MusclePharm (MSLPQ) 10-Q 15 May 18 2018 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	May 01, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q1
Trading Symbol	MSLP
Entity Registrant Name	MusclePharm Corp
Entity Central Index Key	1,415,684
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		14,731,667

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash	$ 5,114	$ 6,228
Accounts receivable, net of allowance for doubtful accounts of $1,518 and $1,363, respectively	16,925	16,668
Inventory	7,738	6,484
Prepaid giveaways	111	89
Prepaid expenses and other current assets	895	993
Total current assets	30,783	30,462
Property and equipment, net	1,632	1,822
Intangible assets, net	1,237	1,317
Other assets	239	225
TOTAL ASSETS	33,891	33,826
Current liabilities:
Accounts payable	14,897	11,742
Accrued liabilities	7,441	7,761
Accrued restructuring charges, current	560	595
Obligation under secured borrowing arrangement	5,547	5,385
Line of credit	2,000	3,000
Total current liabilities	30,445	28,483
Convertible notes with a related party, net of discount	16,917	16,669
Accrued restructuring charges, long-term	110	120
Other long-term liabilities	1,060	1,088
Total liabilities	48,532	46,360
Commitments and contingencies (Note 8)
Stockholders' deficit:
Common stock, par value of $0.001 per share; 100,000,000 shares authorized 15,607,288 and 15,526,175 shares issued as of March 31, 2018 and December 31, 2017, respectively; 14,731,667 and 14,650,554 shares outstanding as of March 31, 2018 and December 31, 2017, respectively	14	14
Additional paid-in capital	159,798	159,608
Treasury stock, at cost; 875,621 shares	(10,039)	(10,039)
Accumulated other comprehensive loss	(142)	(150)
Accumulated deficit	(164,272)	(161,967)
TOTAL STOCKHOLDERS' DEFICIT	(14,641)	(12,534)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 33,891	$ 33,826

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Accounts receivable, net of allowance for doubtful accounts	$ 1,518	$ 1,363
Common Stock, par value	$ 0.001	$ 0.001
Common Stock, shares authorized	100,000,000	100,000,000
Common Stock, shares issued	15,607,288	15,526,175
Common Stock, shares outstanding	14,731,667	14,650,554
Treasury Stock, shares	875,621	875,621

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Income Statement [Abstract]
Revenue, net	$ 26,547	$ 26,009
Cost of revenue	18,328	19,539
Gross profit	8,219	6,470
Operating expenses:
Advertising and promotion	3,661	1,888
Salaries and benefits	2,154	3,269
Selling, general and administrative	2,546	2,886
Research and development	212	137
Professional fees	572	882
Total operating expenses	9,145	9,062
Loss from operations	(926)	(2,592)
Gain on settlement of accounts payable	0	449
Other expense, net	(1,310)	(978)
Loss before provision for income taxes	(2,236)	(3,121)
Provision for income taxes	69	28
Net loss	$ (2,305)	$ (3,149)
Net loss per share, basic and diluted	$ (0.16)	$ (0.23)
Weighted average shares used to compute net loss per share, basic and diluted	14,615,677	13,773,508

Condensed Consolidated Stateme5

Condensed Consolidated Statement of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Statement of Comprehensive Income [Abstract]
Net loss	$ (2,305)	$ (3,149)
Other comprehensive loss:
Change in foreign currency translation adjustment	8	6
Comprehensive loss	$ (2,297)	$ (3,143)

Condensed Consolidated Stateme6

Condensed Consolidated Statement of Changes in Stockholders’ Deficit - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital [Member]	Treasury Stock	Accumulated Other Comprehensive Loss	Accumulated Deficit [Member]	Total
Balance, Amount at Dec. 31, 2017	$ 14	$ 159,608	$ (10,039)	$ (150)	$ (161,967)	$ (12,534)
Balance, Shares at Dec. 31, 2017	14,650,554
Stock-based compensation related to issuance and amortization of restricted stock awards to employees, executives and directors		121				121
Stock-based compensation for issuance of stock options to an executive or a director		$ 16				16
Issuance of shares of common stock related to the payment of interest on a related party note, Amount	$ 81,113					$ 81,113
Issuance of shares of common stock related to the payment of interest on a related party note, Shares		53				53
Change in foreign currency translation adjustment				8		$ 8
Net loss					(2,305)	(2,305)
Balance, Amount at Mar. 31, 2018	$ 14	$ 159,798	$ (10,039)	$ (142)	$ (164,272)	$ (14,641)
Balance, Shares at Mar. 31, 2018	14,731,667

Condensed Consolidated Stateme7

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (2,305)	$ (3,149)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	287	420
Gain on settlement of accounts payable	0	(449)
Bad debt expense	164	0
Amortization of debt discount	248	153
Stock-based compensation	137	607
Other	0	363
Changes in operating assets and liabilities:
Accounts receivable	(443)	(1,925)
Inventory	(1,255)	2,463
Prepaid giveaways	(23)	132
Prepaid expenses and other current assets	100	(387)
Other assets	(14)	0
Accounts payable and accrued liabilities	2,917	803
Accrued restructuring charges	(45)	(73)
Net cash used in operating activities	(232)	(1,042)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(14)	0
Net cash used in investing activities	(14)	0
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on line of credit	(1,000)	0
Proceeds from secured borrowing arrangement, net of reserves	13,494	4,087
Payments on secured borrowing arrangement, net of fees	(13,332)	(4,951)
Repayment of capital lease obligations	(34)	(36)
Net cash used in financing activities	(872)	(900)
Effect of exchange rate changes on cash	4	15
NET CHANGE IN CASH	(1,114)	(1,927)
CASH - BEGINNING OF PERIOD	6,228	4,943
CASH - END OF PERIOD	5,114	3,016
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	614	672
Cash paid for taxes	68	8
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment acquired in conjunction with capital leases	0	12
Purchase of property and equipment included in current liabilities	13	9
Interest paid through issuance of shares of common stock	$ 53	$ 0

Note 1 - Description of Busines

Note 1 - Description of Business	3 Months Ended
	Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of Business	Description of Business MusclePharm Corporation, or the Company, was incorporated in Nevada in 2006. Except as otherwise indicated herein, the terms “Company,” “we,” “our” and “us” refer to MusclePharm Corporation and its subsidiaries. The Company is a scientifically driven, performance lifestyle company that develops, manufactures, markets and distributes branded nutritional supplements. The Company is headquartered in Burbank, California and as of March 31, 2018 had the following wholly-owned operating subsidiaries: MusclePharm Canada Enterprises Corp. (“MusclePharm Canada”), MusclePharm Ireland Limited (“MusclePharm Ireland”) and MusclePharm Australia Pty Limited (“MusclePharm Australia”). A former subsidiary of the Company, BioZone Laboratories, Inc. (“BioZone”), was sold on May 9, 2016. Management’s Plans with Respect to Liquidity and Capital Resources Management believes the restructuring plan, the continued reduction in ongoing operating costs and expense controls, and growth strategy, will enable us to ultimately achieve profitability. Management believes that the Company has sufficiently reduced its operating expenses, and that the Company’s ongoing sources of revenue that will be sufficient to cover these expenses for the foreseeable future. The Company can give no assurances that this will occur. As of March 31, 2018, the Company had a stockholders’ deficit of $14.6 million and recurring losses from operations. To manage cash flow, the Company entered into a secured borrowing arrangement, pursuant to which the Company has the ability to borrow up to $12.5 million subject to sufficient amounts of accounts receivable to secure the loan. The secured borrowing arrangement’s term has been extended to July 31, 2018. In October 2017, the Company also entered into a loan and security agreement to borrow against the Company’s inventory up to a maximum of $3.0 million for an initial six-month term which was automatically extended for six additional months. As of March 31, 2018, the Company owed $2.0 million under this loan and security agreement. On November 3, 2017, the Company entered into a refinancing transaction with Mr. Ryan Drexler, the Company’s Chairman of the Board, Chief Executive Officer and President, to restructure all of the $18.0 million in notes payable to him, which are now due on December 31, 2019. Accordingly, such debt is classified as a long-term liability at March 31, 2018. As of March 31, 2018, the Company had approximately $5.1 million in cash and $0.3 million in working capital. The accompanying Condensed Consolidated Financial Statements as of and for the quarter ended March 31, 2018 was prepared on the basis of a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. Accordingly, they do not give effect to adjustments that could be necessary should we be required to liquidate our assets. The Company’s ability to continue as a going concern and raise capital for specific strategic initiatives could also depend on obtaining adequate capital to fund operating losses until it becomes profitable. The Company can give no assurances that any additional capital that it is able to obtain, if any, will be sufficient to meet its needs, or that any such financing will be obtainable on acceptable terms. Mr. Drexler has verbally both stated his intent and ability to put more capital into the business if necessary. However, Mr. Drexler is under no obligation to the Company to do so, and the Company can give no assurances that Mr. Drexler will be willing or able to do so at a future date and/or that he will not demand payment of his refinanced convertible note on December 31, 2019. Our capital resources as of March 31, 2018, available borrowing capacity and current operating plans are expected to be sufficient to fund the planned operations for at least twelve months from the date of filing this report.

