000 | ||||||
(C) | Unaudited Pro Forma Income Statement | |||||||
The accompanying consolidated statements of operations include the results of the Biozone Acquisition from the acquisition date of January 2, 2014. The Company has determined that there were no significant transactions during the one day which is not presented in the accompanying consolidated statement of operations for the three months ended March 31, 2014 and has therefore not presented the pro forma effects of the acquisition for this period. The unaudited pro forma effects of the acquisition on the results of operations as if the acquisition had been completed on January 1, 2013 is as follows: | ||||||||
Three months ended March 31, | 2013 | |||||||
Total net revenues | $ | 24,436,698 | ||||||
Net loss | -8,602,097 | |||||||
Net loss per common share: | ||||||||
Basic and Diluted | $ | -2.08 | ||||||
The above unaudited pro forma results include adjustments for amortization of acquired intangibles, interest expense and income tax expense. The unaudited pro forma information as presented above is for informational purposes only and is not necessarily indicative of results of operations that would have been achieved if the acquisition had taken place at the date identified. | ||||||||
Intangible_Assets
Intangible Assets | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||
Intangible Assets Disclosure [Text Block] | ' | ||||||||||||
Note 17: Intangible Assets | |||||||||||||
Intangible assets are as follows as of March 31, 2014, which also includes intangible assets acquired in the Biozone acquisition as more fully described in Note 16 above: | |||||||||||||
As of March 31, 2014 | |||||||||||||
Gross carrying | Accumulated | Net carrying | Weighted | ||||||||||
amount | amortization | amount | average | ||||||||||
amortization | |||||||||||||
period (years) | |||||||||||||
Amortized intangible assets | |||||||||||||
Patents | $ | 5,922,374 | $ | -220,482 | $ | 5,701,892 | 8.74 | ||||||
Trademarks | 691,160 | -38,467 | 652,693 | 7.36 | |||||||||
Customer relationships | 629,607 | -26,234 | 603,373 | 6 | |||||||||
7,243,141 | -285,183 | 6,957,958 | |||||||||||
Indefinite lived intangible assets | |||||||||||||
Domain name | 67,686 | - | 67,686 | - | |||||||||
67,686 | - | 67,686 | |||||||||||
Total intangible assets | $ | 7,310,827 | $ | -285,183 | $ | 7,025,644 | |||||||
Estimated amortization expense for intangible assets as of March 31, 2014 is as follows: | |||||||||||||
2014 (9 months) | $ | 830,703 | |||||||||||
2015 | 1,104,106 | ||||||||||||
2016 | 1,001,226 | ||||||||||||
2017 | 932,310 | ||||||||||||
2018 | 910,413 | ||||||||||||
Thereafter | 2,179,200 | ||||||||||||
Total amortization expense | $ | 6,957,958 | |||||||||||
Intangible amortization expense for the three months ended March 31, 2014 was $285,183 and is included in operating expenses in the Consolidated Statement of Operations. | |||||||||||||
With the exception of domain names, intangibles are amortized over the estimated useful lives of the assets of 2 to 18 years. We review intangible assets for impairment when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We use an estimate of future undiscounted net cash flows of the related assets or groups of assets over their remaining lives in measuring whether the assets are recoverable. An impairment loss is calculated by determining the difference between the carrying values and the estimated fair values of these assets. We did not consider any of our intangible assets to be impaired during the three months ended March 31, 2014. | |||||||||||||
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Events [Text Block] | ' |
Note 18: Subsequent Events | |
On April 2, 2014, the remaining 131,500 outstanding shares of our Series D Convertible Preferred Stock held by Dr. Philip Frost were converted into 263,000 shares of the Company’s common stock. | |
On April 2, 2014, the Company entered into a security purchase agreement to sell the Fuse convertible note and warrants as more fully described in Notes 6 and 7 for an aggregate purchase price of $215,000. | |
On April 8, 2014, Mr. L. Gary Davis submitted his resignation as the Company’s Chief Financial Officer, effective April 15, 2014, and as an employee of the Company entirely, effective December 31, 2014. Mr. Davis’ resignation was for personal reasons and not as a result of any disagreements between him and the Company with respect to the Company’s operations, policies or practices. Mr. Davis will continue to be employed by the Company in a special projects role until December 31, 2014; however, beginning on April 15, 2014 he will no longer be a named executive officer, including for purposes of the Securities Exchange Act of 1934, as amended. | |
On April 10, 2014, Donald W. Prosser resigned from his position serving as a member of the Company’s Board of Directors, effective April 16, 2014. Mr. Prosser’s resignation from the Board of Directors was not as a result of any disagreements between him and the Company with respect to the Company’s operations, policies or practices. Also on April 10, 2014, Mr. Prosser was appointed to serve as the Company’s Chief Financial Officer and Principal Accounting Officer, effective April 16, 2014. | |
Also on April 10, 2014, Bradley Pyatt resigned his position serving as President of the Company, effective April 16, 2014, but will continue to serve as the Company’s Chief Executive Officer and Chairman of its Board of Directors. Concurrently, Richard Estalella was appointed to serve as the Company’s President, effective April 16, 2014. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Consolidation, Policy [Policy Text Block] | ' | ||||||||
Principles of Consolidation | |||||||||
The consolidated financial statements include the accounts of MusclePharm Corporation and its wholly-owned subsidiaries MusclePharm Canada Enterprises Corp (“MusclePharm Canada”) and Biozone Laboratories, Inc. (“Biozone”). MusclePharm Canada began operations in April 2012, and Biozone began operations in January 2014. All intercompany accounts and transactions have been eliminated upon consolidation. | |||||||||
Use of Estimates, Policy [Policy Text Block] | ' | ||||||||
Use of Estimates | |||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. | |||||||||
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future non-conforming events. Accordingly, the actual results could differ significantly from estimates. | |||||||||
Risks and Uncertainties [Policy Text Block] | ' | ||||||||
Risks and Uncertainties | |||||||||
The Company operates in an industry that is subject to rapid change and intense competition. The Company’s operations will be subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risks, including the potential risk of business failure. | |||||||||
Cash and Cash Equivalents, Policy [Policy Text Block] | ' | ||||||||
Cash and Cash Equivalents | |||||||||
The Company considers all highly liquid instruments purchased with an original maturity of three months or less and money market accounts to be cash equivalents. At March 31, 2014 and December 31, 2013, the Company had no cash equivalents. | |||||||||
The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At March 31, 2014 and December 31, 2013, we had two bank accounts that exceeded the federally insured limit. | |||||||||
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] | ' | ||||||||
Restricted Cash | |||||||||
The Company segregates cash that is restricted in its use based on contractual provisions from unrestricted cash and cash equivalent balances. See Note 8(A) for further discussion on our March 31, 2014 restricted cash balance. | |||||||||
Accounts Receivable and Allowance For Doubtful Accounts [Policy Text Block] | ' | ||||||||
Accounts Receivable and Allowance for Doubtful Accounts | |||||||||
Accounts receivable represents trade obligations from customers that are subject to normal trade collection terms. The Company periodically evaluates the collectability of its accounts receivable and considers the need to establish an allowance for doubtful accounts based upon historical collection experience and specific customer information. Accordingly, the actual amounts could vary from the recorded allowances. There is also a review of customer discounts at the period end and an accrual made for discounts earned but not yet utilized by period end. | |||||||||
Management performs ongoing evaluations of the Company’s customers’ financial condition and generally does not require collateral. Some international customers are required to pay for their orders in advance of shipment. Management reviews accounts receivable quarterly and reduces the carrying amount by a valuation allowance that reflects management’s best estimate of amounts that may not be collectible. Allowances, if any, for uncollectible accounts receivable are determined based upon information available and historical experience. Bad debt expense recognized as a result of our valuation allowance is classified under General and administrative expense in the Consolidated Statement of Operations. | |||||||||
