MusclePharm CEO and Chairman Issues Letter to Shareholders

DENVER, May 24, 2011 /PRNewswire/ -- MusclePharm Corporation, a Nevada corporation ("MusclePharm" or the "Company") (OTCBB: MSLP), an expanding U.S. nutritional supplement company, is pleased to announce that it has released a letter from its CEO, Bradley J. Pyatt, to update shareholders on the current status of the company.

Dear Valued MusclePharm Shareholder,

The MusclePharm Executive Team would like to offer its most sincere thank you for your continued and amazing support over the past year. We have continued on an impressive pace in building a very powerful brand and company since MusclePharm was created in 2008.

We believe that the foundation we've formed at MusclePharm – high-level employees, top-notch institutions, and the numerous and extensive studies we have engaged in – will ensure the long-lasting growth of MusclePharm. We have followed compliance on everything from our manufacturing certification to our studies at Oklahoma University, and both of these items are what the top vendors love to see.

Our worldwide distribution has grown significantly in the last 12 months. The growth has been so impressive that we have received numerous accounts in person from those in the industry that say that we are the fastest-growing company in the sports nutrition market.

We also believe our partnership with the Ultimate Fighting Championship (UFC) is growing our brand internationally at a rapid pace. We saw this first-hand with international distributors at the recent FIBO conference in Germany. There, nearly everyone knew and recognized the MusclePharm brand.

Additionally, Medicaid reimbursement is in its final stages in New York. Our entire medical board continues to work diligently and vigorously to finish what could be a landmark moment for our company.

We also have shown that the fundamentals of our company continue to get better as we move forward and manage our extreme growth. MusclePharm has gone from $80,000 in sales in 2008 to $4 million in 2010 and, now, already more than $6 million through just the first Five months of 2011. We are excited about that growth and we are confident the best is yet to come.

In closing, we at MusclePharm appreciate your remarkable support and we will not rest until we are the dominant name in this industry. We will continue to sell more and spend less, expanding at a significant rate thanks to quality and proven industry professionals.

Sincerely,

Brad Pyatt

Chairman, Chief Executive Officer

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Financial Highlights for the Three Months Ended March 31, 2011

Musclepharm Corporation reported sales and earnings for the quarter ended March 31, 2011. Total revenues were $3.52 million for the quarter ended March 31, 2011, which compares to sales of $1.26 million for the quarter ended March 31, 2010, a 179% increase. 

Key highlights are as follows:

• Sales were $3.52 million for the three months ended March 31, 2011, as compared to $1.26 million for the comparable three months ended March 31, 2010.  The 179% increase in sales was primarily attributable to increased brand awareness.  Since inception, the Company has focused on an aggressive marketing plan in hopes of penetrating the market.  As a direct result of the aggressive marketing plan, our products are currently being offered in more retail stores, both domestic and international, and our products are receiving better shelf placement.
• The Company increased its gross profit percentage from 30% for the three months ended March 31, 2010 to 34% for the three months ended March 31, 2010.  The increase in gross profit percentage is primarily attributable to the Company's significant increase in sales.  The Company expects to continue to receive bulk order discounts in the future which could result in even stronger gross profit percentages.
• General and administrative expenses for the three months ended March 31, 2011, were $2.3 million, as compared to $2.6 million for the comparable three months ended March 31, 2010.  The $0.3 million decrease is attributable to a substantial decrease in stock based compensation of $0.4 million.  The major decrease in stock based compensation was offset by a slight increase in employee compensation.  The Company's employee headcount increased from 12 employees during the three months ended March 31, 2010, to 15 employees during the three months ended March 31, 2011.
• The Company recognized a Loss from operations for the three months ended March 31, 2011 of $1.1 million as compared to $2.3 million for the comparable three months ended March 31, 2010.  The decrease in operating loss is primarily attributable to the aggressive marketing plan and the Company's ability to gain brand recognition resulting in increased sales during the three months ended March 31, 2011 as compared to the three months ended March 31, 2010.  The Company's $1.1 million loss for the three months ended March 31, 2011 includes non-cash stock based compensation of $0.6 million.
• Other expenses for the three months ended March 31, 2011, were $3.9 million as compared to $0.4 million for the comparable three months ended March 31, 2010.  The increase in other expenses of $3.5 million is primarily attributable features associated with the financing transactions the Company entered into during the three months ended March 31, 2011.  The Company issued approximately $1.5 million in convertible notes during the three months ended March 31, 2011.  These notes bore interest at rates ranging from 8% to 12% per annum.  Interest expense during the three months ended March 31, 2010, increased approximately $0.2 million as compared to the comparable three months ended March 31, 2010.  In addition, the convertible notes contained embedded derivatives, due to the Company not being able to determine the number of shares needed to settle the conversion rights.  As a result, on the commitment date of each financing, the Company recorded an aggregate derivative expenses of $1.4 million and on the date of remeasurement, which is March 31, 2011, a change in fair market value of $0.1 million.  There were no derivative liabilities recorded for the three months ended March 31, 2010.