Note 2 - Summary of Significant

Note 2 - Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2018
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Basis of Presentation and Principles of Consolidation The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The Condensed Consolidated Financial Statements include the accounts of MusclePharm Corporation and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Unaudited Interim Financial Information The accompanying unaudited interim Condensed Consolidated Financial Statements have been prepared in accordance with GAAP and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these statements do not include all of the information and notes required by GAAP for complete financial statements. The Company’s management believes the unaudited interim Condensed Consolidated Financial Statements include all adjustments of a normal recurring nature necessary for the fair presentation of the Company’s financial position as of March 31, 2018, results of operations for the three months ended March 31, 2018 and 2017, and cash flows for the three months ended March 31, 2018 and 2017. The results of operations for the three ended March 31, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018. These unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on April 2, 2018. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Such estimates include, but are not limited to, allowance for doubtful accounts, revenue discounts and allowances, the valuation of inventory and tax assets, the assessment of useful lives, recoverability and valuation of long-lived assets, likelihood and range of possible losses on contingencies, restructuring liabilities, valuations of equity securities and intangible assets, fair value of derivatives, warrants and options, among others. Actual results could differ from those estimates. Revenue Recognition The Company's previous revenue recognition policy was to recognize revenue when persuasive evidence of an arrangement existed, delivery had occurred, the fee was fixed or determinable and collection was reasonably assured. The Company’s standard terms and conditions of sale allowed for product returns or replacements in certain cases. Estimates of expected future product returns were recognized at the time of sale based on analyses of historical return trends by customer type. Upon recognition, the Company reduced revenue and cost of revenue for the estimated return. Return rates could fluctuate over time, but were sufficiently predictable with established customers to allow the Company to estimate expected future product returns, and an accrual was recorded for future expected returns when the related revenue was recognized. The Company also offered sales incentives through various programs, consisting primarily of volume incentive rebates and sales incentive reserves. Volume incentive rebates were provided to certain customers based on contractually agreed upon percentages once certain thresholds had been met. Sales incentive reserves were computed based on historical trending and budgeted discount percentages, which were typically based on historical discount rates with adjustments for any known changes, such as future promotions or one-time historical promotions that would not repeat for each customer. The Company recorded sales incentive reserves and volume rebate reserves as a reduction to revenue. With the adoption of ASC 606, the Company reviewed its previous revenue recognition policy as described above and under ASC 606 the Company determined that there were no material changes resulting from the adoption. Revenue would be recognized when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. This is consistent with the revenue recognition policy previously used by the Company. The Company also reviewed the timing and recognition of accounts receivable within the different distribution channels for which the Company generates revenue. During the three months ended March 31, 2018 and 2017, the Company recorded discounts, and to a lesser degree, sales returns, totaling $4.9 million and $8.0 million, respectively, which accounted for 16% and 23% of gross revenue in each period, respectively. Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The cash balance at times may exceed federally insured limits. Management believes the financial risk associated with these balances is minimal and has not experienced any losses to date. Significant customers are those which represent more than 10% of the Company’s net revenue for each period presented. For each significant customer, revenue as a percentage of total revenue is as follows: Percentage of Net Revenue for the Three Months Ended March 31, 2018 2017 Customers Costco Wholesale Corporation 37 % 35 % Share-Based Payments and Stock-Based Compensation Share-based compensation awards, including stock options and restricted stock awards, are recorded at estimated fair value on the applicable award’s grant date, based on estimated number of awards that are expected to vest. The grant date fair value is amortized on a straight-line basis over the time in which the awards are expected to vest, or immediately if no vesting is required. Share-based compensation awards issued to non-employees for services are recorded at either the fair value of the services rendered or the fair value of the share-based payments whichever is more readily determinable. The fair value of restricted stock awards is based on the fair value of the stock underlying the awards on the grant date as there is no exercise price. The fair value of stock options is estimated using the Black-Scholes option-pricing model. The determination of the fair value of each stock award using this option-pricing model is affected by the Company’s assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards and the expected term of the awards based on an analysis of the actual and projected employee stock option exercise behaviors and the contractual term of the awards. Due to the Company’s limited experience with the expected term of options, the simplified method was utilized in determining the expected option term as prescribed in Staff Accounting Bulletin No. 110. The Company recognizes stock-based compensation expense over the requisite service period, which is generally consistent with the vesting of the awards, based on the estimated fair value of all stock-based payments issued to employees and directors that are expected to vest. Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases

Note 3 - Fair Value of Financia

Note 3 - Fair Value of Financial Instruments	3 Months Ended
	Mar. 31, 2018
Fair Value Disclosures [Abstract]
Fair Value of Financial Instruments	Management believes the fair values of the obligations under the secured borrowing arrangements and the convertible notes with a related party approximate carrying value because the debt carries market rates of interest available to the Company. The Company’s remaining financial instruments consisted primarily of accounts receivable, accounts payable, accrued liabilities and accrued restructuring charges, all of which are short-term in nature with fair values approximating carrying value. As of March 31, 2018 and December 31, 2017, the Company held no assets or liabilities that required re-measurement at fair value on a recurring basis.

Note 4 - Restructuring

Note 4 - Restructuring	3 Months Ended
	Mar. 31, 2018
Restructuring and Related Activities [Abstract]
Restructuring	As part of an effort to better focus and align the Company’s resources toward profitable growth, on August 24, 2015, the Board authorized the Company to undertake steps to commence a restructuring of the business and operations, which concluded during the third quarter of 2016. The following table illustrates the provision of the restructuring charges and the accrued restructuring charges balance as of March 31, 2018 (in thousands): Contract Termination Costs Purchase Commitment of Discontinued Inventories Not Yet Received Abandoned Lease Facilities Total Balance as of December 31, 2017 $ 308 $ 175 $ 232 $ 715 Expensed — — 132 132 Cash payments — — (177 ) (177 ) Balance as of March 31, 2018 308 175 187 670 The total future payments under the restructuring plan as of March 31, 2018 are as follows (in thousands): For the Years Ending December 31, Outstanding Payments 2018 2019 2020 Total Contract termination costs $ 308 $ — $ — $ 308 Purchase commitment of discontinued inventories not yet received 175 — — 175 Abandoned leased facilities 67 91 29 187 Total future payments $ 550 $ 91 $ 29 $ 670