The Company does not charge interest on past due receivables. Receivables are determined to be past due based on the payment terms of the original invoices. The Company’s finance department contacts customers with past due balances to request payment. | |||||||||
Accounts receivable consisted of the following at March 31, 2014 and December 31, 2013: | |||||||||
As of March 31, | As of December 31, | ||||||||
2014 | 2013 | ||||||||
Accounts receivable | $ | 20,274,972 | $ | 14,830,487 | |||||
Less: allowance for discounts | -535,621 | -1,060,000 | |||||||
Less: allowance for doubtful accounts | -105,277 | -29,307 | |||||||
Accounts receivable – net | $ | 19,634,074 | $ | 13,741,180 | |||||
At March 31, 2014 and December 31, 2013, the Company had the following concentrations of accounts receivable with customers: | |||||||||
Customer | As of March 31, 2014 | As of December 31, 2013 | |||||||
A | 22 | % | 16 | % | |||||
Bodybuilding.com (related party – See Note 14) | 8 | % | 14 | % | |||||
C | 6 | % | 24 | % | |||||
Inventory, Policy [Policy Text Block] | ' | ||||||||
Inventory | |||||||||
Inventory is valued at the lower of cost or market value. Product-related inventory for MusclePharm and MusclePharm Canada is maintained using the First-In First-Out method, and inventory for Biozone is maintained using the average cost method. To estimate any necessary obsolescence or lower-of-cost-or-market adjustments, various assumptions are made in regard to excess or slow-moving inventories, non-conforming inventories, expiration dates, current and future product demand, production planning and market conditions. | |||||||||
Prepaid Giveways [Policy Text Block] | ' | ||||||||
Prepaid Giveaways | |||||||||
Prepaid giveaways represent non-inventory sample items which are given away to aid in promotion of the brand. | |||||||||
Prepaid Sponsorship Fees [Policy Text Block] | ' | ||||||||
Prepaid Sponsorship and Endorsement Fees | |||||||||
Prepaid sponsorship and endorsement fees represent fees paid in connection with Company sponsorships of certain events and trade shows as well as prepaid athlete endorsement fees, which are expensed over the period the fees are earned. A significant amount of the Company’s promotional expenses results from payments under endorsement and sponsorship contracts. Accounting treatment for endorsement and sponsorship payments is based upon specific contract provisions. Generally, endorsement payments are expensed straight-line over the term of the contract after giving recognition to periodic performance compliance provisions of the contract. Prepayments made under the contracts are included in either current or long-term prepaid expenses depending on the period for which the prepayment applies. | |||||||||
Compensation Related Costs, Policy [Policy Text Block] | ' | ||||||||
Prepaid Stock Compensation | |||||||||
Prepaid stock compensation represents amounts paid with stock for future contractual benefits to be received. The Company amortizes these contractual benefits over the life of the contracts using the straight-line method. | |||||||||
Prepaid Expenses [Policy Text Block] | ' | ||||||||
Prepaid Expenses | |||||||||
Prepaid expenses consist of various payments that the Company has made in advance for goods or services to be received in the future. These prepaid expenses include legal retainers, print advertising, insurance and service contracts requiring up-front payments. | |||||||||
Property, Plant and Equipment, Policy [Policy Text Block] | ' | ||||||||
Property and Equipment | |||||||||
Property and equipment are stated at cost and depreciated to their estimated residual value over their estimated useful lives. When assets are retired or otherwise disposed of, the assets and related accumulated depreciation are relieved from the accounts and the resulting gains or losses are included in the Statements of Operations. Repairs and maintenance costs are expensed as incurred. Depreciation is provided using the straight-line method for all property and equipment. We review our property and equipment for impairment when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We use an estimate of future undiscounted net cash flows of the related assets or groups of assets over their remaining lives in measuring whether the assets are recoverable. An impairment loss is calculated by determining the difference between the carrying values and the estimated fair values of these assets. We did not consider any of our property and equipment to be impaired during the three months ended March 31, 2014 or 2013. | |||||||||
Debt Securities [Policy Text Block] | ' | ||||||||
Debt Securities | |||||||||
The Company classifies its investment securities as either held-to-maturity, available-for-sale or trading. The Company’s debt securities are classified as trading securities and are carried at fair value with changes recognized through net income. See Note 6 for further discussion of the Company’s debt securities. | |||||||||
Accrued Liabilities [Policy Text Block] | ' | ||||||||
Accrued Liabilities | |||||||||
Accrued liabilities consist of amounts estimated by management for future liability payments that relate to the current accounting period. Management reviews these estimates periodically to determine their reasonableness and fair presentation. | |||||||||
Debt, Policy [Policy Text Block] | ' | ||||||||
Debt | |||||||||
The Company defines short term debt as any debt payment due less than one year from the date of the financial statements. Long term debt is defined as any debt payment due more than one year from the date of the financial statements. Refer to Note 8 for further disclosure of debt liabilities. | |||||||||
Derivatives, Policy [Policy Text Block] | ' | ||||||||
Derivatives | |||||||||
Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in equity instruments and warrants granted, and measurement of their fair value. In determining the appropriate fair value, the Company uses Black-Scholes or lattice option-valuation models. In assessing the convertible equity instruments, management determines if the convertible equity instrument is conventional convertible equity and further if the beneficial conversion feature requires separate measurement. | |||||||||
Once derivative instruments are determined, they are adjusted to reflect fair value at the end of each reporting period. Any increase or decrease in the fair value is recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using a Black-Scholes or lattice option-pricing model. Once a derivative liability ceases to exist any remaining fair value is reclassified to additional paid-in capital if redeemed or through earnings if forfeited or expired. | |||||||||
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | ' | ||||||||
Share-Based Payments | |||||||||
Generally, all forms of share-based payments, including stock option grants, warrants and restricted stock grants and stock appreciation rights are measured at their fair value on the awards’ grant date, based on estimated number of awards that are ultimately expected to vest. Share-based compensation awards issued to non- employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. | |||||||||
Revenue Recognition Accounting Policy, Gross and Net Revenue Disclosure [Policy Text Block] | ' | ||||||||
Revenue Recognition | |||||||||
The Company records revenue when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) product has been shipped or delivered, (3) the sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured. | |||||||||
Depending on individual customer agreements, sales are recognized either upon shipment of products to customers or upon delivery. For all of our Canadian sales, which represent 2% of total sales, recognition occurs upon shipment. | |||||||||
The Company has determined that advertising related credits that were granted to customers fell within the guidance of ASC No. 605-50-55 (“Revenue Recognition” – Customer Payments and Incentives). The guidance indicates that, absent evidence of benefit to the vendor, appropriate treatment requires netting these types of payments against revenues and not expensing as advertising expense. | |||||||||
The Company records sales allowances and discounts as a direct reduction of sales. The Company grants volume incentive rebates to certain customers based on contractually agreed upon percentages once certain thresholds have been met. These volume incentive rebates are recorded as a direct reduction to sales. | |||||||||
Sales for the three months ended March 31, 2014 and 2013 are as follows: | |||||||||
Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Gross Sales | $ | 56,705,286 | $ | 24,924,036 | |||||
Discounts | -6,495,832 | -2,362,869 | |||||||
Sales – Net | $ | 50,209,454 | $ | 22,561,167 | |||||
The Company has an informal 7-day right of return for products. There were nominal returns under the Company’s informal right of return policy for the three months ended March 31, 2014 and 2013. | |||||||||
Major Customers, Policy [Policy Text Block] | ' | ||||||||
Significant Customers | |||||||||
For the three months ended March 31, 2014 and 2013, the Company had the following concentrations of revenues with customers: | |||||||||