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Summary of Distribution, Research & Development, and Marketing Activities

(Three Months Ended March 31, 2011)

• MuscleGel launches at 1,500 GNC locations Products Rolling Out in Vitamin World Locations in 2011

MuscleGel is the supplement world's untapped opportunity: high quality protein in a convenient gel-based formula. The gel is simple to consume on the go. No hassling with liquids and mixes.

• MusclePharm Products Rolling Out in Vitamin World Locations in 2011

Vitamin World is a top retail supplement provider. For MusclePharm, this creates opportunity for continued growth.

• MusclePharm Inks Deal With Canadian Distributor American Nutrition Inc.

Signing with ANI, a top-tier distributor, means we can fully meet Canada's strong  MusclePharm demand. Canada's MMA fan base is substantial.

• MusclePharm Sportswear Officially launches

Our sportswear line, Powered by TapouT, is now rolling out to retail through distribution agreement with TapouT.

• Lids-Hat World Inc. to Launch MusclePharm sportswear in 2011

Starting summer 2011, MusclePharm further leverages TapOuT partnership with distribution in 850 Lids-Hat World retail stores.

• Former Bristol-Myers Squibb Executive Joins MusclePharm as Director of Therapeutic Nutrition

Dr. Stevens joins MusclePharm with over twenty years of well diversified experience in the healthcare and pharmaceutical industry. Dr. Stevens spent 17 years at Bristol-Myers Squibb, where he held positions of increasing responsibility in the areas of Market Research (Oncology and HIV), Marketing (Oncology), and Medical Affairs (HIV).

• Former Global HIV Pharmaceutical Head, James Sapirstein, Joins MusclePharm as Strategic Advisor

Mr. Sapirstein, formerly President and Chief Executive Officer of Tobira Therapeutics, Inc., a New Jersey-based biopharmaceutical company that develops novel compounds for HIV/AIDS ("Tobira"). His expertise- 27 years in pharmaceutical, 22 specializing in infectious diseases - will be an asset to MusclePharm's advisory board.

• MP Appoints Patricia Ware, Former Director of the U.S. Presidential Advisory Council on HIV/AIDS, to Its Scientific Advisory Board

Ware is a leader in HIV/AIDS research, serving as Executive Director of the U.S. Presidential Advisory Council on HIV/AIDS. Her education and prevention roles included: the Director of the Office of Adolescent Pregnancy Programs at the U.S. Department of Health and Human Services in the H.W. Bush Administration; a member of the HIV/AIDS and Women Collaborative Working Group under President Clinton.

• MusclePharm Becomes an Official Nutritional Supplement Supplier
  for the Cincinnati Reds

MusclePharm is the only sports nutrition company that has a product deal with a MLB team. This is do to the fact of  MusclePharm products having  the banned substance certifications with NSF.

• MusclePharm Named Official Supplement Provider of New Pro Golf Tour, the Xempt Players Series

MusclePharm's XPS sponsorship also introduces its innovative MuscleGel™ to the golf market.

• MusclePharm Signs Multi-Year Sponsorship Deal With World Bodybuilding & Fitness Federation

The significant partnership with the World Bodybuilding and Fitness Federation (WBFF) locks up title sponsorship through 2014.

• MusclePharm Signs Leading Fitness Female Natalia Muntean

Muntean, the 2009 Ms. Bikini Universe and WBFF Fitness Model World Champion, is a recognizable face in the fitness industry. She's graced the covers of magazines like Oxygen, Physique and Fitness.

• University of Oklahoma to Begin Clinical Research Program on MusclePharm's Assault TM Pre-Workout Performance-Enhancing Product

With positive reviews from thousands of satisfied customers, now backed up by the OU team's work, MusclePharm once again leads the industry.

• MusclePharm Moves Into Top 10 Best-Selling Brands on Bodybuilding.com

Due to impressive growth, MusclePharm cracked the Top 10 at bodybuilding.com, which carries brands from over 500 companies.

ABOUT MUSCLEPHARM CORPORATION

Headquartered in Denver, Colorado, MusclePharm is a healthy life-style company that develops and manufactures a full line of National Science Foundation approved nutritional supplements that are 100% free of banned substances. Based on years of research, MusclePharm products are created through an advanced six-stage research protocol involving the expertise of top nutritional scientists and field tested by more than one hundred elite professional athletes from various professional sports leagues including the National Football League, Mixed Martial Arts, and Major League Baseball. The Company's products address all categories of an active lifestyle, including muscle building, weight loss, and maintaining general fitness through a daily nutritional supplement regimen.  MusclePharm is sold in over 120 countries and available in over 5,000 U.S. retail outlets, including GNC and Vitamin Shoppe. MusclePharm products are also sold in over 100 online stores, including bodybuilding.com, Amazon.com and Vitacost.com. For more information, please visit www.musclepharm.com.

FORWARD LOOKING STATEMENTS

The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Investor Contact:
Cory Gregory
President
303-396-6100
http://www.musclepharm.com

SOURCE MusclePharm Corporation