Note 5 - Balance Sheet Componen

Note 5 - Balance Sheet Components	3 Months Ended
	Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Balance Sheet Components	Inventory Inventory consisted solely of finished goods as of March 31, 2018 and December 31, 2017. The Company records charges for obsolete and slow-moving inventory based on the age of the product as determined by the expiration date or otherwise determined to be obsolete. Products within one year of their expiration dates are considered for write-off purposes. Historically, the Company has had minimal returns with established customers. Other than write-off of inventory during restructuring activities, the Company incurred insignificant inventory write-offs during the three months ended March 31, 2018 and 2017. Inventory write-downs, once established, are not reversed as they establish a new cost basis for the inventory. Property and Equipment Property and equipment consisted of the following as of March 31, 2018 and December 31, 2017 (in thousands): As of March 31, 2018 As of December 31, 2017 Furniture, fixtures and equipment $ 3,614 $ 3,597 Leasehold improvements 2,044 2,044 Manufacturing and lab equipment 3 3 Vehicles 86 86 Displays 484 485 Website 462 462 Property and equipment, gross 6,693 6,677 Less: accumulated depreciation and amortization (5,061 ) (4,855 ) Property and equipment, net $ 1,632 $ 1,822 Depreciation and amortization expense related to property and equipment was $0.2 million and $0.3 million for the three months ended March 31, 2018 and 2017, respectively, which is included in “Selling, general, and administrative” expense in the accompanying Condensed Consolidated Statements of Operations. Intangible Assets Intangible assets consisted of the following (in thousands): As of March 31, 2018 Gross Value Accumulated Amortization Net Carrying Value Remaining Weighted-Average Useful Lives (years) Amortized Intangible Assets Brand (apparel rights) $ 2,244 $ (1,007 ) $ 1,237 3.9 Total intangible assets $ 2,244 $ (1,007 ) $ 1,237 As of December 31, 2017 Gross Value Accumulated Amortization Net Carrying Value Remaining Weighted-Average Useful Lives (years) Amortized Intangible Assets Brand (apparel rights) $ 2,244 $ (927 ) $ 1,317 4.1 Total intangible assets $ 2,244 $ (927 ) $ 1,317 Intangible assets amortization expense was $0.1 million for each of the three months ended March 31, 2018 and 2017, respectively, which is included in “Selling, general, and administrative” expense in the accompanying Condensed Consolidated Statements of Operations. As of March 31, 2018, the estimated future amortization expense of intangible assets is as follows (in thousands): For the Year Ending December 31, Remainder of 2018 $ 241 2019 321 2020 321 2021 321 2022 33 Total amortization expense $ 1,237

Note 6 - Other Expense, net

Note 6 - Other Expense, net	3 Months Ended
	Mar. 31, 2018
Other Income and Expenses [Abstract]
Other Expense, net	For the three months ended March 31, 2018 and 2017, “Other expense, net” consisted of the following (in thousands): For the Three Months Ended March 31, 2018 2017 Other expense, net: Interest expense, related party $ (541 ) $ (422 ) Interest expense, related party debt discount (248 ) - Interest expense, other (67 ) (159 ) Interest expense, secured borrowing arrangement (346 ) (104 ) Foreign currency transaction loss (113 ) (12 ) Other 5 (281 ) Total other expense, net $ (1,310 ) $ (978 )

Note 7 - Debt

Note 7 - Debt	3 Months Ended
	Mar. 31, 2018
Debt Disclosure [Abstract]
Debt	As of March 31, 2018 and December 31, 2017, the Company’s debt consisted of the following (in thousands): As of March 31, 2018 As of December 31,2017 2017 Refinanced Convertible Note due December 31, 2019 with a related party $ 18,000 $ 18,000 Obligations under secured borrowing arrangement 5,547 5,385 Secured line of credit 2,000 3,000 Unamortized debt discount with a related party (1,083 ) (1,331 ) Total debt 24,464 25,054 Less: current portion (7,547 ) (8,385 ) Long term debt $ 16,917 $ 16,669 Related-Party Notes Payable On November 3, 2017, the Company entered into a refinancing transaction (the “Refinancing”) with Mr. Ryan Drexler, the Company’s Chairman of the Board of Directors, Chief Executive Officer and President. As part of the Refinancing, the Company issued to Mr. Drexler an amended and restated convertible secured promissory note (the “Refinanced Convertible Note”) in the original principal amount of $18,000,000, which amends and restates (i) a convertible secured promissory note dated as of December 7, 2015, and amended as of January 14, 2017, in the original principal amount of $6,000,000 with an interest rate of 8% prior to the amendment and 10% following an amendment (the “2015 Convertible Note”), (ii) a convertible secured promissory note dated as of November 8, 2016, in the original principal amount of $11,000,000 with an interest rate of 10% (the “2016 Convertible Note”) , and (iii) a secured demand promissory note dated as of July 27, 2017, in the original principal amount of $1,000,000 with an interest rate of 15% (the “2017 Note”, and together with the 2015 Convertible Note and the 2016 Convertible Note, collectively, the “Prior Notes”). The due date of the 2015 Convertible Note and the 2016 Convertible Note was November 8, 2017. The 2017 Note was due on demand. The $18.0 million Refinanced Convertible Note bears interest at the rate of 12% per annum. Interest payments are due on the last day of each quarter. At the Company’s option (as determined by its independent directors), the Company may repay up to one-sixth of any interest payment by either adding such amount to the principal amount of the note or by converting such interest amount into an equivalent amount of the Company’s common stock. Any interest not paid when due shall be capitalized and added to the principal amount of the Refinanced Convertible Note and bear interest on the applicable interest payment date along with all other unpaid principal, capitalized interest, and other capitalized obligations. Both the principal and the interest under the Refinanced Convertible Note are due on December 31, 2019, unless converted earlier. Mr. Drexler may convert the outstanding principal and accrued interest into shares of the Company’s common stock at a conversion price of $1.11 per share at any time. The Company may prepay the Refinanced Convertible Note by giving Mr. Drexler between 15 and 60 days’ notice depending upon the specific circumstances, subject to Mr. Drexler’s conversion right. The Refinanced Convertible Note contains customary events of default, including, among others, the failure by the Company to make a payment of principal or interest when due. Following an event of default, interest will accrue at the rate of 14% per annum. In addition, following an event of default, any conversion, redemption, payment or prepayment of the Refinanced Convertible Note will be at a premium of 105%. The Refinanced Convertible Note also contains customary restrictions on the ability of the Company to, among other things, grant liens or incur indebtedness other than certain obligations incurred in the ordinary course of business. The restrictions are also subject to certain additional qualifications and carveouts, as set forth in the Refinanced Convertible Note. The Refinanced Convertible Note is subordinated to certain other indebtedness of the Company. As part of the Refinancing, the Company and Mr. Drexler entered into a restructuring agreement (the “Restructuring Agreement”) pursuant to which the parties agreed to enter into the Refinanced Convertible Note and to amend and restate the security agreement pursuant to which the Prior Notes were secured by all of the assets and properties of the Company and its subsidiaries whether tangible or intangible, by entering into the Third Amended and Restated Security Agreement (the “Amended Security Agreement”). Pursuant to the Restructuring Agreement, the Company agreed to pay, on the effective date of the Refinancing, all outstanding interest on the Prior Notes through November 8, 2017 and certain fees and expenses incurred by Mr. Drexler in connection with the Restructuring. In connection with the refinancing, the Company recorded a debt discount of $1.2 million. The debt discount is equal to the change in the fair value of the conversion option between the Refinanced Convertible Note and the Prior Notes. The fair value of the conversion option was determined using a Monte Carlo simulation and the model of stock price behavior known as GBM which simulates a future period as a random step from a previous period. Significant assumptions were: expected stock price premium of 40%, expected trading days of 252 days, and volatility of 60%. In addition, the Refinanced Convertible Note contains two embedded derivatives for default interest and an event of default put. Due to the unlikely event of default, the embedded derivatives have a de minimis value as of March 31, 2018. For the three months ended March 31, 2018 and 2017, interest expense related to the related party notes was $0.8 million and $0.4 million, respectively. During the three months ended March 31, 2018 and 2017, $0.3 million and $0.4 million, respectively, in interest was paid in cash to Mr. Drexler. Inventory Financing On October 6, 2017, the Company and its affiliate (together with the Company, “Borrower”) entered into a Loan and Security Agreement (“Security Agreement”) with Crossroads Financial Group, LLC (“Crossroads”). Pursuant to the Security Agreement, the Company may borrow up to 70% of its Inventory Cost Secured Borrowing Arrangement In January 2016, the Company entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with Prestige Capital Corporation (“Prestige”) pursuant to which the Company agreed to sell and assign and Prestige agreed to buy and accept, certain accounts receivable owed to the Company (“Accounts”). Under the terms of the Purchase and Sale Agreement, upon the receipt and acceptance of each assignment of Accounts, Prestige will pay the Company 80% of the net face amount of the assigned Accounts, up to a maximum total borrowings of $12.5 million subject to sufficient amounts of accounts receivable to secure the loan. The remaining 20% will be paid to the Company upon collection of the assigned Accounts, less any chargeback, disputes, or other amounts due to Prestige. Prestige’s purchase of the assigned Accounts from the Company will be at a discount fee which varies based on the number of days outstanding from the assignment of Accounts to collection of the assigned Accounts. In addition, the Company granted Prestige a continuing security interest in and lien upon all accounts receivable, inventory, fixed assets, general intangibles and other assets. The Purchase and Sale Agreement’s term has been extended to July 31, 2018. At March 31, 2018, we had approximately $5.5 million of outstanding borrowings under the Purchase and Sale Agreement. During the three months ended March 31, 2018, the Company sold to Prestige accounts with an aggregate face amount of approximately $16.9 million, for which Prestige paid to the Company approximately $13.5 million in cash. During the three months ended March 31, 2018, $13.3 million was repaid to Prestige, including fees and interest. During the three months ended March 31, 2017, the Company sold to Prestige accounts with an aggregate face amount of approximately $5.5 million, for which Prestige paid to the Company approximately $4.4 million in cash. During the three months ended March 31, 2017, $5.1 million was repaid to Prestige, including fees and interest.