Three Months Ended March 31, | |||||||||
Customer | 2014 | 2013 | |||||||
Bodybuilding.com (related party – See Note 14) | 15 | % | 33 | % | |||||
B | 14 | % | 11 | % | |||||
A loss of either of these customers could have a material adverse impact on the Company. | |||||||||
Discounts And Sales Allowances Policy [Policy Text Block] | ' | ||||||||
Discounts and Sales Allowances | |||||||||
We offer various discounts and sales allowances for volume rebate programs, product promotions, early payment remittances, and other discounts and allowances. We accrue for sales discounts and allowances over the period they are earned. Because of the inherent uncertainty surrounding volume rebate programs and product promotions that are based on sales thresholds, actual results could generate liabilities greater or less than the recorded amounts. Sales discounts and allowances for the three months ended March 31, 2014 and 2013 were $6.5 million, or 11% of gross sales, and $2.4 million of 9% of gross sales, respectively. | |||||||||
Cost of Sales, Policy [Policy Text Block] | ' | ||||||||
Cost of Sales | |||||||||
Cost of sales for MusclePharm and MusclePharm Canada represent costs directly related to the production, manufacturing and freight of the Company’s products purchased from third party manufacturers. For products produced by Biozone, cost of sales consists of costs for raw material, direct labor, freight expenses, and other supply and equipment rental expenses used to manufacture products. | |||||||||
Significant Vendors Policy [Policy Text Block] | ' | ||||||||
Significant Vendors | |||||||||
The Company uses four non-affiliated principal manufacturers for the components of our products. We have an agreement in place with our primary manufacturer, which is in place to support our growth and ensure consistency in production and quality. During the three months ended March 31, 2014, our primary manufacturer accounted for approximately 54% of our product purchases and the next largest manufacturer accounted for 44% of product purchases. For the three months ended March 31, 2013, our primary manufacturer accounted for 97% of our product purchases. | |||||||||
Shipping and Handling Cost, Policy [Policy Text Block] | ' | ||||||||
Shipping and Handling | |||||||||
We ship customer orders from our distribution center in Franklin, Tennessee. The facility is operated with the Company’s equipment and employees, and all inventory is owned by the Company. Shipments to customers from our distribution center are recorded as a component of cost of sales. | |||||||||
The Company also uses a manufacturer in New York to manufacture one of the Company’s products. These orders are typically large and heavy and are drop shipped directly to our customers at the time of order. Costs associated with these shipments are recorded in cost of sales. | |||||||||
For Canadian sales, the product is shipped from our Canadian warehouse to our customers. Costs associated with the shipments are recorded in cost of sales. | |||||||||
Advertising Costs, Policy [Policy Text Block] | ' | ||||||||
Advertising | |||||||||
Advertising and promotion expenses include digital and print advertising, trade show events, athletic endorsements and sponsorships, and promotional giveaways. Advertising expenses are recognized in the month that the advertising appears while costs associated with trade show events are expensed when the event occurs. For major trade shows, the expenses are recognized within the calendar year over the period in which we recognize revenue associated with sales generated at the trade show. Costs related to promotional giveaways are expensed when the product is either given out at a promotional event or shipped to the customer. | |||||||||
A significant amount of the Company’s promotional expenses results from payments under endorsement and sponsorship contracts. Accounting treatment for endorsement and sponsorship payments is based upon specific contract provisions. Generally, endorsement payments are expensed straight-line over the term of the contract after giving recognition to periodic performance compliance provisions of the contract. Prepayments made under the contracts are included in either current or long-term prepaid expenses depending on the period for which the prepayment applies. | |||||||||
Some of the contracts provide for contingent payments to endorsers or athletes based upon specific achievement in their sports (e.g. winning a championship). The Company records expense for these payments when the endorser achieves the specific achievement. | |||||||||
Advertising expense for the three months ended March 31, 2014 and 2013, are as follows: | |||||||||
Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Advertising and promotion | $ | 6,328,487 | $ | 2,317,377 | |||||
Income Tax, Policy [Policy Text Block] | ' | ||||||||
Income Taxes | |||||||||
Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Beginning with the adoption of Financial Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (included in FASB ASC Subtopic 740-10, Income Taxes — Overall), the Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely to be realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. | |||||||||
The Company records interest and penalties related to unrecognized tax benefits in income tax expense. There were no interest or penalties related to unrecognized tax benefits for the three months ended March 31, 2014 and 2013. | |||||||||
Earnings Per Share, Policy [Policy Text Block] | ' | ||||||||
Earnings (Loss) Per Share | |||||||||
Basic net earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. | |||||||||
The Company uses the “treasury stock” method to determine whether there is a dilutive effect of outstanding option and warrant contracts. For the three months ended March 31, 2013 the Company reflected net loss and a dilutive net loss, and the effect of considering any common stock equivalents would have been anti-dilutive for the period. Therefore, separate computation of diluted earnings (loss) per share is not presented for the three months ended March 31, 2013. | |||||||||
The Company has the following common stock equivalents as of March 31, 2014 and 2013, respectively: | |||||||||
As of March 31, | |||||||||
2014 | 2013 | ||||||||
Stock options (exercise price – $425/share) | 472 | 670 | |||||||
Warrants (exercise price – $4 - $1,275/share) | 263,089 | 687,839 | |||||||
Employee and director unvested shares | 1,381,573 | 86,275 | |||||||
Total common stock equivalents | 1,645,134 | 774,784 | |||||||
The following is a reconciliation of the number of shares used in the calculation of basic and diluted earnings per share for the three months ended March 31, 2014 and 2013, respectively: | |||||||||
Three months ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Net income (loss) | $ | 2,736,234 | $ | -7,361,981 | |||||
Weighted average number of common shares outstanding | 10,307,350 | 4,128,679 | |||||||
Incremental shares from the assumed exercise of dilutive agreements | 1,644,573 | - | |||||||
Diluted common shares outstanding | 11,951,923 | 4,128,679 | |||||||
Earnings (loss) per shares - basic | $ | 0.27 | $ | -1.78 | |||||
Earnings (loss) per shares - diluted | $ | 0.23 | $ | -1.78 | |||||
Foreign Currency Transactions and Translations Policy [Policy Text Block] | ' | ||||||||
Foreign Currency | |||||||||
MusclePharm began operations in Canada in April 2012. The Canadian Dollar was determined to be the functional currency as the majority of the transactions related to the day to day operations of the business are exchanged in Canadian Dollars. At the end of the period, the financial results of the Canadian operation are translated into the U.S. Dollar, which is the reporting currency, and added to the U.S. operations for consolidated company financial results. The revenue and expense items are translated using the average rate for the period and the assets and liabilities at the end of period rate. Transactions that have completed the accounting cycle and resulted in a gain or loss related to translation are recorded in realized gain or loss due to foreign currency translation under other income and expense on the income statement. Transactions that have not completed their accounting cycle but appear to have gain or loss due to the translation process are recorded as unrealized gain or loss due to translation and held in the equity section on the balance sheet until such date the accounting cycle of the transaction is complete and the actual realized gain or loss is recognized. | |||||||||
Reclassification, Policy [Policy Text Block] | ' | ||||||||
Reclassification | |||||||||
The Company has reclassified certain prior period amounts to conform to the current period presentation. These reclassifications were for presentation purposes and had no effect on the financial position, results of operations, or cash flows for the periods presented. | |||||||||
New Accounting Pronouncements, Policy [Policy Text Block] | ' | ||||||||
Recent Accounting Pronouncements | |||||||||
