MusclePharm Corporation: Towards Valid Reflection.
On February 15, 2013, Chief Executive officer of MusclePharm Corporation (OTCQB: MSLP) Brad Pyatt has forwarded a news letter to the Shareholders of the company. The news letter has covered a detail outline of the company including its past history, growth steps, recent development, business position, financial position, issuance of new shares to raise fund, revenue generation, profitability position, capital structure and leverage position, etc. The CEO has substantiate that to clean up balance sheet and make it debt free, the company has recently completed a $12.0 million registered direct offering of Series D Convertible Preferred Stock at $8.00 per share. Each preferred share is convertible into two shares of our common stock. The above fund raise was not only to clean up balance sheet but also to support operational growth. The company has been showing good growth in revenue. According to Brad Pyatt, “Over the past three years we achieved exponential product sales growth, growing from around $1.4 million in revenue for 2009, to approximately $78 million in 2012. However, to finance that growth from essentially a startup mode we had to utilize dilutive financing instruments, which were very expensive and hurt our financial performance, and as one would expect our stock price suffered too. All of us at MusclePharm believe that our market capitalization today is not a valid reflection of our Company's current underlying fundamentals”.
From the above, it is clear that Brad Pyatt wants the Shareholders to assure that MusclePharm is in right track but he is talking about future success. It is most important that the company needs to improve its profit margin at first, then to distribute profit to its shareholders. I primarily agree with his expectation regarding reflection of company’s success in market price of stock but it is subject to successful profit generation.