Note 8 - Commitments and Contin

Note 8 - Commitments and Contingencies	3 Months Ended
	Mar. 31, 2018
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Operating Leases The Company leases office and warehouse facilities under operating leases, which expire at various dates through 2022. The amounts reflected in the table below are for the aggregate future minimum lease payments under non-cancelable facility operating leases for properties that have not been abandoned as part of the restructuring plan. See Note 4 for additional details regarding the restructured leases. Under lease agreements that contain escalating rent provisions, lease expense is recorded on a straight-line basis over the lease term. Rent expense was $0.2 million and $0.1 million for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, future minimum lease payments are as follows (in thousands): For the Year Ending December 31, Remainder of 2018 $ 645 2019 845 2020 735 2021 481 2022 369 Thereafter — Total minimum lease payments $ 3,075 Capital Leases As of March 31, 2018, the Company was leasing two vehicles under a fleet leasing agreement which were included in “Property and equipment, net” in the accompanying Consolidated Balance Sheets. The original cost of leased assets was $86,000 and the associated accumulated depreciation was $60,000 as of March 31, 2018. As of March 31, 2018 and December 31, 2017, short-term capital lease liabilities of $119,000 and $126,000, respectively, were included as a component of current accrued liabilities, and the long-term capital lease liabilities of $119,000 and $146,000, respectively, were included as a component of long-term liabilities in the accompanying Condensed Consolidated Balance Sheets. As of March 31, 2018, the Company’s future minimum lease payments under capital lease agreements, are as follows (in thousands): For the Year Ending December 31, Remainder of 2018 $ 99 2019 101 2020 50 Total minimum lease payments 250 Less amounts representing interest (12 ) Present value of minimum lease payments $ 238 Purchase Commitment Upon the completion of the sale of BioZone, the Company entered into a manufacturing and supply agreement whereby the Company is required to purchase a minimum of approximately $2.5 million of products per year from BioZone annually for an initial term of three years. If the minimum order quantities of specific products are not met, a $3.0 million minimum purchase of other products must be met in order to waive the shortfall, which is at 25% of the realized shortfall. Due to the timing of achieving the minimum purchase quantities, we are below these targets. As a result, we have provided for the estimated purchase commitment shortfall adjustment in the three months ended March 31, 2018. Settlements Manchester City Football Group The Company was engaged in a dispute with City Football Group Limited (“CFG”), the owner of Manchester City Football Group, concerning amounts allegedly owed by the Company under a sponsorship agreement with CFG (the “Sponsorship Agreement”). In August 2016, CFG commenced arbitration in the United Kingdom against the Company, seeking approximately $8.3 million for the Company’s purported breach of the Sponsorship Agreement. On July 28, 2017, the Company approved a Settlement Agreement (the “CFG Settlement Agreement”) with CFG effective July 7, 2017. The CFG Settlement Agreement represents a full and final settlement of all litigation between the parties. Under the terms of the agreement, the Company has agreed to pay CFG a sum of $3 million, consisting of a $1 million payment that was advanced by a related party on July 7, 2017, and subsequent $1 million installments to be paid by July 7, 2018 and July 7, 2019, respectively. The 2018 payment is accrued in current liabilities and the 2019 payment is accrued in other long-term liabilities. The Company recorded a charge in its Statement of Operations for the year ended December 31, 2017 for approximately $1.5 million, representing the discounted value of the unrecorded settlement amount. During the three months ended March 31, 2018, the Company recorded a charge of $0.1 million, representing imputed interest. Contingencies In the normal course of business or otherwise, the Company may become involved in legal proceedings. The Company will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred. As of March 31, 2018, the Company was involved in the following material legal proceedings described below. ThermoLife In January 2016, ThermoLife International LLC (“ThermoLife”), a supplier of nitrates to MusclePharm, filed a complaint against the Company in Arizona state court. In its complaint, ThermoLife alleges that the Company failed to meet minimum purchase requirements contained in the parties’ supply agreement and seeks monetary damages for the deficiency in purchase amounts. In March 2016, the Company filed an answer to ThermoLife’s complaint, denying the allegations contained in the complaint, and filed a counterclaim alleging that ThermoLife breached its express warranty to MusclePharm because ThermoLife’s products were defective and could not be incorporated into the Company’s products. Therefore, the Company believes that ThermoLife’s complaint is without merit. The lawsuit continues to be in the discovery phase. Former Executive Lawsuit In December 2015, the Company accepted notice by Mr. Richard Estalella (“Estalella”) to terminate his employment as the Company’s President. Although Estalella sought to terminate his employment with the Company for “Good Reason,” as defined in Estalella’s employment agreement with the Company (the “Employment Agreement”), the Company advised Estalella that it deemed his resignation to be without Good Reason. In February 2016, Estalella filed a complaint in Colorado state court against the Company and Ryan Drexler, Chairman of the Board, Chief Executive Officer and President, alleging, among other things, that the Company breached the Employment Agreement, and seeking certain equitable relief and unspecified damages. The Company believes Estalella’s claims are without merit. As of the date of this report, the Company has evaluated the potential outcome of this lawsuit and recorded the liability consistent with its policy for accruing for contingencies. The discovery phase of the lawsuit has concluded and the Company was preparing for trial which was scheduled to commence on May 7, 2018. On May 7, 2018, the Court vacated the trial in contemplation of the parties’ settlement of this matter. Settlement discussions are in progress. Insurance Carrier Lawsuit The Company is engaged in litigation with an insurance carrier, Liberty Insurance Underwriters, Inc. (“Liberty”), arising out of Liberty’s denial of coverage. In 2014, the Company sought coverage under an insurance policy with Liberty for claims against directors and officers of the Company arising out of an investigation by the Securities and Exchange Commission (“SEC”). Liberty denied coverage, and, on February 12, 2015, the Company filed a complaint in the District Court, City and County of Denver, Colorado against Liberty claiming wrongful and unreasonable denial of coverage for the cost and expenses incurred in connection with the SEC investigation and related matters. Liberty removed the complaint to the United States District Court for the District of Colorado, which in August 2016 granted Liberty’s motion for summary judgment, denying coverage and dismissing the Company’s claims with prejudice, and denied the Company’s motion for summary judgment. The Company filed an appeal in November 2016. The Company filed its opening brief on February 1, 2017 and Liberty filed its response brief on April 7, 2017. The Company filed its reply brief on May 5, 2017. The case moved to the 10th Circuit Court of Appeals. In October 2017, the 10th Circuit affirmed the lower court’s grant of summary judgment in favor of Liberty. The Company is currently working with Liberty to determine what amounts are recoverable under the policy that fall outside of the litigation. IRS Audit On April 6, 2016, the Internal Revenue Service (“IRS”) selected the Company’s 2014 Federal Income Tax Return for audit. As a result of the audit, the IRS proposed certain adjustments with respect to the tax reporting of the Company’s former executives’ 2014 restricted stock grants. Due to the Company’s current and historical loss position, the proposed adjustments would have no material impact on its Federal income tax. On October 5, 2016, the IRS commenced an audit of the Company’s employment and withholding tax liability for 2014. The IRS is contending that the Company inaccurately reported the value of the restricted stock grants and improperly failed to provide for employment taxes and federal tax withholding on these grants. In addition, the IRS is proposing certain penalties associated with the Company’s filings. On April 4, 2017, the Company received a “30-day letter” from the IRS asserting back taxes and penalties of approximately $5.3 million, of which $0.4 million related to employment taxes and $4.9 million related to federal tax withholding and penalties. Additionally, the IRS is asserting that the Company owes information reporting penalties of approximately $2.0 million. The Company’s counsel has submitted a formal protest to the IRS disputing on several grounds all of the proposed adjustments and penalties on the Company’s behalf, and the Company intends to pursue this matter vigorously through the IRS appeal process. Due to the uncertainty associated with determining the Company’s liability for the asserted taxes and penalties, if any, and to the Company’s inability to ascertain with any reasonable degree of likelihood, as of the date of this report, the outcome of the IRS appeals process, the Company has recorded an estimate for its potential liability, if any, associated with these taxes. Sponsorship and Endorsement Contract Liabilities The Company has various non-cancelable endorsement and sponsorship agreements with terms expiring through 2019. The total value of future contractual payments as of March 31, 2018 are as follows (in thousands): For the Years Ending December 31, Remainder of 2018 2019 Total Outstanding Payments Endorsement $ 191 $ 62 $ 253 Sponsorship 67 55 122 Total future payments $ 258 $ 117 $ 375