In March 2013, the FASB issued ASU 2013-05, which indicates that the entire amount of a cumulative translation adjustment (CTA) related to an entity’s investment in a foreign entity should be released when one of the following occur: | |||||||||
⋅ | Sale of a subsidiary or group of net assets within a foreign entity and the sale represents the substantially complete liquidation of the investment in the foreign entity. | ||||||||
⋅ | Loss of a controlling financial interest in an investment in a foreign entity | ||||||||
⋅ | Step acquisition for a foreign entity | ||||||||
The ASU does not change the requirement to release a pro rata portion of the CTA of the foreign entity into earnings for a partial sale of an equity method investment in a foreign entity. ASU 2013-5 is effective for fiscal years (and interim periods within those fiscal years) beginning on or after December 15, 2013. The adoption of this pronouncement did not have a material impact on our consolidated financial statements. | |||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Schedule Of Accounts Receivable [Table Text Block] | ' | ||||||||
Accounts receivable consisted of the following at March 31, 2014 and December 31, 2013: | |||||||||
As of March 31, | As of December 31, | ||||||||
2014 | 2013 | ||||||||
Accounts receivable | $ | 20,274,972 | $ | 14,830,487 | |||||
Less: allowance for discounts | -535,621 | -1,060,000 | |||||||
Less: allowance for doubtful accounts | -105,277 | -29,307 | |||||||
Accounts receivable – net | $ | 19,634,074 | $ | 13,741,180 | |||||
Concentration Percentage Of Accounts Receivable With Customer [Table Text Block] | ' | ||||||||
At March 31, 2014 and December 31, 2013, the Company had the following concentrations of accounts receivable with customers: | |||||||||
Customer | As of March 31, 2014 | As of December 31, 2013 | |||||||
A | 22 | % | 16 | % | |||||
Bodybuilding.com (related party – See Note 14) | 8 | % | 14 | % | |||||
C | 6 | % | 24 | % | |||||
Schedule Of Sales [Table Text Block] | ' | ||||||||
Sales for the three months ended March 31, 2014 and 2013 are as follows: | |||||||||
Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Gross Sales | $ | 56,705,286 | $ | 24,924,036 | |||||
Discounts | -6,495,832 | -2,362,869 | |||||||
Sales – Net | $ | 50,209,454 | $ | 22,561,167 | |||||
Schedule Of Concentrations Of Revenues With Customers [Table Text Block] | ' | ||||||||
For the three months ended March 31, 2014 and 2013, the Company had the following concentrations of revenues with customers: | |||||||||
Three Months Ended March 31, | |||||||||
Customer | 2014 | 2013 | |||||||
Bodybuilding.com (related party – See Note 14) | 15 | % | 33 | % | |||||
B | 14 | % | 11 | % | |||||
Schedule Of Advertising Expense [Table Text Block] | ' | ||||||||
Advertising expense for the three months ended March 31, 2014 and 2013, are as follows: | |||||||||
Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Advertising and promotion | $ | 6,328,487 | $ | 2,317,377 | |||||
Schedule Of Common Stock Equivalents [Table Text Block] | ' | ||||||||
The Company has the following common stock equivalents as of March 31, 2014 and 2013, respectively: | |||||||||
As of March 31, | |||||||||
2014 | 2013 | ||||||||
Stock options (exercise price – $425/share) | 472 | 670 | |||||||
Warrants (exercise price – $4 - $1,275/share) | 263,089 | 687,839 | |||||||
Employee and director unvested shares | 1,381,573 | 86,275 | |||||||
Total common stock equivalents | 1,645,134 | 774,784 | |||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | ' | ||||||||
The following is a reconciliation of the number of shares used in the calculation of basic and diluted earnings per share for the three months ended March 31, 2014 and 2013, respectively: | |||||||||
Three months ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Net income (loss) | $ | 2,736,234 | $ | -7,361,981 | |||||
Weighted average number of common shares outstanding | 10,307,350 | 4,128,679 | |||||||
Incremental shares from the assumed exercise of dilutive agreements | 1,644,573 | - | |||||||
Diluted common shares outstanding | 11,951,923 | 4,128,679 | |||||||
Earnings (loss) per shares - basic | $ | 0.27 | $ | -1.78 | |||||
Earnings (loss) per shares - diluted | $ | 0.23 | $ | -1.78 | |||||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 3 Months Ended | |||||||||
Mar. 31, 2014 | ||||||||||
Property, Plant and Equipment [Abstract] | ' | |||||||||
Property, Plant and Equipment [Table Text Block] | ' | |||||||||
Property and equipment consisted of the following at March 31, 2014 and December 31, 2013: | ||||||||||
As of March 31, 2014 | As of December 31, 2013 | Estimated Useful Life | ||||||||
Leasehold improvements | $ | 3,205,922 | $ | 619,159 | From 20 to 182 months | |||||
Furniture, fixtures and equipment | 2,059,778 | 1,849,462 | From 3 to 5 years | |||||||
Manufacturing and lab equipment | 1,183,168 | - | From 2 to 20 years | |||||||
Vehicles | 444,065 | 442,300 | From 2 to 5 years | |||||||
Displays | 33,683 | 33,683 | 5 years | |||||||
Website | 11,462 | 11,462 | 3 years | |||||||
Construction in process | 190,373 | 1,018,509 | ||||||||
Total | 7,128,451 | 3,974,575 | ||||||||
Less: Accumulated depreciation | -1,665,164 | -1,360,991 | ||||||||
$ | 5,463,287 | $ | 2,613,584 | |||||||
Inventory_Tables
Inventory (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
Schedule of Inventory, Current [Table Text Block] | ' | |||||||
Inventory consisted of the following at March 31, 2014 and December 31, 2013: | ||||||||
March 31, 2014 | December 31, 2013 | |||||||
Raw materials inventory | $ | 661,026 | $ | - | ||||
Work in process inventory | 16,411 | - | ||||||
Finished goods inventory | 16,077,964 | 16,001,515 | ||||||
Inventory reserve | -101,261 | -229,147 | ||||||
Total inventory - net | $ | 16,654,140 | $ | 15,772,368 | ||||
Fair_Value_of_Financial_Instru1
Fair Value of Financial Instruments (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Fair Value Disclosures [Abstract] | ' | |||||||
Schedule of Derivative Liabilities at Fair Value [Table Text Block] | ' | |||||||
The following are the major categories of assets and liabilities measured at fair value on a recurring basis as of March 31, 2014 and December 31, 2013, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3): | ||||||||
As of March 31, | As of December 31, | |||||||
2014 | 2013 | |||||||
Assets | ||||||||
Debt securities – FUSE convertible notes (Level 2) | $ | 215,000 | $ | 259,715 | ||||
Derivative instruments – FUSE warrants (Level 2) | - | 119,248 | ||||||
215,000 | 378,963 | |||||||
Liabilities | ||||||||
Derivative liabilities - Series D shares (Level 2) | $ | 663,096 | $ | 1,147,330 | ||||
Debt_Securities_Tables
Debt Securities (Tables) | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Investments, Debt and Equity Securities [Abstract] | ' | ||||
Schedule of Debt Securities Activity [Table Text Block] | ' | ||||
The following table summarizes the Company’s debt securities activity for the three months ended March 31, 2014: | |||||
Fuse Note | |||||
Balance – December 31, 2013 | $ | 259,715 | |||
Redemption of note | -275,000 | ||||
Renewal of note | 275,000 | ||||
Discount for value of conversion option | -206,855 | ||||
Accretion of net discount | 222,140 | ||||
Unrealized loss on debt security | -60,000 | ||||
Balance – March 31, 2014 | $ | 215,000 | |||
Derivative_Instruments_Tables
Derivative Instruments (Tables) | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||
Schedule of Derivative Assets at Fair Value [Table Text Block] | ' | ||||
The following table summarizes the Company’s derivative asset activity for the three months ended March 31, 2014: | |||||
Balance – December 31, 2013 | $ | 119,248 | |||
Fair value of conversion option at renewal | 206,855 | ||||
Unrealized loss | -326,103 | ||||
Balance – March 31, 2014 | $ | - | |||
Debt_Tables
Debt (Tables) | 3 Months Ended | |||||||||
Mar. 31, 2014 | ||||||||||
Debt Disclosure [Abstract] | ' | |||||||||
Schedule Of Long Term Debt [Table Text Block] | ' | |||||||||
At March 31, 2014 and December 31, 2013, debt consists of the following: | ||||||||||
As of March 31, 2014 | As of December 31, 2013 | |||||||||
Revolving line of credit | $ | 2,500,000 | $ | 2,500,000 | ||||||
Auto loan - secured | - | 2,902 | ||||||||
Unsecured debt | 59,600 | 59,600 | ||||||||
Total debt | 2,559,600 | 2,562,502 | ||||||||
Less: current portion | -2,559,600 | -2,562,502 | ||||||||
Long term debt | $ | - | $ | - | ||||||
Schedule Of Convertible Debt Activity And Terms [Table Text Block] | ' | |||||||||
Unsecured debt consisted of the following activity and terms: | ||||||||||
Balance - December 31, 2013 | $ | 59,600 | ||||||||
Repayments | - | |||||||||
Balance – March 31, 2014 | $ | 59,600 | ||||||||
Schedule Of Auto Loan Activity and Terms [Table Text Block] | ' | |||||||||
Vehicle loan account consisted of the following activity and terms: | ||||||||||
Interest Rate | Maturity | |||||||||
Balance - December 31, 2013 | $ | 2,902 | 6.99 | % | 3 payments of $1,008 | |||||
Repayments | -2,902 | |||||||||
Balance – March 31, 2014 | $ | - | ||||||||
Derivative_Liabilities_Tables
Derivative Liabilities (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||
Schedule Of Fair Value Of Derivative Instruments Conversion Feature [Table Text Block] | ' | ||||||||
The fair value of the conversion feature is summarized as follows: | |||||||||
Derivative liability - December 31, 2013 | 1,147,330 | ||||||||
Fair value mark to market adjustment for equity instruments | -484,234 | ||||||||
Derivative liability – March 31, 2014 | $ | 663,096 | |||||||
Schedule Of Derivative Liabilities Fair Value Assumptions At Commitment and Re-Measurement Date [Table Text Block] | ' | ||||||||
The fair values at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions as of March 31, 2014: | |||||||||
Commitment Date | Re-measurement Date | ||||||||
Expected dividends | 0 | % | 0 | % | |||||
Expected volatility | 120 | % | 40 | % | |||||
Expected term: | 1 year | 1 year | |||||||
Risk free interest rate | 0.14 | % | 0.13 | % | |||||
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 3 Months Ended | |||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||
Stockholders' Equity Note [Abstract] | ' | |||||||||||||||||
Schedule of Stockholders Equity [Table Text Block] | ' | |||||||||||||||||
During the three months ended March 31, 2014, the Company issued the following common stock: | ||||||||||||||||||
Transaction Type | Quantity | Valuation | Range of Value | |||||||||||||||
(#) | ($) | per Share | ||||||||||||||||
($) | ||||||||||||||||||
Executive/board of director compensation | 60,422 | 265,325 | 3.48 – 8.70 | |||||||||||||||
Stock issued for Biozone asset purchase | 1,200,000 | 9,840,000 | 8.2 | |||||||||||||||
Total | 1,260,422 | 10,105,325 | 3.48 – 8.70 | |||||||||||||||
Schedule Of Warrants Activity [Table Text Block] | ' | |||||||||||||||||
A summary of warrant activity for the Company for the three months ended March 31, 2014 is as follows: | ||||||||||||||||||
Number of Warrants | Weighted Average Exercise Price | |||||||||||||||||
Balance at December 31, 2013 | 263,089 | 4.43 | ||||||||||||||||
Granted | - | - | ||||||||||||||||
Exercised | - | - | ||||||||||||||||
Converted | - | - | ||||||||||||||||
Balance at March 31, 2014 | 263,089 | 4.43 | ||||||||||||||||
Warrants Outstanding | Warrants Exercisable | |||||||||||||||||
Range of | Number | Weighted Average | Weighted Average | Number | Weighted | Intrinsic Value | ||||||||||||
Exercise Prices | Outstanding | Remaining | Exercise Price | Exercisable | Average | |||||||||||||
Contractual Life (in | Exercise Price | |||||||||||||||||
years) | ||||||||||||||||||
$ | $4 - 1,275 | 263,089 | 1 | $ | 4.43 | 263,089 | $ | 4.43 | $ | 518,295 | ||||||||
Committments_Contingencies_and
Committments, Contingencies and Other Matters (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Operating Leased Assets [Line Items] | ' | ||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | ' | ||||||||||||||||
Future minimum annual lease payments for the above leases are approximately as follows: | |||||||||||||||||
Years Ending December 31, | |||||||||||||||||
2014 (9 months) | $ | 967,816 | |||||||||||||||
2015 | 868,844 | ||||||||||||||||
2016 | 355,916 | ||||||||||||||||
2017 | 291,528 | ||||||||||||||||
2018 | 291,528 | ||||||||||||||||
Thereafter | 3,206,808 | ||||||||||||||||
Total minimum lease payments | $ | 5,982,440 | |||||||||||||||
Schedule of Future Minimum Lease Payments for Capital Leases [Table Text Block] | ' | ||||||||||||||||
As of March 31, 2014 and December 31, 2013, the Company had an outstanding balance on capital leases of $186,371 and $81,292, respectively. Future minimum lease payments are as follows: | |||||||||||||||||
Years Ending December 31, | |||||||||||||||||
2014 (9 months) | $ | 60,650 | |||||||||||||||
2015 | 80,867 | ||||||||||||||||
2016 | 69,017 | ||||||||||||||||
2017 | 4,155 | ||||||||||||||||
Total minimum lease payments | 214,689 | ||||||||||||||||
Less amounts representing interest | -28,318 | ||||||||||||||||
Present value of minimum lease payments | $ | 186,371 | |||||||||||||||
Sponsorship and Endorsement Contract Liabilities [Member] | ' | ||||||||||||||||
Operating Leased Assets [Line Items] | ' | ||||||||||||||||
Contractual Obligation, Fiscal Year Maturity Schedule [Table Text Block] | ' | ||||||||||||||||
The total value of outstanding payments as of March 31, 2014 was $14,536,916. The total outstanding payments are as follows: | |||||||||||||||||
Outstanding Payments | 2014 | 2015 | 2016 | 2017 | Total | ||||||||||||
Endorsement | $ | 1,461,000 | $ | 2,455,833 | $ | 853,333 | $ | - | $ | 4,770,166 | |||||||
Sponsorship | 3,521,250 | 4,832,500 | 1,125,000 | 100,000 | 9,578,750 | ||||||||||||
Service | 128,000 | 60,000 | - | - | 188,000 | ||||||||||||
Total | $ | 5,110,250 | $ | 7,348,333 | $ | 1,978,333 | $ | 100,000 | $ | 14,536,916 | |||||||
Biozone_Acquisition_Tables
Biozone Acquisition (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Business Combinations [Abstract] | ' | |||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | ' | |||||||
The following reflects the allocation of the consideration to the net tangible and identifiable intangible assets of the Seller, based upon their estimated fair values: | ||||||||
Assets and Liabilities at Fair Value | ||||||||
Assets | ||||||||
Intangible assets | ||||||||
Patents | $ | 5,869,874 | ||||||
Trademarks | 656,160 | |||||||
Customer Lists | 629,607 | |||||||
Domain Name | 21 | |||||||
Total intangible assets | 7,155,662 | |||||||
Property & equipment | 1,859,066 | |||||||
Receivables | 806,212 | |||||||
Inventory | 840,999 | |||||||
Other assets | 577,453 | |||||||
Total assets acquired | 11,239,392 | |||||||
Liabilities | ||||||||
Factoring payable | 795,031 | |||||||
Trade payables | 327,038 | |||||||
Equipment leases | 122,766 | |||||||
Employee vacation liability | 78,134 | |||||||
Other | 76,423 | |||||||
Total liabilities assumed | 1,399,392 | |||||||
Total stock consideration | $ | 9,840,000 | ||||||
Schedule of Business Combination Acquired Receivables [Table Text Block] | ' | |||||||
As of the date of the acquisition we did not determine that any of the receivables would ultimately become uncollectible. | ||||||||
Receivables | Estimated Fair | Contractual | ||||||
Value | Value | |||||||
Trade receivables | $ | 806,212 | $ | 807,240 | ||||
Factoring receivable | 150,702 | 151,016 | ||||||
Asset sale receivable | 399,814 | 400,000 | ||||||
Business Acquisition, Pro Forma Information [Table Text Block] | ' | |||||||
The unaudited pro forma effects of the acquisition on the results of operations as if the acquisition had been completed on January 1, 2013 is as follows: | ||||||||
Three months ended March 31, | 2013 | |||||||
Total net revenues | $ | 24,436,698 | ||||||
Net loss | -8,602,097 | |||||||
Net loss per common share: | ||||||||
Basic and Diluted | $ | -2.08 | ||||||
Intangible_Assets_Tables
Intangible Assets (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||
Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block] | ' | ||||||||||||
Intangible assets are as follows as of March 31, 2014, which also includes intangible assets acquired in the Biozone acquisition as more fully described in Note 16 above: | |||||||||||||
As of March 31, 2014 | |||||||||||||
Gross carrying | Accumulated | Net carrying | Weighted | ||||||||||
amount | amortization | amount | average | ||||||||||
amortization | |||||||||||||
period (years) | |||||||||||||
Amortized intangible assets | |||||||||||||
Patents | $ | 5,922,374 | $ | -220,482 | $ | 5,701,892 | 8.74 | ||||||
Trademarks | 691,160 | -38,467 | 652,693 | 7.36 | |||||||||
Customer relationships | 629,607 | -26,234 | 603,373 | 6 | |||||||||
7,243,141 | -285,183 | 6,957,958 | |||||||||||
Indefinite lived intangible assets | |||||||||||||
Domain name | 67,686 | - | 67,686 | - | |||||||||
67,686 | - | 67,686 | |||||||||||
Total intangible assets | $ | 7,310,827 | $ | -285,183 | $ | 7,025,644 | |||||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | ' | ||||||||||||
Estimated amortization expense for intangible assets as of March 31, 2014 is as follows: | |||||||||||||
2014 (9 months) | $ | 830,703 | |||||||||||
2015 | 1,104,106 | ||||||||||||
2016 | 1,001,226 | ||||||||||||
2017 | 932,310 | ||||||||||||
2018 | 910,413 | ||||||||||||
Thereafter | 2,179,200 | ||||||||||||
Total amortization expense | $ | 6,957,958 | |||||||||||
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Accounting Policies [Line Items] | ' | ' |
Accounts receivable | $20,274,972 | $14,830,487 |
Less: allowance for discounts | -535,621 | -1,060,000 |
Less: allowance for doubtful accounts | -105,277 | -29,307 |
Accounts receivable - net | $19,634,074 | $13,741,180 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 1) | Mar. 31, 2014 | Dec. 31, 2013 |
A [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Concentration Percentage Of Accounts Receivable With Customers | 22.00% | 16.00% |
Bodybuilding.com [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Concentration Percentage Of Accounts Receivable With Customers | 8.00% | 14.00% |
C [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Concentration Percentage Of Accounts Receivable With Customers | 6.00% | 24.00% |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details 2) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Accounting Policies [Line Items] | ' | ' |