Note 9 - Stockholders' Deficit

Note 9 - Stockholders' Deficit	3 Months Ended
	Mar. 31, 2018
Equity [Abstract]
Stockholders' Deficit	Common Stock For the three months ended March 31, 2018, the Company had the following transactions related to its common stock including restricted stock awards (in thousands, except share and per share data): Transaction Type Quantity (Shares) Valuation ($) Range of Value per Share Stock issued to related party for interest 81,133 $ 52 0.65 Total 81,133 $ 52 $ 0.65 The fair value of all stock issuances above is based upon the quoted closing trading price on the date of issuance. Common stock outstanding as of March 31, 2018 and December 31, 2017 includes shares legally outstanding even if subject to future vesting. Warrants In November 2016, the Company issued a warrant to purchase 1,289,378 shares of its common stock to the parent company of Capstone related to the settlement of a dispute between the Company and Capstone. The exercise price of this warrant was $1.83 per share, with a contractual term of four years. The Company has valued this warrant by utilizing the Black-Scholes model at approximately $1.8 million with the following assumptions: contractual life of four years, risk free interest rate of 1.27%, dividend yield of 0%, and expected volatility of 118.4%. In July 2014, the Company issued a warrant to purchase 100,000 shares of its common stock related to an endorsement agreement. The exercise price of this warrant was $11.90 per share, with a contractual term of five years.

Note 10 - Stock-Based Compensat

Note 10 - Stock-Based Compensation	3 Months Ended
	Mar. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-Based Compensation	Restricted Stock The Company’s stock-based compensation for the three months ended March 31, 2018 and 2017 consist primarily of restricted stock awards. The activity of restricted stock awards granted to employees, executives and Board members was as follows: Unvested Restricted Stock Awards Number of Shares Weighted Average Grant Date Fair Value Unvested balance – December 31, 2017 487,267 $ 2.32 Granted — — Vested (383,423 ) 1.95 Cancelled — — Unvested balance – March 31, 2018 103,844 3.70 The total fair value of restricted stock awards granted to employees and the Board was $0.7 million for the three months ended March 31, 2017. There were no restricted stock awards granted during the three months ended March 31, 2018. As of March 31, 2018, the total unrecognized expense for unvested restricted stock awards, net of expected forfeitures, was $0.4 million, which is expected to be amortized over a weighted average period of 0.6 years. Restricted Stock Awards Issued to Ryan Drexler, Chairman of the Board, Chief Executive Officer and President In January 2017, the Company issued Mr. Drexler 350,000 shares of restricted stock pursuant to an Amended and Restated Executive Employment Agreement dated November 18, 2016 with a grant date value of $0.7 million based upon the closing price of the Company’s common stock on the date of issuance. These shares of restricted stock vested in full upon the first anniversary of the grant date. Accelerated Vesting of Restricted Stock Awards Related to Terminations of Employment In March 2017, Brent Baker, the Company’s former Executive Vice President of International Business, terminated employment with the Company. In connection with his termination of employment in March 2017, 10,000 shares of restricted stock held by Mr. Baker vested in full upon his termination of employment in accordance with the original grant terms. In connection with the accelerated vesting of these restricted stock awards, the Company recognized stock compensation expense of $42,902, which is included in “Salaries and Benefits” in the accompanying Consolidated Statements of Operations for the three months ended March 31, 2017. Stock Options The Company may grant options to purchase shares of the Company’s common stock to certain employees and directors pursuant to the 2015 Incentive Compensation Plan (the “2015 Plan”). Under the 2015 Plan, all stock options are granted with an exercise price equal to or greater than the fair market value of a share of the Company’s common stock on the date of grant. Vesting is generally determined by the Compensation Committee of the Board within limits set forth in the 2015 Plan. No stock option will be exercisable more than ten years after the date it is granted. In February 2016, the Company issued options to purchase 137,362 shares of its common stock to Mr. Drexler, the Company’s Chairman of the Board, Chief Executive Officer, and President, and options to purchase 54,945 shares of its common stock to Michael Doron, the former Lead Director of the Board. Upon resignation from the Board of Directors in June 2017, Mr. Doron forfeited 20,604 of the options issued. These stock options were granted with an exercise price of $1.89 per share, a contractual term of 10 years and a grant date fair value of $1.72 per share, or $0.3 million in the aggregate, which is amortized on a straight-line basis over the vesting period of two years. The Company determined the fair value of the stock options using the Black-Scholes model. The table below sets forth the assumptions used in valuing such options. For the Year Ended December 31, 2016 Expected term of options 6.5 years Expected volatility-range used 118.4%-131.0% Expected volatility-weighted average 125.7% Risk-free interest rate-range used 1.27%-1.71% For the three months ended March 31, 2018 and 2017, the Company recorded stock compensation expense related to options of $16,000 and $0.1 million, respectively.