Gross Sales | $56,705,286 | $24,924,036 |
Discounts | -6,495,832 | -2,362,869 |
Sales - Net | $50,209,454 | $22,561,167 |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies (Details 3) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Bodybuilding.com [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Concentration percentage of revenue with customers | 15.00% | 33.00% |
B [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Concentration percentage of revenue with customers | 14.00% | 11.00% |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies (Details 4) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Accounting Policies [Line Items] | ' | ' |
Advertising and promotion | $6,328,487 | $2,317,377 |
Summary_of_Significant_Account8
Summary of Significant Accounting Policies (Details 5) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Accounting Policies [Line Items] | ' | ' |
Total common stock equivalents | 1,645,134 | 774,784 |
Employee Stock Option [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Total common stock equivalents | 472 | 670 |
Warrant [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Total common stock equivalents | 263,089 | 687,839 |
Employee and Director Unvested Shares [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Total common stock equivalents | 1,381,573 | 86,275 |
Summary_of_Significant_Account9
Summary of Significant Accounting Policies (Details 6) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Accounting Policies [Line Items] | ' | ' |
Net income (loss) | $2,736,234 | ($7,361,981) |
Weighted average number of common shares outstanding (in shares) | 10,307,350 | 4,128,679 |
Incremental shares from the assumed exercise of dilutive agreements (in shares) | 1,644,573 | 0 |
Diluted common shares outstanding | 11,951,923 | 4,128,769 |
Earnings (loss) per shares - basic (in dollars per share) | $0.27 | ($1.78) |
Earnings (loss) per shares - diluted (in dollars per share) | $0.23 | ($1.78) |
Recovered_Sheet1
Summary of Significant Accounting Policies (Details Textual) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Accounting Policies [Line Items] | ' | ' |
Stock Option Exercised Price Per Share (in dollars per share) | $425 | $425 |
Minimum Warrants Exercised Price Per Share (in dollars per share) | $4 | $4 |
Maximum Warrants Exercised Price Per Share (in dollars per share) | $1,275 | $1,275 |
Sales Discounts, Returns and Allowances, Goods, Total | $6,500,000 | $2,400,000 |
Earnings Per Share, Basic and Diluted | ' | ($1.78) |
Sales Discounts Returns and Allowances Goods Percentage on Gross Sales | 11.00% | 9.00% |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense | $0 | $0 |
Primary Manufacturer [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Concentration Risk, Percentage | 54.00% | 97.00% |
Largest Manufacturer [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Concentration Risk, Percentage | 44.00% | ' |
Canadian Sales [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Concentration Risk, Percentage | 2.00% | ' |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Line Items] | ' | ' |
Total | $7,128,451 | $3,974,575 |
Less: Accumulated depreciation | -1,665,164 | -1,360,991 |
Property, Plant and Equipment, Net | 5,463,287 | 2,613,584 |
Furniture, Fixtures And Equipment [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Total | 2,059,778 | 1,849,462 |
Furniture, Fixtures And Equipment [Member] | Minimum [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Estimated Useful Life (in years) | '3 years | ' |
Furniture, Fixtures And Equipment [Member] | Maximum [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Estimated Useful Life (in years) | '5 years | ' |
Leasehold Improvements [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Total | 3,205,922 | 619,159 |
Leasehold Improvements [Member] | Minimum [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Estimated Useful Life (in years) | '20 months | ' |
Leasehold Improvements [Member] | Maximum [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Estimated Useful Life (in years) | '182 months | ' |
Vehicles [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Total | 444,065 | 442,300 |
Vehicles [Member] | Minimum [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Estimated Useful Life (in years) | '2 years | ' |
Vehicles [Member] | Maximum [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Estimated Useful Life (in years) | '5 years | ' |
Displays [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Total | 33,683 | 33,683 |
Property, Plant and Equipment, Estimated Useful Life (in years) | '5 years | ' |
Website [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Total | 11,462 | 11,462 |
Property, Plant and Equipment, Estimated Useful Life (in years) | '3 years | ' |
Construction in Progress [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Total | 190,373 | 1,018,509 |
Manufacturing and lab equipment [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Total | $1,183,168 | $0 |
Manufacturing and lab equipment [Member] | Minimum [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Estimated Useful Life (in years) | '2 years | ' |
Manufacturing and lab equipment [Member] | Maximum [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Estimated Useful Life (in years) | '20 years | ' |
Inventory_Details
Inventory (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Inventory [Line Items] | ' | ' |
Raw materials inventory | $661,026 | $0 |
Work in process inventory | 16,411 | 0 |
Finished goods inventory | 16,077,964 | 16,001,515 |
Inventory reserve | -101,261 | -229,147 |
Total inventory - net | $16,654,140 | $15,772,368 |
Inventory_Details_Textual
Inventory (Details Textual) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Inventory [Line Items] | ' | ' |
Inventory, Finished Goods, Gross | $16,077,964 | $16,001,515 |
Third Party Manufacturers [Member] | ' | ' |
Inventory [Line Items] | ' | ' |
Inventory, Finished Goods, Gross | $16,039,948 | ' |
Fair_Value_of_Financial_Instru2
Fair Value of Financial Instruments (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Assets | ' | ' |
Debt securities - FUSE convertible notes (Level 2) | $215,000 | $259,715 |
Derivative instruments - FUSE warrants (Level 2) | 0 | 119,248 |
Assets, Fair Value Disclosure, Total | 215,000 | 378,963 |
Liabilities | ' | ' |
Derivative liabilities - Series D shares (Level 2) | $663,096 | $1,147,330 |
Debt_Securities_Details
Debt Securities (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Unrealized loss on debt security | ($60,000) | $0 |
Fuse Note [Member] | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Balance - December 31, 2013 | 259,715 | ' |
Redemption of note | -275,000 | ' |
Renewal of note | 275,000 | ' |
Discount for value of conversion option | -206,855 | ' |
Accretion of net discount | 222,140 | ' |
Unrealized loss on debt security | -60,000 | ' |
Balance - March 31, 2014 | $215,000 | ' |
Debt_Securities_Details_Textua
Debt Securities (Details Textual) (USD $) | 3 Months Ended | 1 Months Ended | ||||||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 11, 2013 | Nov. 07, 2013 | Jan. 31, 2014 | Nov. 30, 2013 | Jan. 03, 2014 | Nov. 07, 2013 | |
secured convertible promissory note [Member] | secured convertible promissory note [Member] | secured convertible promissory note [Member] | secured convertible promissory note [Member] | secured convertible promissory note [Member] | ||||
Biozone Convertible Note [Member] | Fuse Convertible Note [Member] | Fuse Convertible Note [Member] | Fuse Convertible Note [Member] | Fuse Convertible Note [Member] | ||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Notes, Loans and Financing Receivable, Net, Current, Total | ' | ' | ' | $200,000 | ' | ' | $275,000 | ' |
Debt Instrument, Interest Rate, Stated Percentage | ' | ' | ' | 10.00% | ' | ' | ' | ' |
Debt Conversion, Converted Instrument, Shares Issued | ' | ' | ' | ' | 13,750,000 | 3,076,923 | ' | ' |
Debt Instrument, Convertible, Conversion Price | ' | ' | ' | ' | ' | ' | $0.02 | $0.07 |
Equity Method Investment, Ownership Percentage | ' | ' | ' | ' | ' | ' | ' | 9.99% |
Discount For Value Of Derivative Instrument | 206,855 | 174,574 | ' | ' | ' | ' | ' | ' |
Debt Instrument Additional Fund Amount | ' | ' | $75,000 | ' | ' | ' | ' | ' |
Debt Instrument, Maturity Date | ' | ' | ' | ' | 3-Jan-19 | ' | ' | ' |
Derivative_Instruments_Details
Derivative Instruments (Details) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Trading Activity, Gains and Losses, Net [Line Items] | ' |
Balance - December 31, 2013 | $119,248 |
Fair value of conversion option at renewal | 206,855 |
Unrealized loss | -326,103 |
Balance - March 31, 2014 | $0 |
Derivative_Instruments_Details1
Derivative Instruments (Details Textual) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Derivatives, Fair Value [Line Items] | ' |
Conversion option at renewal Debt Securities Converted | $206,855 |
Fuse Warrants [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Payments to Acquire Trading Securities Held-for-investment | $174,574 |