Note 11 - Net Loss per Share

Note 11 - Net Loss per Share	3 Months Ended
	Mar. 31, 2018
Earnings Per Share [Abstract]
Net Loss per Share	Basic net loss per share is computed by dividing net loss for the period by the weighted average number of shares of common stock outstanding during each period. There was no dilutive effect for the outstanding potentially dilutive securities for the three months ended March 31, 2018 and 2017, respectively, as the Company reported a net loss for both periods. The following table sets forth the computation of the Company’s basic and diluted net loss per share for the periods presented (in thousands, except share and per share data): For the Three Months Ended March 31, 2018 2017 Net loss $ (2,305 ) $ (3,149 ) Weighted average common shares used in computing net loss per share, basic and diluted 14,615,677 13,773,508 Net loss per share, basic and diluted $ (0.16 ) $ (0.23 ) Diluted net income per share is computed by dividing net income for the period by the weighted average number of shares 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 potentially dilutive securities, and the if-converted method to assess the dilutive effect of the convertible notes. There was no dilutive effect for the outstanding awards for the three months ended March 31, 2018 and 2017, as the Company reported a net loss for both periods. However, if the Company had net income for the three months ended March 31, 2018, the potentially dilutive securities included in the earnings per share computation would have been 17,881,141 . Total outstanding potentially dilutive securities were comprised of the following: As of March 31, 2018 2017 Stock options 171,703 192,307 Warrants 1,389,378 1,389,378 Unvested restricted stock 103,844 670,170 Convertible notes 16,216,216 8,619,624 Total common stock equivalents 17,881,141 10,871,479

Note 12 - Income Taxes

Note 12 - Income Taxes	3 Months Ended
	Mar. 31, 2018
Income Tax Disclosure [Abstract]
Income Taxes	The Company recorded a tax provision of $69,000 and $28,000 for the three months ended March 31, 2018 and 2017, respectively. Income taxes are provided for the tax effects of transactions reported in the Condensed Consolidated Financial Statements and consist of taxes currently due. Deferred taxes relate to differences between the basis of assets and liabilities for financial and income tax reporting which will be either taxable or deductible when the assets or liabilities are recovered or settled. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on consideration of these items, management has established a full valuation allowance as it is more likely than not that the tax benefits will not be realized as of March 31, 2018.

Note 13 - Segments, Geographica

Note 13 - Segments, Geographical Information	3 Months Ended
	Mar. 31, 2018
Segment Reporting [Abstract]
Segments, Geographical Information	The Company’s chief operating decision maker reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. As such, the Company currently has a single reporting segment and operating unit structure. In addition, substantially all long-lived assets are attributable to operations in the U.S. for both periods presented. Revenue, net by geography is based on the Company addresses of the customers. The following table sets forth revenue, net by geographic area (in thousands): For the Three Months Ended March 31, 2018 2017 Revenue, net: United States $ 15,300 $ 17,590 International 11,247 8,419 Total revenue, net $ 26,547 $ 26,009

Note 14 - Subsequent Events

Note 14 - Subsequent Events	3 Months Ended
	Mar. 31, 2018
Subsequent Events [Abstract]
Subsequent Events	GAAP requires an entity to disclose events that occur after the balance sheet date but before financial statements are issued or are available to be issued (“subsequent events”) as well as the date through which an entity has evaluated subsequent events. There are two types of subsequent events. The first type consists of events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, (“recognized subsequent events”). The second type consists of events that provide evidence about conditions that did not exist at the date of the balance sheet but arose subsequent to that date (“non-recognized subsequent events”). Recognized Subsequent Events None. Unrecognized Subsequent Events None.

Note 2 - Summary of Significa22

Note 2 - Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2018
Accounting Policies [Abstract]
Basis of Presentation and Principles of Consolidation	The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The Condensed Consolidated Financial Statements include the accounts of MusclePharm Corporation and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Unaudited Interim Financial Information	The accompanying unaudited interim Condensed Consolidated Financial Statements have been prepared in accordance with GAAP and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these statements do not include all of the information and notes required by GAAP for complete financial statements. The Company’s management believes the unaudited interim Condensed Consolidated Financial Statements include all adjustments of a normal recurring nature necessary for the fair presentation of the Company’s financial position as of March 31, 2018, results of operations for the three months ended March 31, 2018 and 2017, and cash flows for the three months ended March 31, 2018 and 2017. The results of operations for the three ended March 31, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018. These unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on April 2, 2018.
Use of Estimates	The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Such estimates include, but are not limited to, allowance for doubtful accounts, revenue discounts and allowances, the valuation of inventory and tax assets, the assessment of useful lives, recoverability and valuation of long-lived assets, likelihood and range of possible losses on contingencies, restructuring liabilities, valuations of equity securities and intangible assets, fair value of derivatives, warrants and options, among others. Actual results could differ from those estimates.
Revenue Recognition	The Company's previous revenue recognition policy was to recognize revenue when persuasive evidence of an arrangement existed, delivery had occurred, the fee was fixed or determinable and collection was reasonably assured. The Company’s standard terms and conditions of sale allowed for product returns or replacements in certain cases. Estimates of expected future product returns were recognized at the time of sale based on analyses of historical return trends by customer type. Upon recognition, the Company reduced revenue and cost of revenue for the estimated return. Return rates could fluctuate over time, but were sufficiently predictable with established customers to allow the Company to estimate expected future product returns, and an accrual was recorded for future expected returns when the related revenue was recognized. The Company also offered sales incentives through various programs, consisting primarily of volume incentive rebates and sales incentive reserves. Volume incentive rebates were provided to certain customers based on contractually agreed upon percentages once certain thresholds had been met. Sales incentive reserves were computed based on historical trending and budgeted discount percentages, which were typically based on historical discount rates with adjustments for any known changes, such as future promotions or one-time historical promotions that would not repeat for each customer. The Company recorded sales incentive reserves and volume rebate reserves as a reduction to revenue. With the adoption of ASC 606, the Company reviewed its previous revenue recognition policy as described above and under ASC 606 the Company determined that there were no material changes resulting from the adoption. Revenue would be recognized when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. This is consistent with the revenue recognition policy previously used by the Company. The Company also reviewed the timing and recognition of accounts receivable within the different distribution channels for which the Company generates revenue. During the three months ended March 31, 2018 and 2017, the Company recorded discounts, and to a lesser degree, sales returns, totaling $4.9 million and $8.0 million, respectively, which accounted for 16% and 23% of gross revenue in each period, respectively.
Concentrations	Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The cash balance at times may exceed federally insured limits. Management believes the financial risk associated with these balances is minimal and has not experienced any losses to date. Significant customers are those which represent more than 10% of the Company’s net revenue for each period presented. For each significant customer, revenue as a percentage of total revenue is as follows: Percentage of Net Revenue for the Three Months Ended March 31, 2018 2017 Customers Costco Wholesale Corporation 37 % 35 %
Share-Based Payments and Stock-Based Compensation	Share-based compensation awards, including stock options and restricted stock awards, are recorded at estimated fair value on the applicable award’s grant date, based on estimated number of awards that are expected to vest. The grant date fair value is amortized on a straight-line basis over the time in which the awards are expected to vest, or immediately if no vesting is required. Share-based compensation awards issued to non-employees for services are recorded at either the fair value of the services rendered or the fair value of the share-based payments whichever is more readily determinable. The fair value of restricted stock awards is based on the fair value of the stock underlying the awards on the grant date as there is no exercise price. The fair value of stock options is estimated using the Black-Scholes option-pricing model. The determination of the fair value of each stock award using this option-pricing model is affected by the Company’s assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards and the expected term of the awards based on an analysis of the actual and projected employee stock option exercise behaviors and the contractual term of the awards. Due to the Company’s limited experience with the expected term of options, the simplified method was utilized in determining the expected option term as prescribed in Staff Accounting Bulletin No. 110. The Company recognizes stock-based compensation expense over the requisite service period, which is generally consistent with the vesting of the awards, based on the estimated fair value of all stock-based payments issued to employees and directors that are expected to vest.
Recent Accounting Pronouncements	In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases

Note 2 - Summary of Significa23

Note 2 - Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2018
Note 2 - Summary Of Significant Accounting Policies Tables
Significant customers	Percentage of Net Revenue for the Three Months Ended March 31, 2018 2017 Customers Costco Wholesale Corporation 37 % 35 %

Note 4 - Restructuring (Tables)

Note 4 - Restructuring (Tables)	3 Months Ended
	Mar. 31, 2018
Restructuring and Related Activities [Abstract]
Schedule of Provision of Restructuring and Accrued Restructuring Charges	Contract Termination Costs Purchase Commitment of Discontinued Inventories Not Yet Received Abandoned Lease Facilities Total Balance as of December 31, 2017 $ 308 $ 175 $ 232 $ 715 Expensed — — 132 132 Cash payments — — (177 ) (177 ) Balance as of March 31, 2018 308 175 187 670
Schedule of Future Payments Under The Restructuring Plan	For the Years Ending December 31, Outstanding Payments 2018 2019 2020 Total Contract termination costs $ 308 $ — $ — $ 308 Purchase commitment of discontinued inventories not yet received 175 — — 175 Abandoned leased facilities 67 91 29 187 Total future payments $ 550 $ 91 $ 29 $ 670

Note 5 - Balance Sheet Compon25

Note 5 - Balance Sheet Components (Tables)	3 Months Ended
	Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Schedule of Property, Plant and Equipment	As of March 31, 2018 As of December 31, 2017 Furniture, fixtures and equipment $ 3,614 $ 3,597 Leasehold improvements 2,044 2,044 Manufacturing and lab equipment 3 3 Vehicles 86 86 Displays 484 485 Website 462 462 Property and equipment, gross 6,693 6,677 Less: accumulated depreciation and amortization (5,061 ) (4,855 ) Property and equipment, net $ 1,632 $ 1,822
Schedule of Intangible Assets	As of March 31, 2018 Gross Value Accumulated Amortization Net Carrying Value Remaining Weighted-Average Useful Lives (years) Amortized Intangible Assets Brand (apparel rights) $ 2,244 $ (1,007 ) $ 1,237 3.9 Total intangible assets $ 2,244 $ (1,007 ) $ 1,237 As of December 31, 2017 Gross Value Accumulated Amortization Net Carrying Value Remaining Weighted-Average Useful Lives (years) Amortized Intangible Assets Brand (apparel rights) $ 2,244 $ (927 ) $ 1,317 4.1 Total intangible assets $ 2,244 $ (927 ) $ 1,317
Schedule of Estimated Future Amortization Expense of Intangible Assets	For the Year Ending December 31, Remainder of 2018 $ 241 2019 321 2020 321 2021 321 2022 33 Total amortization expense $ 1,237

Note 6 - Other Expense, net (Ta

Note 6 - Other Expense, net (Tables)	3 Months Ended
	Mar. 31, 2018
Other Income and Expenses [Abstract]
Other Expense, net	For the Three Months Ended March 31, 2018 2017 Other expense, net: Interest expense, related party $ (541 ) $ (422 ) Interest expense, related party debt discount (248 ) - Interest expense, other (67 ) (159 ) Interest expense, secured borrowing arrangement (346 ) (104 ) Foreign currency transaction loss (113 ) (12 ) Other 5 (281 ) Total other expense, net $ (1,310 ) $ (978 )

Note 7 - Debt (Tables)

Note 7 - Debt (Tables)	3 Months Ended
	Mar. 31, 2018
Debt Disclosure [Abstract]
Schedule of Long Term Debt	As of March 31, 2018 As of December 31,2017 2017 Refinanced Convertible Note due December 31, 2019 with a related party $ 18,000 $ 18,000 Obligations under secured borrowing arrangement 5,547 5,385 Secured line of credit 2,000 3,000 Unamortized debt discount with a related party (1,083 ) (1,331 ) Total debt 24,464 25,054 Less: current portion (7,547 ) (8,385 ) Long term debt $ 16,917 $ 16,669

Note 8 - Commitments and Cont28

Note 8 - Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2018
Commitments and Contingencies Disclosure [Abstract]
Schedule of Future Minimum Rental Payments for Operating Leases	For the Year Ending December 31, Remainder of 2018 $ 645 2019 845 2020 735 2021 481 2022 369 Thereafter — Total minimum lease payments $ 3,075
Schedule of Future Minimum Lease Payments for Capital Leases	For the Year Ending December 31, Remainder of 2018 $ 99 2019 101 2020 50 Total minimum lease payments 250 Less amounts representing interest (12 ) Present value of minimum lease payments $ 238
Contractual Obligation, Fiscal Year Maturity Schedule	For the Years Ending December 31, Remainder of 2018 2019 Total Outstanding Payments Endorsement $ 191 $ 62 $ 253 Sponsorship 67 55 122 Total future payments $ 258 $ 117 $ 375

Note 9 - Stockholders' Deficit

Note 9 - Stockholders' Deficit (Tables)	3 Months Ended
	Mar. 31, 2018
Equity [Abstract]
Schedule of Stockholders Equity	Transaction Type Quantity (Shares) Valuation ($) Range of Value per Share Stock issued to related party for interest 81,133 $ 52 0.65 Total 81,133 $ 52 $ 0.65

Note 10 - Stock-Based Compens30

Note 10 - Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of Restricted Stock Units Activity	Unvested Restricted Stock Awards Number of Shares Weighted Average Grant Date Fair Value Unvested balance – December 31, 2017 487,267 $ 2.32 Granted — — Vested (383,423 ) 1.95 Cancelled — — Unvested balance – March 31, 2018 103,844 3.70
Black-Sholes assumptions	For the Year Ended December 31, 2016 Expected term of options 6.5 years Expected volatility-range used 118.4%-131.0% Expected volatility-weighted average 125.7% Risk-free interest rate-range used 1.27%-1.71%

Note 11 - Net Loss per Share (T

Note 11 - Net Loss per Share (Tables)	3 Months Ended
	Mar. 31, 2018
Earnings Per Share [Abstract]
Schedule of Basic and Diluted Net Loss Per Share	For the Three Months Ended March 31, 2018 2017 Net loss $ (2,305 ) $ (3,149 ) Weighted average common shares used in computing net loss per share, basic and diluted 14,615,677 13,773,508 Net loss per share, basic and diluted $ (0.16 ) $ (0.23 )
Antidilutive Securities Excluded from Computation of Diluted Earnings Per Share	As of March 31, 2018 2017 Stock options 171,703 192,307 Warrants 1,389,378 1,389,378 Unvested restricted stock 103,844 670,170 Convertible notes 16,216,216 8,619,624 Total common stock equivalents 17,881,141 10,871,479

Note 13 - Segments, Geographi32

Note 13 - Segments, Geographical Information (Tables)	3 Months Ended
	Mar. 31, 2018
Segment Reporting [Abstract]
Revenue, Net by Geographic Area	For the Three Months Ended March 31, 2018 2017 Revenue, net: United States $ 15,300 $ 17,590 International 11,247 8,419 Total revenue, net $ 26,547 $ 26,009

Note 1 - Description of Busin33

Note 1 - Description of Business (Details Narrative) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Stockholders' deficit	$ (14,641)	$ (12,534)
Maximum amount of secured borrowing arrangement	12,500
Cash	5,114	$ 6,228	$ 3,016	$ 4,943
Working capital deficit	$ 300

Note 2 - Accounting Policies -

Note 2 - Accounting Policies - Summary of Significant Accounting Policies (Details)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | Costco [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	37.00%	35.00%

Note 2 - Summary of Significa35

Note 2 - Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Note 2 - Accounting Policies Detail
Sales returns and discounts	$ 4,900	$ 8,000
Sales returns and discounts as a percentage of sales	16.00%	23.00%

Note 4 - Restructuring (Details

Note 4 - Restructuring (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018USD ($)
Restructuring Cost and Reserve [Line Items]
Beginning Balance	$ 715
Expensed	132
Cash payments	(177)
Balance	670
Contract termination costs [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance	308
Expensed	0
Cash payments	0
Balance	308
Purchase commitment of discontinued inventories not yet received [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance	175
Expensed	0
Cash payments	0
Balance	175
Abandoned leased facilities
Restructuring Cost and Reserve [Line Items]
Beginning Balance	232
Expensed	132
Cash payments	(177)
Balance	$ 187