secured convertible promissory note [Member] | Fuse Warrants [Member] | ' |
Derivatives, Fair Value [Line Items] | ' |
Debt Conversion, Converted Instrument, Shares Issued | 9,165,750 |
Investment Warrants, Exercise Price | $0.07 |
Warrants Expiration Term | '5 years |
Debt_Details
Debt (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Schedule of Capitalization, Long-term Debt [Line Items] | ' | ' |
Revolving line of credit | $2,500,000 | $2,500,000 |
Auto loan - secured | 0 | 2,902 |
Unsecured debt | 59,600 | 59,600 |
Total debt | 2,559,600 | 2,562,502 |
Less: current portion | -2,559,600 | -2,562,502 |
Long term debt | $0 | $0 |
Debt_Details_1
Debt (Details 1) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Debt Instrument [Line Items] | ' |
Balance - December 31, 2013 | $59,600 |
Repayments | 0 |
Balance - March 31, 2014 | $59,600 |
Debt_Details_2
Debt (Details 2) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 |
Vehicle Loan [Member] | |||
Debt Instrument [Line Items] | ' | ' | ' |
Balance | $0 | $2,902 | $2,902 |
Repayments | ' | ' | -2,902 |
Balance | $0 | $2,902 | $0 |
Interest Rate | ' | ' | 6.99% |
Maturity | ' | ' | '3 payments of $1,008 |
Debt_Details_Textual
Debt (Details Textual) (USD $) | 3 Months Ended | ||
Mar. 31, 2014 | Dec. 31, 2013 | Dec. 24, 2013 | |
Debt Instrument [Line Items] | ' | ' | ' |
Debt Default, Short-term Debt, Amount | $59,600 | $59,600 | ' |
Line of Credit Facility, Maximum Borrowing Capacity | ' | ' | 2,500,000 |
Line of Credit Facility, Expiration Date | 15-Sep-14 | ' | ' |
Line of Credit Facility, Interest Rate Description | 'prime plus 2% | ' | ' |
Line of Credit Facility, Interest Rate at Period End | 5.25% | ' | ' |
U.S. Bank, N.A D Savings Deposits [Member] | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' |
Restricted Cash and Investments, Current, Total | $2,500,000 | ' | ' |
Derivative_Liabilities_Details
Derivative Liabilities (Details) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Derivative Liabilities [Line Items] | ' |
Derivative liability - December 31, 2013 | $1,147,330 |
Fair value mark to market adjustment for equity instruments | -484,234 |
Derivative liability - March 31, 2014 | $663,096 |
Derivative_Liabilities_Details1
Derivative Liabilities (Details 1) | 3 Months Ended |
Mar. 31, 2014 | |
Commitment Date [Member] | ' |
Derivative Liabilities [Line Items] | ' |
Expected dividends | 0.00% |
Expected volatility | 120.00% |
Expected term: | '1 year |
Risk free interest rate | 0.14% |
Re Measurement Date [Member] | ' |
Derivative Liabilities [Line Items] | ' |
Expected dividends | 0.00% |
Expected volatility | 40.00% |
Expected term: | '1 year |
Risk free interest rate | 0.13% |
Derivative_Liabilities_Details2
Derivative Liabilities (Details Textual) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Derivative Liabilities [Line Items] | ' | ' |
Derivative expense | $0 | $96,913 |
Restricted_Stock_Units_Details
Restricted Stock Units (Details Textual) (USD $) | 3 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Nov. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | |
December 31, 2015 [Member] | Chief Operating Officer [Member] | Chief Financial Officer [Member] | key employees officers and directors [Member] | key employees officers and directors [Member] | key employees officers and directors [Member] | Director [Member] | Director [Member] | Director [Member] | ||
Subsequent Event [Member] | Restricted Stock [Member] | Restricted Stock [Member] | Restricted Stock [Member] | Restricted Stock [Member] | Restricted Stock [Member] | |||||
December 31, 2013 [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Shares, Issued For Services (in shares) | ' | ' | ' | 129,413 | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Value, Issued For Services | ' | ' | ' | $449,900 | ' | ' | ' | ' | ' | ' |
Shares Vesting In Next Twelve Months Number | ' | ' | 43,137 | ' | ' | ' | ' | ' | ' | ' |
Shares Vesting In Year Two Number | ' | ' | 43,138 | ' | ' | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | ' | ' | 86,275 | ' | ' | ' | ' | ' | ' | ' |
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not Yet Recognized | 11,342,915 | ' | 112,989 | ' | ' | ' | ' | 240,000 | ' | 113,998 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | ' | ' | ' | ' | ' | 1,550,000 | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | ' | ' | ' | ' | ' | 1,500,200 | 16,284 | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value | ' | ' | ' | ' | ' | 16,517,202 | ' | ' | ' | ' |
Stock Issued During Period, Value, Restricted Stock Award, Gross | ' | ' | ' | ' | 17,065,500 | ' | ' | 320,007 | 152,000 | ' |
Restricted stock agreement grant vesting percentage | 17.00% | 83.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Number of Shares | ' | ' | ' | ' | ' | ' | 263,500 | ' | ' | ' |
Share-based Compensation, Total | $2,402,435 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Shares, Restricted Stock Award, Gross | ' | ' | ' | ' | ' | ' | ' | 48,856 | 19,364 | ' |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Class of Stock [Line Items] | ' |
Executive/Board of Director compensation, Quantity | 60,422 |
Executive/Board of Director compensation, Valuation | $265,325 |
Stock issued for Biozone asset purchase, Quantity | 1,200,000 |
Stock issued for Biozone asset purchase, Valuation | 9,840,000 |
Stock issued for Biozone asset purchase, Range of value per share | $8.20 |
Total, Quantity | 1,260,422 |
Total, Valuation | $10,105,325 |
Minimum [Member] | ' |
Class of Stock [Line Items] | ' |
Executive/Board of Director compensation, Range of Value per share | $3.48 |
Total, Range of Value per Share | $3.48 |
Maximum [Member] | ' |
Class of Stock [Line Items] | ' |
Executive/Board of Director compensation, Range of Value per share | $8.70 |
Total, Range of Value per Share | $8.70 |
Stockholders_Equity_Details_1
Stockholders' Equity (Details 1) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Class of Stock [Line Items] | ' |
Warrants Exercisable, Numbers Exercisable (in shares) | 263,089 |
Minimum [Member] | ' |
Class of Stock [Line Items] | ' |
Weighted Average Exercise Price, Balance (in dollars per share) | $4 |
Maximum [Member] | ' |
Class of Stock [Line Items] | ' |
Weighted Average Exercise Price, Balance (in dollars per share) | $1,275 |
Warrant [Member] | ' |
Class of Stock [Line Items] | ' |
Number of Warrants, Outstanding Balance (in shares) | 263,089 |
Number of Warrants, Granted (in shares) | 0 |
Number of Warrants, Exercised/settled (in shares) | 0 |
Number of Warrants, Converted (in shares) | 0 |
Number of Warrants, Outstanding Balance (in shares) | 263,089 |
Weighted Average Exercise Price, Balance (in dollars per share) | $4.43 |
Weighted Average Exercise Price, Granted (in dollars per share) | $0 |
Weighted Average Exercise Price, Exercised/settled (in dollars per share) | $0 |
Weighted Average Exercise Price, Converted (in dollars per share) | $0 |
Weighted Average Exercise Price, Balance (in dollars per share) | $4.43 |
Warrants Outstanding, Weighted Average Remaining Contractual Life (in years) | '1 year |
Warrants Exercisable, Weighted Average Exercise Price (in dollars per share) | $4.43 |
Warrants Exercisable, Intrinsic Value | $518,295 |
Warrant Outstanding Weighted Average Exercise Price | $4.43 |
Warrant Outstanding Number Outstanding | 263,089 |
Stockholders_Equity_Details_Te
Stockholders' Equity (Details Textual) (USD $) | 3 Months Ended | 12 Months Ended | 1 Months Ended | ||||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Feb. 04, 2013 | Jan. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | |
Board of Directors Chairman [Member] | Series D Convertible Preferred Stock [Member] | Series D Convertible Preferred Stock [Member] | Series D Convertible Preferred Stock [Member] | Series D Convertible Preferred Stock [Member] | |||
Stockholders Equity Disclosure [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Description Of Class Of Stock Provision | ' | ' | ' | ' | 'The shares of Series D have the following provisions: · Voting rights based on number of common shares of conversion option; · Initially no rights to dividends; · Liquidation rights entitle the receipt of net assets on a pro-rata basis; and · Convertible into 2 shares of common stock, subject to adjustment. | ' | ' |
Stock Repurchased During Period, Value | ' | ' | $5,000,000 | ' | ' | ' | ' |
Stock Repurchased Maximum Value | ' | ' | 5,000,000 | ' | ' | ' | ' |
Preferred stock, shares authorized | ' | ' | ' | ' | 1,600,000 | 1,600,000 | 1,600,000 |
Number Of Shares Sold Under Subscription Agreement | ' | ' | ' | 1,500,000 | ' | ' | ' |
Proceeds from Issuance of Preferred Stock and Preference Stock | $0 | $12,000,000 | ' | $12,000,000 | ' | ' | ' |
Commitments_Contingencies_and_1
Commitments, Contingencies and Other Matters (Details) (USD $) | Mar. 31, 2014 |
Years Ending December 31, | ' |
2014 (9 months) | $967,816 |
2015 | 868,844 |
2016 | 355,916 |
2017 | 291,528 |
2018 | 291,528 |
Thereafter | 3,206,808 |
Total minimum lease payments | $5,982,440 |
Commitments_Contingencies_and_2
Commitments, Contingencies and Other Matters (Details 1) (USD $) | Mar. 31, 2014 |
Years Ending December 31, | ' |