Note 4 - Restructuring (Detai37

Note 4 - Restructuring (Details 1) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Restructuring Cost and Reserve [Line Items]
Remainder of 2018	$ 550
2,019	91
2,020	29
Total	670	$ 715
Contract termination costs [Member]
Restructuring Cost and Reserve [Line Items]
Remainder of 2018	308
2,019	0
2,020	0
Total	308	308
Purchase commitment of discontinued inventories not yet received [Member]
Restructuring Cost and Reserve [Line Items]
Remainder of 2018	175
2,019	0
2,020	0
Total	175	175
Abandoned leased facilities
Restructuring Cost and Reserve [Line Items]
Remainder of 2018	67
2,019	91
2,020	29
Total	$ 187	$ 232

Note 5 - Balance Sheet Compon38

Note 5 - Balance Sheet Components (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 6,693	$ 6,677
Less: accumulated depreciation and amortization	(5,061)	(4,855)
Property and equipment, net	1,632	1,822
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	3,614	3,597
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,044	2,044
Manufacturing And Lab Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	3	3
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	86	86
Displays [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	484	485
Website [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 462	$ 462

Note 5 - Balance Sheet Compon39

Note 5 - Balance Sheet Components (Details 1) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	$ 2,244	$ 2,244
Finite-Lived Intangible Assets, Accumulated Amortization	(1,007)	(927)
Finite-Lived Intangible Assets, Net, Total	1,237	1,317
Brands [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	2,244	2,244
Finite-Lived Intangible Assets, Accumulated Amortization	(1,007)	(927)
Finite-Lived Intangible Assets, Net, Total	$ 1,237	$ 1,317
Finite-Lived Intangible Asset, Remaining Useful Life	3 years 10 months 24 days	4 years 1 month 6 days

Note 5 - Balance Sheet Compon40

Note 5 - Balance Sheet Components (Details 2) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2018	$ 241
2,019	321
2,020	321
2,021	321
2,022	33
Finite-Lived Intangible Assets, Net, Total	$ 1,237	$ 1,317

Note 5 - Balance Sheet Compon41

Note 5 - Balance Sheet Components (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Balance Sheet Related Disclosures [Abstract]
Depreciation and amortization expense	$ 200	$ 300
Amortization of intangible assets	$ 100	$ 100

Note 6 - Other Expense, net (De

Note 6 - Other Expense, net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Other expense, net:
Interest expense, related party	$ (541)	$ (422)
Interest expense, related party debt discount	(248)	0
Interest expense, other	(67)	(159)
Interest expense, secured borrowing arrangement	(346)	(104)
Foreign currency transaction gain	(113)	(12)
Other	5	(281)
Total other expense, net	$ (1,310)	$ (978)

Note 7 - Debt (Details)

Note 7 - Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Debt Disclosure [Abstract]
2017 Refinanced Convertible Note due December 31, 2019 with a related party	$ 18,000	$ 18,000
Obligations under secured borrowing arrangement	5,547	5,385
Secured line of credit	2,000	3,000
Unamortized debt discount with a related party	(1,083)	(1,331)
Total debt	24,464	25,054
Less: current portion	(7,547)	(8,385)
Long term debt	$ 16,917	$ 16,669

Note 7 - Debt (Details Narrativ

Note 7 - Debt (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Debt Disclosure [Abstract]
Interest expense, related party	$ 541	$ 422
Interest paid to related party	300	400
Obligations under secured borrowing arrangement	5,547		$ 5,385
Cash received on account of sale of accounts	13,500	4,400
Repayments of account receivable sale	$ 13,300	$ 5,100

Note 8 - Commitments and Cont45

Note 8 - Commitments and Contingencies (Details) $ in Thousands	Mar. 31, 2018USD ($)
Year Ending December 31,
Remainder of 2018	$ 645
2,019	845
2,020	735
2,021	481
2,022	369
Thereafter	0
Total minimum lease payments	$ 3,075

Note 8 - Commitments and Cont46

Note 8 - Commitments and Contingencies (Details 1) $ in Thousands	Mar. 31, 2018USD ($)
Commitments and Contingencies Disclosure [Abstract]
Remainder of 2018	$ 99
2,019	101
2,020	50
Total minimum lease payments	250
Less amounts representing interest	(12)
Present value of minimum lease payments	$ 238

Note 8 - Commitments and Cont47

Note 8 - Commitments and Contingencies (Details 2) $ in Thousands	Mar. 31, 2018USD ($)
Contractual Obligation Fiscal Year Maturity [Line Items]
Remainder of 2018	$ 258
2,019	117
Contractual Obligation, Total future payments	375
Endorsement [Member]
Contractual Obligation Fiscal Year Maturity [Line Items]
Remainder of 2018	191
2,019	62
Contractual Obligation, Total future payments	253
Sponsorship [Member]
Contractual Obligation Fiscal Year Maturity [Line Items]
Remainder of 2018	67
2,019	55
Contractual Obligation, Total future payments	$ 122

Note 8 - Commitments and Cont48

Note 8 - Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Operating Leases, Rent Expense, Net	$ 200	$ 100
Capital lease - short term	119		$ 126
Capital lease - long term	$ 119		$ 146

Note 9 - Stockholders' Defici49

Note 9 - Stockholders' Deficit (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018USD ($)$ / sharesshares
Stockholders' Equity Note [Abstract]
Stock issued to related party for interest, Quantity | shares	53
Total, Quantity | shares	53
Stock issued to related party for interest, Valuation | $	$ 81,113
Total, Valuation | $	$ 81,113
Stock issued to related party for interest, Range of Value per Share | $ / shares	$ .65
Total, Range of Value per Share | $ / shares	$ .65

Note 10 - Stock-Based Compens50

Note 10 - Stock-Based Compensation (Details)	3 Months Ended
	Mar. 31, 2018$ / sharesshares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Number of Shares, Unvested Beginning Balance | shares	487,267
Number of Shares, Granted | shares	0
Number of Shares, Vested | shares	(383,423)
Number of Shares, Cancelled | shares	0
Number of Shares, Unvested Ending Balance | shares	103,844
Weighted-Average Grant Date Fair Value, Unvested Beginning Balance | $ / shares	$ 2.32
Weighted-Average Grant Date Fair Value, Granted | $ / shares	.00
Weighted-Average Grant Date Fair Value, Vested | $ / shares	1.95
Weighted-Average Grant Date Fair Value, Cancelled | $ / shares	.00
Weighted-Average Grant Date Fair Value, Unvested Ending Balance | $ / shares	$ 3.70

Note 10 - Stock-Based Compens51

Note 10 - Stock-Based Compensation (Details 1)	3 Months Ended
	Mar. 31, 2018$ / shares
Expected term of options	6 years 6 months
Risk-free interest rate	125.70%
Minimum [Member]
Expected volatility	118.40%
Expected dividend yield	$ .0127
Maximum [Member]
Expected volatility	131.00%
Expected dividend yield	$ .0171

Note 10 - Stock-Based Compens52

Note 10 - Stock-Based Compensation (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Restricted stock awards granted	$ 0	$ 700
Total unrecognized expense for unvested restricted stock awards	$ 400
Total unrecognized expense for unvested restricted stock awards, weighted average period (in years)	7 months 6 days
Stock compensation expense related to options	$ 16	$ 100

Note 11 - Net Loss per Share (D

Note 11 - Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Income Statement [Abstract]
Net loss	$ (2,305)	$ (3,149)
Weighted-average common shares used in computing net loss per share, basic and diluted	14,615,677	13,773,508
Net loss per share, basic and diluted	$ (0.16)	$ (0.23)

Note 11 - Net Loss per Share 54

Note 11 - Net Loss per Share (Details 1) - shares	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive securities outstanding	17,881,141	10,871,479
Employee Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive securities outstanding	171,703	192,307
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive securities outstanding	1,389,378	1,389,378
Convertible Debt Securities [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive securities outstanding	16,216,216	8,619,624
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive securities outstanding	103,844	670,170

Note 13 - Segments, Geographi55

Note 13 - Segments, Geographical Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Revenue, net:
Revenue, net	$ 26,547	$ 26,009
UNITED STATES
Revenue, net:
Revenue, net	15,300	17,590
International [Member]
Revenue, net:
Revenue, net	$ 11,247	$ 8,419