2014 (9 months) | $60,650 |
2015 | 80,867 |
2016 | 69,017 |
2017 | 4,155 |
Total minimum lease payments | 214,689 |
Less amounts representing interest | -28,318 |
Present value of minimum lease payments | $186,371 |
Commitments_Contingencies_and_3
Commitments, Contingencies and Other Matters (Details 2) (USD $) | Mar. 31, 2014 |
Contractual Obligation, Fiscal Year Maturity [Line Items] | ' |
Total | $14,536,916 |
Sponsorship and Endorsement Contract Liabilities [Member] | ' |
Contractual Obligation, Fiscal Year Maturity [Line Items] | ' |
2014 | 5,110,250 |
2015 | 7,348,333 |
2016 | 1,978,333 |
2017 | 100,000 |
Total | 14,536,916 |
Endorsement [Member] | Sponsorship and Endorsement Contract Liabilities [Member] | ' |
Contractual Obligation, Fiscal Year Maturity [Line Items] | ' |
2014 | 1,461,000 |
2015 | 2,455,833 |
2016 | 853,333 |
2017 | 0 |
Total | 4,770,166 |
Sponsorship [Member] | Sponsorship and Endorsement Contract Liabilities [Member] | ' |
Contractual Obligation, Fiscal Year Maturity [Line Items] | ' |
2014 | 3,521,250 |
2015 | 4,832,500 |
2016 | 1,125,000 |
2017 | 100,000 |
Total | 9,578,750 |
Service [Member] | Sponsorship and Endorsement Contract Liabilities [Member] | ' |
Contractual Obligation, Fiscal Year Maturity [Line Items] | ' |
2014 | 128,000 |
2015 | 60,000 |
2016 | 0 |
2017 | 0 |
Total | $188,000 |
Commitments_Contingencies_and_4
Commitments, Contingencies and Other Matters (Details Textual) (USD $) | 3 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Commitments And Contingency [Line Items] | ' | ' | ' |
Operating Lease Expire Term | '2029 | ' | ' |
Operating Leases, Rent Expense, Net | $297,497 | $151,219 | ' |
Product Liability Insurance Deduction | 10,000 | ' | ' |
Aggregate Product Liability Retained Loss | 5,000,000 | ' | ' |
Capital Lease Obligations, Current | 68,094 | ' | ' |
Capital Lease Obligations, Noncurrent | 118,277 | ' | ' |
Capital Lease Obligations | 186,371 | ' | 81,292 |
Capital Leases, Balance Sheet, Assets by Major Class, Net, Total | 206,917 | ' | ' |
Capital Leases, Lessee Balance Sheet, Assets by Major Class, Accumulated Depreciation | ' | ' | 6,068 |
Contractual Obligation, Total | 14,536,916 | ' | ' |
Sponsorship and Endorsement Contract Liabilities [Member] | ' | ' | ' |
Commitments And Contingency [Line Items] | ' | ' | ' |
Operating Lease Expire Term | '2017 | ' | ' |
Contractual Obligation, Total | 14,536,916 | ' | ' |
Biozone [Member] | ' | ' | ' |
Commitments And Contingency [Line Items] | ' | ' | ' |
Capital Lease Obligations | $112,705 | ' | ' |
Defined_Contribution_Plan_Deta
Defined Contribution Plan (Details Textual) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Defined Contribution Pension And Other Postretirement Plans Disclosure [Line Items] | ' | ' |
Noncash Contribution Expense | $17,500 | ' |
Defined Contribution Plan, Employer Discretionary Contribution Amount | $55,534 | $12,791 |
Related_Party_Transactions_Det
Related Party Transactions (Details Textual) (USD $) | 3 Months Ended | 3 Months Ended | 3 Months Ended | ||||||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Mar. 31, 2014 | Oct. 16, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | |
Bodybuilding.com [Member] | Bodybuilding.com [Member] | Bodybuilding.com [Member] | Frost Real Estate Holdings, LLC [Member] | Frost Real Estate Holdings, LLC [Member] | VP and General Manager [Member] | VP and General Manager [Member] | |||
sqft | |||||||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenue from Related Parties | ' | ' | $8,223,456 | $8,019,335 | ' | ' | ' | ' | ' |
Due from Related Parties | ' | ' | 1,684,995 | ' | 2,051,265 | ' | ' | ' | ' |
Securities Purchase Under Agreement Description | 'The Company purchased marketing services from Bodybuilding.com during the three months ended March 31, 2014 in the amount of $349,998. | ' | ' | ' | ' | ' | ' | ' | ' |
Operating Leases, Rent Expense, Net | $297,497 | $151,219 | ' | ' | ' | $22,781 | ' | $18,064 | $19,502 |
Lease Expiration Date | 31-Mar-16 | ' | ' | ' | ' | ' | ' | ' | ' |
Area of Land | ' | ' | ' | ' | ' | ' | 1,437 | ' | ' |
Deferred Compensation Arrangements, Overall, Description | 'the Company purchased split dollar life insurance policies on certain key executives. These policies provide a split of 50% of the death benefit proceeds to the Company and 50% to the officers designated beneficiaries | ' | ' | ' | ' | ' | ' | ' | ' |
Endorsement_Agreement_Details_
Endorsement Agreement (Details Textual) (Marine MP LLC [Member], USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Marine MP LLC [Member] | ' | ' |
Endorsement Agreement Disclosure [Line Items] | ' | ' |
Prepaid Expense | $6,598,800 | $7,300,800 |
Biozone_Acquisition_Details
Biozone Acquisition (Details) (USD $) | Mar. 31, 2014 |
Intangible assets | ' |
Total intangible assets | $7,155,662 |
Property & equipment | 1,859,066 |
Receivables | 806,212 |
Inventory | 840,999 |
Other assets | 577,453 |
Total assets acquired | 11,239,392 |
Liabilities | ' |
Factoring payable | 795,031 |
Trade payables | 327,038 |
Equipment leases | 122,766 |
Employee vacation liability | 78,134 |
Other | 76,423 |
Total liabilities assumed | 1,399,392 |
Total stock consideration | 9,840,000 |
Patents [Member] | ' |
Intangible assets | ' |
Total intangible assets | 5,869,874 |
Trademarks [Member] | ' |
Intangible assets | ' |
Total intangible assets | 656,160 |
Customer Relationships [Member] | ' |
Intangible assets | ' |
Total intangible assets | 629,607 |
Domain name [Member] | ' |
Intangible assets | ' |
Total intangible assets | $21 |
Biozone_Acquisition_Details_1
Biozone Acquisition (Details 1) (USD $) | Mar. 31, 2014 |
Trade Accounts Receivable [Member] | ' |
Business Acquisition [Line Items] | ' |
Fair Value | $806,212 |
Contractual Value | 807,240 |
Factoring receivable [Member] | ' |
Business Acquisition [Line Items] | ' |
Fair Value | 150,702 |
Contractual Value | 151,016 |
Asset sale receivable [Member] | ' |
Business Acquisition [Line Items] | ' |
Fair Value | 399,814 |
Contractual Value | $400,000 |
Biozone_Acquisition_Details_2
Biozone Acquisition (Details 2) (USD $) | 3 Months Ended |
Mar. 31, 2013 | |
Business Acquisition [Line Items] | ' |
Total net revenues | $24,436,698 |
Net loss | ($8,602,097) |
Net loss per common share: | ' |
Basic and Diluted | ($2.08) |
Biozone_Acquisition_Details_Te
Biozone Acquisition (Details Textual) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Business Acquisition [Line Items] | ' |
Stock Issued During Period, Shares, Acquisitions | 1,200,000 |
Escrow Period | '0 months |
Business Acquisition, Share Price | $10 |
Noncash or Part Noncash Acquisition, Noncash Financial or Equity Instrument Consideration, Shares Issued | 9,840,000 |
Escrow [Member] | ' |
Business Acquisition [Line Items] | ' |
Stock Issued During Period, Shares, Acquisitions | 600,000 |
Non-escrowed [Member] | ' |
Business Acquisition [Line Items] | ' |
Stock Issued During Period, Shares, Acquisitions | 600,000 |
Intangible_Assets_Details
Intangible Assets (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 |
Domain name [Member] | Patents [Member] | Trademarks [Member] | Customer Relationships [Member] | |||
Intangible Assets [Line Items] | ' | ' | ' | ' | ' | ' |
Finite-Lived Intangible Assets, Gross | $7,243,141 | ' | ' | $5,922,374 | $691,160 | $629,607 |
Indefinite-Lived Intangible Assets (Excluding Goodwill) | 67,686 | ' | 67,686 | ' | ' | ' |
Intangible Assets, Gross (Excluding Goodwill), Total | 7,310,827 | ' | ' | ' | ' | ' |
Finite-Lived Intangible Assets, Accumulated Amortization | -285,183 | ' | ' | -220,482 | -38,467 | -26,234 |
Finite-Lived Intangible Assets, Net, Total | 6,957,958 | ' | ' | 5,701,892 | 652,693 | 603,373 |
Intangible Assets, Net (Excluding Goodwill), Total | $7,025,644 | $155,165 | ' | ' | ' | ' |
Finite-Lived Intangible Asset, Useful Life | ' | ' | ' | '8 years 8 months 26 days | '7 years 4 months 10 days | '6 years |
Intangible_Assets_Details_1
Intangible Assets (Details 1) (USD $) | Mar. 31, 2014 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Line Items] | ' |
2014 (9 months) | $830,703 |
2015 | 1,104,106 |
2016 | 1,001,226 |
2017 | 932,310 |
2018 | 910,413 |
Thereafter | 2,179,200 |
Total amortization expense | $6,957,958 |
Intangible_Assets_Details_Text
Intangible Assets (Details Textual) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Intangible Assets [Line Items] | ' | ' |
Amortization of Intangible Assets | $285,183 | $0 |
Minimum [Member] | ' | ' |
Intangible Assets [Line Items] | ' | ' |
Finite-Lived Intangible Asset, Useful Life | '2 years | ' |
Maximum [Member] | ' | ' |
Intangible Assets [Line Items] | ' | ' |
Finite-Lived Intangible Asset, Useful Life | '18 years | ' |
Subsequent_Events_Details_Text
Subsequent Events (Details Textual) (Subsequent Event [Member], USD $) | 0 Months Ended |
Apr. 02, 2014 | |
Subsequent Event [Line Items] | ' |
Sale Of Convertible Notes And Warrants | $215,000 |
Common Stock [Member] | ' |
Subsequent Event [Line Items] | ' |
Conversion of Stock, Shares Issued | 263,000 |
Series D Convertible Preferred Stock [Member] | ' |
Subsequent Event [Line Items] | ' |
Conversion of Stock, Shares Converted | 131,500 |